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Linkbait, Content Farming and Advertorial: Welcome To New Media (Circa 1842)
I’m in the middle of reading Michael Slater’s biography of Charles Dickens, and it’s excellent (if a little fawning).
Given that I grew up just a few miles from the Medway town where Dickens spent his childhood, it’s pretty embarrassing how little I knew about the 19th century’s greatest British author. And given my obsession with copyright law, it’s equally shameful that, until reading Slater’s book, I knew nothing of his campaign for an International copyright treaty.
The campaign was well-meaning, but essentially self-interested: Dickens held the UK copyright of his famous works – like the Pickwick Papers and Oliver Twist – but, in the USA (where Dickens was also hugely popular), publishers were free to steal his work and characters and republish them in books, newspapers and periodicals without paying royalties.
In 1842, the 30-year-old Dickens took his first trip to the USA to research a book about the former British colony (spoiler: as a world-famous champion of human rights, he wasn’t hugely impressed by slavery). While there, he took the opportunity to lecture Americans, and the American press, about the importance of international copyright. Given today’s insistence by that same press that journalists should be paid for their work, not to mention their bleating over content farms aggregating their features, you’d assume that American newspapers would have rallied to his cause.
Not quite.
After hearing Dickens’ lecture on copyright, the Hartford Times insisted that “we want no advice on this matter, and it will be better for Mr Dickens if he refrains from introducing [it] hereafter”, while the Boston Morning Post recommended: “You must drop that, Charlie, or you will be dished; it smells of the shop – rank.”
A few weeks later, the anti-Dickens feeling in the press had turned personal. The (Philadelphia) Spirit of the Times put the ad into ad-hominem by noting of Dickens that “his rather yellowed teeth shewed that he did not avail himself of Teaberry Tooth Wash.” Interestingly that same Teaberry Tooth Wash was a valued advertiser in the Spirit of the Times.
Few people who write about technology have more love for old school newspapers than me; and there have been few more vocal advocates on the importance of copyright in the digital age. But next time I hear newspaper publishers complaining about how the Internet is killing their business, I’m going to remember, with a smile, that 170 years ago the fledgling newspaper industry saw nothing wrong with aggregating the work of successful authors without payment, while writing reader-baiting articles with the sole purpose of embedding advertisements.
Or put another way: 170 years ago, American newspapers were Aol.
Don’t Be Fooled By Vanity Metrics
Startups love to point to big growth numbers, and the press loves to publish them. We are as guilty as anyone else in this regard: one million downloads, 10 million registered users, 200 million tweets per day. These growth metrics can often be signs of traction (which is why we report them), but just as often they are not. It is important to distinguish between real metrics and what Lean Startup guru Eric Ries calls vanity metrics.
Vanity metrics are things like registered users, downloads, and raw pageviews. They are easily manipulated, and do not necessarily correlate to the numbers that really matter: active users, engagement, the cost of getting new customers, and ultimately revenues and profits. The latter are more actionable metrics. As First Round Capital’s Josh Kopelman recently advised on Founder Office Hours, “The real data is retention and repeat usage.” Startups that focus on the real metrics can make their products better, attract more customers, and make them happier.
It is important for startups to properly instrument the data they track so that they can get a handle on the true health of their business. If they track only the vanity metrics, they can get a false sense of success. Just because a startup can produce a chart that is up and to the right does not mean it has a great business. A mobile apps could have millions of downloads but only a few hundred thousand active users, or a freemium website might see exