*michael parekh on IT*

ON AOL TAKING AIM AT MYSPACE TERRITORY (TWX, NWS)

MAKEOVER TIME

Interesting piece in the Sunday New York Times on Time Warner's AOL (the company formerly known as America Online). 

The full article is interesting for AOL watchers everywhere, but I wanted to highlight the section at the end of the article on the company's efforts to convert it's AIM instant messaging (IM) franchise into a MySpace (NWS) like platform:

"...much is riding on AIM Pages, which will be announced in beta form in May. The idea is to build a MySpace-like network around the so-called buddy lists of people who use AOL's instant-messaging product, known as AIM.

The buddy list will work in the same way that the "friends" section of other social-networking sites do, but it will have the added advantage of letting people know when their friends are online, whether they have added any new information to their personal pages — blog entries or photographs, for example — and is integrated into AOL's popular chat feature.

What's more, AOL has a sales force that is already doing more than $1.5 billion a year in business, an advantage that it believes will lead AIM Pages to have a credible advertising business sooner than its rivals..."

"AIM Pages is especially crucial because AIM is the closest thing that AOL has to what used to be called a killer app; it enjoys a wide margin in the United States over its rivals from Yahoo and MSN in both the number of users and the time spent instant-messaging.

The problem is, AIM's numbers have been sliding of late, in direct correlation to the growing amount of time that young people in particular are spending on social-networking sites like MySpace.

According to figures provided by comScore Media Metrix, the audience using AIM through the AOL subscriber service declined by 28 percent from March 2005 to March 2006, to 16.3 million.

That is a result of simple but sobering math: AOL lost 2.7 million subscribers last year, and with each of them went multiple AIM identities. Meanwhile, the number of users of AIM via the Internet — separate from the subscriber service — was down 4 percent, to 28.2 million.

During the same period, according to comScore, the overall audience of instant-messenger users declined by 4 percent, to 72.8 million. ComScore's ratings competitor, Nielsen/NetRatings, says the unique audience of AOL Instant Messenger declined by 13 percent in March from a year earlier. For AOL, these are troubling figures."

At one level, observers may view this as yet another company getting on the MySpace bandwagon, despite it's potential issues and concerns.

It's interesting that the company does not seem to be making similar efforts with it's other IM franchise, ICQ, which has a higher percent of users in overseas markets.

Maybe the idea is to focus on one IM asset at a time for this this MySpace type makeover. 

Some AOL watchers may note the irony in the fact that the company that pioneered the mainstream adoption and popularity of instant messaging communities globally, seems now to be playing catch-up to new start-ups that are taking online communities in a new direction.

However, for this AOL watcher and Time Warner shareholder, it's better late than never.

ON UPDATING YOUR TREO 700w SOFTWARE...NOW! (PALM)

PIECE OF CAKE

The first paragraph of this release from Palm.com (via memeorandum), got my attention:

"For Verizon Wireless smartphones  —  The Treo 700w Updater installs the latest software on your smartphone.  It is designed to update your device while preserving your data.  In some instances, user set preferences may not be retained after updating."

Umm, OK, you got me...where do I go for an update and what do I do?

Not to worry...Palm's got that covered.  The link takes you to this very detailed page. 

While on one hand, Palm should be applauded for being both thorough and meticulous in documenting the procedures and steps to be taken to update your Treo 700w, I can see how a mainstream user might think another thought.

Why do the steps required to defuse a live, ticking bomb for a movie character like, say Mel Gibson in Lethal Weapon, seem simpler than the steps required to update your Palm Treo?

I mean, all Mel has to do is decide whether to cut the red or the blue wire...and with the same amount of pressure and pressure through the process, as updating the Treo.

In a document with over 700 words, and over 15 steps on the "do and don't" check-list before updating, Palm does a good job showing exactly how to do the update.  And that's not including the two other pages of "sub-check lists", found here and here (only 500 more words together).

Never-mind that most mainstream users' stress levels while actually doing the update , will go through the roof. 

In normal cases, most sensible mainstream users would choose to postpone doing the update.  Perhaps schedule it the same day they're having their next root canal...you know, to go through all that anxiety on that one day and be done with it.

So then it becomes clearer, as to why Palm would start off the release with the statement that they use above. 

You gotta get people motivated...kinda like training those raw recruits to crawl through the barbed wire course on their bellies with live bullets being fired over their heads.

P.S.  This is not to pick on Palm.  They're doing the best they can in a world where technology companies do not control all the elements of the services enabled by their products.  But it does mean more complexity for mainstream mortals to deal with in the interim.

ON MICOROSOFT & THE NY TIMES READER SOFTWARE (MSFT, NYT, ADBE, SNE)

TOWARDS THE HOLY GRAIL

From the New York Times, a story headlined "Microsoft Software will let Times Readers Download Paper", touches on a subject near and dear to me for almost two decades: a time when most if not all of our publications are easily readable, search-able, comment-able, shareable and monetizable. 

OK, so some of those words may be as much on the margin of being a word as "The Decider", but hopefully you get my point.

Here're some excerpts from the story for background:

"Microsoft and The  New York Times unveiled software on Friday that would allow readers to download an electronic version of the newspaper and view it on a portable device.

With Microsoft's new Windows Vista software, to be available in January, virtually any newspaper, magazine or book can be formatted into an electronic version and read online or off. The software would allow The Times to replicate its look — fonts, typeface and layout — more closely than its Web site now does.

Bill Gates, the chairman of Microsoft, and Arthur Sulzberger Jr., the publisher of The Times, unveiled the prototype at the annual meeting of the American Society of Newspaper Editors..."

"The Times said it would charge advertisers to appear on the new version of the newspaper, called Times Reader, but it had not decided whether to charge readers for the service. Microsoft would include the offering in the next version of its operating system..."

"For today's demonstration, The Times was downloaded onto small tablet
computers, about the size of a hardcover book, which are already commercially available for $1,000 to $3,000.

But this printlike version of the newspaper could also be downloaded onto a home computer or a laptop. The electronic paper is displayed in columns and it formats itself to fit any size screen."

If you actually read the press release from the Times on the subject, you realize that the headline of it's own story doesn't quite explain what's going on.  Here's the quote that explains it better:

"The New York Times and Microsoft Corp. unveiled a prototype of a new PC-based software application for news distribution called Times Reader. Available for download in the coming months, Times Reader is a New York Times application that takes advantage of Microsoft(R) Windows Vista(TM), the next generation of the Windows(R) client operating system, to enhance the online and offline reading experience of The New York Times."

So the New York Times, has developed a software application that leverages components of Microsoft Vista to read the Times online, and that application will be distributed with every copy of Vista.

The NY Times, with Microsoft's help, will also make the Times Reader available to other publishers to format their content to be readable on PCs, laptops, and the new wave of UMPCs (Ultra-mobile PCs, aka "Origami"), which I've talked about positively of late. 

See this piece from Mobile Read and one from JKontherun  in this post, for more on the subject.

As an aside, TeleRead asks an interesting question from a UMPC perspective:

"I’m curious what this means for the Origami-class machines. Will they miss out on the Vista software? Or will we see Origamis running Vista early on?"

There are already companies that provide stand-alone software to read off-line publications, including magazines online.  A good example is Zinio, whose products I've used off and on over the years.

I'd encourage you to try out Zinio.  It has some features like natural page turning, zooming in and out of text easily, etc., that I wish Adobe would learn from with it's world-dominating Acrobat Reader software.

Adobe has done a great job making Acrobat Reader a no-brainer for publishers of all kinds of content, but could do more to make the product more usable for mainstream readers.

Sony has also toiled hard in this market on the hardware front, having marketed a device for some time called the Librie as an "e-book reader" with little success.  Here's an old review to explain some of the cons of that approach.

This spring, Sony is releasing a new version of the same idea called, what else, the "Sony Reader" (via The Engadget).  Key advantages of the new version?  More affordable than a PC/laptop or an UMPC at a price reportedly around $300 to $400, and most important:  a higher resolution screen that allows a crisper, more "paper" like experience of reading. 

Here's a brief review  of the unit from Engadget if you'd like to know more.

And of course, the other option for almost a decade has been provided by Audible, where you can download thousands of book titles to hear rather than read, at the same price as the off-line books and Audio Books.

From a mainstream user point of view, the problems with most of the approaches to date have been two-fold.  A combination of

• "technology not quite there" in terms of usability and cost, and

• the need for content publishers to protect their off-line business models by charging off-line prices for the same content online despite drastically different cost structures of the two models.

So the book, the magazine and the newspapers industries are struggling with the same "defend the old business model" issues as the music and TV/movie industries.

At least with the Sony Reader, the book publishers have supposedly agreed to charge "20-25%" less than off-line versions.  How generous of them.

In the meantime, mainstream users are already reading more and more newspapers and magazines online, using the technology called..."the web".

As Jeff Jarvis puts it in his post titled "Two Steps Backward",

"Why not design the next frontier for the sharing of news that takes advantage of all the new opportunities technology permits — linking, conversation, multimedia, search, selectivity, depth, currency?

Oh, yeah, it was already invented. It’s the web. The only reasons to do this are to feed editorial ego, to think you’re maintaining editorial control, to try to dupe advertisers into thinking this the same as putting an ad in print, and to grasp desperately onto a past that is disappearing."

Scott Karp of Publishing 2.0 also has a good post expounding on this point of view against semi-proprietary "digital readers".

I'm more positive on on-going software and hardware innovations to constantly improve the experience of consuming off-line media online.  At the same time, I recognize that while specific instances of software and/or hardware solutions may not quite hit the mark, it shows the way for future improvement.

So I look forward to trying out the Times Reader, on and off a UMPC.  And comparing it with Sony's new Reader.  All the while seeing how Zinio and others respond.

Because some day, we'll find a solution, solid both from a technical and a business model point of view, that offers a path to transition today's publishing industry (newspapers, paid flyers, magazines, books and all), into a mainstream online world.  And I'd almost hold my breath for that world.

ON "MARGIN SURPLUS" AND WILE E. COYOTE

IT'S DIFFERENT THIS TIME?

Tom Evslin pointed me to this piece via his interesting post.

The  good piece in question is an article by Andy Kessler in the Wall Street Journal( via his website), that comments on the "it's the worst of times, best of times" state of the world he sees right now:

"Oil is over $70 a barrel, Iran’s got nukes, and soon they’ll price gas per ounce. The Fed has jacked short rates up 15 times....

The yield curve is as flat as a subsidized Iowa corn field.

There’s $1 trillion of teaser rate Adjustable Rate Mortgages about to burst all over Southern California and ’burbs everywhere. Gold is over $600, commodities are roaring, the dollar is dropping again, there are trade deficits as far as the eye can see and GM is on life support.

Drunken sailors in D.C. are running a sea of red ink and every time it’s sunny, some antigrowth global warming nutjob wags his finger at your $100-to-fill SUV. It feels like the ’70s all over again, a blaze of malaise. Except . . .

The stock market is like the little engine that could, and seems to go up everyday. The Dow is just shy of its all-time high, the S&P 500 is over 1300 and Nasdaq has doubled in three years. Yee-ha, bull markets are fun, but something doesn’t add up. They say the stock market climbs the Wall of Worry, but this is ridiculous—it’s got the Wile E. Coyote Acme Jetpack on."

Andy then goes on to explain his theory of a "Margin Surplus" that may account for the better world that the market sees as a whole.  It's a theory he's talked about before and is worth reading.

But then I remembered what happened to Wile E. Coyote with his Acme Jetpack on full blast...every time. (Image via Yahoo!)

SPLATT!

Don't get me wrong...my tendency is generally to see the glass half full than empty. 

And I somewhat buy into this whole business of "we'll do all the creative design stuff (the iPod is the iconic example), then send it overseas to be made inexpensively, generate a whole lot of revenues for those overseas companies, which then find their way back into the stocks of the Apples, the Microsofts, the Googles etc, that then trade to high valuations and don't get accounted for in the trade statistics", that Andy talks about. (I'm paraphrasing here of course).

But then I look at his impressive list of woes above, and feel compelled to add some that directly impinge on the very process of "Margin Surplus" creation he talks about.  I've provided links to my previous posts where I've expounded on these additional walls of worry:

• IMMIGRATION BACKLASH:  We're putting out a "foreigners not welcome" sign in the name of national security.  We're forgetting the very unique, secret ingredient that made America the most powerful nation in the world.
• TRADE WAR SABRE-RATTLING:  Some members of our Congress  are threatening 27% tariffs on trade with China, one of the key components of the "Margin Surplus" production chain outlined by Andy above.
• CREAKY PATENT SYSTEM:  The Patent Process has gone amok, where the main windfall from intellectual property accrues to smart and quick lawyers rather than people and companies who actually convert ideas into market-leading products and services.
• BROADBAND OLIGOPOLIES:  Congress continues to give more and more power to the oligopolies who control the deployment of both wired and wireless broadband, be they from the cable, telco and/or cellular industries.  Local and State governments are also guilty here, beholden as many of them are to lobbying clout of the large oligopolists.
• MAINTAIN MYTH OF SPECTRUM SCARCITY:  In an age where technologies are eroding the very need to think of spectrum as a scarce commodity, our regulators continue to maintain a system that is holding back a whole lot of innovative products and services, not to mention new companies and jobs.
• GOING OVERBOARD ON DIGITAL COPYRIGHT PROTECTION:  We've lost the balance between protecting copyrights and intellectual property, and allowing for not just fair use, but innovation built on prior innovation and creativity.  Again, there are moves afoot in both houses in Congress to extend these protections to the point of hampering the very digital innovation that fuels the iPod-driven "Margin Surplus" that Andy applauds.

This is not meant to be a comprehensive list, but are some of the reasons why Wile E. Coyote may not have the jet pack work for him again this time.

 

ON GATES IN VIETNAM AND BEYOND

WHO'D HAVE THUNK?

The picture tells the story almost as well as the New York Times story that it accompanies.  Titled "Communist Vietnam Lunges for Capitalism's Brass Ring", it tells the story of how far Vietnam has come.  Here's how the article begins:

"HANOI, Vietnam, April 26 — It was Lenin's birthday. The most important Communist Party meeting in five years was under way. And the star of the show was the world's most famous capitalist, Bill Gates.

The president, the prime minister and the deputy prime minister all excused themselves from the party meeting on Saturday to have their pictures taken with Mr. Gates, who has more star power in Vietnam than any of them.

When people heard he was in town, hundreds climbed trees and pushed through police lines to get a glimpse of him. He was the subject of the lead article in the next day's newspapers."

A country of 83 million people, 31 years after the end of the war with the US, the article describes the evolution underway there as follows:

"It is 20 years since Vietnam, still struggling in the aftermath of war, began a sort of perestroika that has moved it from a strict planned economy to the more helter-skelter mechanisms of the marketplace."

It's been a long road indeed from this picture (via Corante) to the one above.

It's an article worth reading in it's entirety, not only for understanding the present in the context of the past, but for understanding what the present might look like in the future.

And the present I'm referring to today?  Iran, Iraq, North Korea are some of the places that might look very different in a few decades, despite our relations with them today.

Who knows?  In a few decades, there may yet be crowds of kids in the capitals of some of these countries with pictures of Larry and Sergey, along of course with Bill.

ON PLACING ADS IN GAMES & VIRTUAL WORLDS (MSFT)

SELL THEM WHERE THEY ARE

(Update:  It's official.  In a press release dated May 4, 2006, Microsoft announces the acquisition of Massive Inc.)

Speaking of games and virtual worlds over the last few days (see here and here), I thought it relevant to highlight this little acquisition by Microsoft today, from the Wall Street Journal:

"Microsoft Corp. plans to acquire Massive Inc., a closely held start-up that places ads in videogames, in a deal that highlights the growing flow of advertising into nontraditional media.

Massive, a two-year-old start-up with 80 employees, is one of several companies pioneering the business of placing ads in videogames. Massive's clients include Coca-Cola Co., Honda Motor Co. and other advertisers that are gradually increasing their spending on ads in videogames.

Microsoft plans to announce next week an agreement to buy the New York company, said people familiar with the situation. People familiar with the matter estimated the deal to be valued at $200 million to $400 million."

The article goes on to point out other more or less similar acquisitions like this one by other incumbent media companies:

"Major media companies have similarly begun to increase their investments in game-related media to ensure they stay abreast of consumers' tastes.

This week, Viacom Inc. paid $102 million to acquire Xfire Inc., a start-up that operates an instant-messaging service that connects gamers over the Internet.

Last September, News Corp. agreed to pay $650 million to acquire IGN Entertainment Inc., a company that operates a collection of Web sites for game enthusiasts."

This is not a slam-dunk business, even though on the surface, the thought of putting ads in front of millions of mainstream folks, riveted for hours on end in virtual worlds, may be of some appeal to advertisers. 

Often the ads and game genres don't mix, as this bit from the article points out:

"Online videogame provider NCsoft is unsure whether advertisements for modern goods will work in its games, some of which are set in the distant past (such as medieval times) and the future, says Dorothy Ferguson, an NCsoft vice president."

But these are barely speed bumps.  Given that massive attention is shifting over time to folks living "virtual lives", creative solutions to these kinds of issues are likely just around the corner.

ON WORLD OF WARCRAFT NETWORK PROBLEMS

CRAWL BEFORE THE WALK

CNET has an interesting story titled "World of Warcraft battles server problems".  Specifically,

"With 6 million subscribers, each of whom pays $15 a month, Blizzard Entertainment's online game "World of Warcraft" has become a billion-dollar enterprise.

Now comes the hard part: Making sure WoW is always up and running. Some players are angered by ongoing server problems that have led the game to crash without warning while they were playing. Complaints have also surfaced about long lag times and frustrating waits to even play."

The reason this is of interest?  Well, WoW represents by far the largest massively multi-player game out there, with hundreds of thousands of subscribers playing concurrently at any given time.  And why is that important?

Well, if we're to see the Internet evolve to a 3--D graphical user-interface using Avatars, and virtual worlds as the underlying online "operating sysem", (as discussed in my post "On Virtual Worlds going Mainstream", a few days ago), we'll need to learn all we can about scaling to millions of users being online at the same time. 

And it needs to happen reliably and efficiently.

As the CNET article describes it,

"WoW is what is known as a "sharded" online game. That means the game's many players are divided up among a large number of servers, or "shards," because no individual server could handle the full player base. This is common in the online games space."

We're really at the early stages of learning how to scale these kinds of virtual worlds. Here's hoping WoW can work through the server problems.

ON UNDERSTANDING MYSPACE'S PAGE VIEWS

A WHOLE LOTTA NOTHIN' GOING ON?

In yesterday's post, I mentioned how MySpace seems to focus more on monetization of it's large number of page views and less on enhancing it's site for it's users.  Today Techdirt has an interesting piece that offers a different way to look at the MySpace page views:

"Several months ago, we noted that something wasn't adding up when it came to MySpace. Ostensibly they are one of the most viewed sites on the internet, yet their ability to pull in revenues seems almost pitifully poor.

This became the subject of much chatter this weekend, as The New York Times pondered the same question.  According to one web designer, at issue is the MySpace's design, which produces a large number of extra page views each time a user accesses the site.

With a superior interface, the user might get the same experience with a third (or less) page views. Advertisers understand that a lot of the page views are redundant, thus explaining why they're not will to pay too much for ad impressions -- giving MySpace a reported 10-cent average CPM. What isn't clear is whether the company would be better off improving the site's usability.

Undoubtedly they'd improve their CPM, but it might be at the expense of their stature as a top-ten internet destination -- something that's helped fuel a lot of their hype. Some publishers have openly stated that they won't adopt more efficient design techniques, out of fear of reducing their ad impressions, and thus revenues.

Ultimately, this seems like a bad strategy. Nobody likes a cab driver that takes the scenic route, just to drive up the fare. Eventually, people will gravitate to sites with superior usability. It's better to become one of those, than to foist bogus page views on the users and advertisers.

I'm sure MySpace is concerned and focused on enhancing the experience for it's users.  However, the Techdirt piece offers another way to evaluate the current design of the site.

ON SAYING GOODBYE AND THANKS TO RUSSELL BEATTIE

ADIOS, AMIGO

Well, Russell Beattie is doing what I've thought about doing semi-seriously for the past few weeks.  He's shutting down his popular, relevant, and "will-be-most-missed" blog.

This after "...four years and almost 3,000 posts", as he puts it, punctuating his post with the picture of a wound-up Moleskine notebook.  He's got good taste.

His regular input on things wireless, mobile, gadgets, and other tech issues small and large, will be missed. 

I did a search on Russell's name on my blog and as expected, found that I've commented often on things he's brought up in his posts over the years. 

There were times I was in emphatic agreement (here and here), and at times not (here and here).  In fact, the last two resulted in two permanent categories that I still use on this blog (Thriller and "Russell's Web 2.0 Rant Rebuttal". 

But that's the sort of reaction Russell provoked in otherwise content folks.  He got you to react more often than not, whether you agreed with him or not.  That's one of the things that makes a good Blogger in my book.

As someone who also attempts to be relevant daily on a blog (although with a far different scale of readership), I appreciate the costs of maintaining one, even when it's just a hobby and a labor of love.  Thus like many bloggers, Russell, I empathize with your decision.

So again, Good luck and Good-bye, Russell.  Hope you still give us your input on issues of the day via comments on various blogs. 

And again, thanks for making tech blogs richer over the past four years.

ON FINDING EXPLOSIVE BUSINESS MODELS IN UGC (GOOG, TWX, YHOO)

JUST CLOSE YOUR EYES AND BUY ALREADY

Another day, another breathlessly told story about MySpace, this time by Saul Hansell in the New York Times.  It's the lead story in the Sunday Business section of the paper. 

MySpace as most readers know, has rapidly become a poster-child of UGC (user-generated content), driven by the coveted younger demographic.

It's worth reading if you're curious not just about the faddish focus on MySpace by the mainstream media, but about how other internet companies are reacting to MySpace itself. (see Paul Kedrosky's pithy post on the media feeding frenzy on this company)

I had a number of reactions to the article, which I'll try and flesh out in this post.

1.  WHAT ABOUT THE USERS?  In a 3143 word article, most of the focus seems to be on how the MySpace founders, Intermix, it's previous owner, and News Corp/Fox, it's current owner, are obsessively focused on monetizing the mushrooming site's user metrics, through all types of advertising and marketing schemes.  Very little in the article about how to better serve the needs of it's 70 million registered users and/or it's core demographic, highlighted by this CNET article:

"MySpace -- the explosively popular social network site owned by News Corp (NWS) -- represents the generation Y consumer -- those born between 1981 and 1995. At 57 million strong, this demographic is the largest consumer group in the history of the U.S., according to OnPoint. See OnPoint site.

In other words, MySpace, which saw 36 million unique visitors in March and 19.6 billion page views, can drive consumption habits across the Web."

One wonders what one of the ardent users might think reading the article...especially quotes like the following from Fox suit Ross Levinsohn,

"We have some very aggressive goals on how to build this thing into a real contributor to News Corp. financially," Mr. Levinsohn said last month. Mr. Murdoch, he added, "is focused on that, and he rightfully holds my feet to the fire."

Not that there's anything wrong with monetizing the site, especially, in the spirit of striking while the iron's hot.  As this graphic shows from the piece, MySpace's metrics are only number two to Yahoo! as of last month.

But the graphic reminds me of a small pot of water brought to a boil.  After all, Yahoo! and AOL (part of Time Warner), both cater to mainstream, larger audiences worldwide, and not just the young people demographic.

Certainly, the folks in charge of MySpace are all too aware of the consequences of NOT striking while the iron is hot, as the article points out:

"In some ways, MySpace has assumed the role America Online held a decade ago when it introduced e-mail services and Internet chat to the masses. But AOL's example is a cautionary one. For many reasons, largely its failure to keep up with trends, AOL lost its place in the social lives of young people."

But the argument can still be made that these are early days for the service, and bringing the advertising/marketing to a boil too soon may irrevocably spoil the broth.

2.  DEBATING THE QUALITY OF THE TRAFFIC.  The article highlights another difference between MySpace and the mainstream portals like Yahoo!, MSN and Google.  Clickety Clack, a blog online advertising, puts this in context:

"The article gives a great example of MySpace's poor traffic quality when it describes Google/Yahoo's lack of interest in distributing contextual listings on MySpace.com.   However,  the NYTimes softens this by implying that Google's lack of advertiser s is the issue:

The answer he received was a shock. Not one of them, not even the mighty Google, was sure that it could provide enough advertisements to fill all the pages that MySpace displays each day, Mr. Levinsohn said. The search companies did not want to dilute their networks with so many ads for MySpace users, whom they said were not the best prospects for most marketing because they use MySpace for socializing, not buying.

The first part of the quote can be translated to mean that there are no advertisers that will be happy with the performance of MySpace traffic (Adsense advertisers expect a certain level of performance from Google).  When Google goes out to find and test more distribution partners, they look for good click through rate traffic with good performance (meaning that the traffic converts for advertiser). "

For those with long memories, this evokes some deja vu going back a decade, when first AOL and then Yahoo! tried, with mixed success, to sell community and chat areas dominated by younger users, to mainstream advertisers.

This debate is going on not just for MySpace, but also for YouTube, which is the current leader in show-casing user-generated videos.  And it's also struggling with how to attract mainstream advertisers when there are no guarantees on the quality and content of what user's put up. 

A CNET article today describes quoting Paul Heberger, advertising director at eBaum World, a leading uploading site:

"The problem is advertisers want it both ways," Heberger said. "They want to be in front of that 18 to 34, but they don't want to be associated with much of what that demographic finds entertaining."

Well said...he could just as well have been talking about MySpace.  While sites like MySpace and YouTube are striving for their explosive business models, advertisers are concerned about keeping explosive issues from their businesses. 

The CNET article gives an anecdotal example:

"Yet, one video featured on eBaum's World Thursday showed a multi-car crash on an icy road. As cars continue to slide into each other, up comes a banner ad for Bridgestone tires."

3.  GOOGLE BEING SMART?  Not to read too much into Google demurring, part of the reason may be that Google doesn't want to do for MySpace what AOL, Yahoo! and Microsoft did for Google.  And that is make MySpace a successful competitor in the long-term, even though there may be short term merit to working with them today.  As I've pointed out in a previous post:

"In fact, in the last decade (late nineties), Microsoft, AOL and Yahoo! collectively gave away the search store to a start up called Google, by using Google's search engine for their search services, while ALLOWING Google to build-up a separately branded, relatively open platform of their own. "

It's the issue eBay is struggling with today, weighing the short-term benefits to it's business model from Google's advertising distribution with the long-term near-certainty of parts of Google competing with it's core businesses.

The probable answer here is that sites like MySpace and YouTube will find their advertising footing as they craft and optimize their business models.  But it's likely to be a slower, more tentative ramp as both advertisers and the users of these sites come to better terms with each other.

Both articles are good Sunday reading though, if you want to ponder the big issues facing online media.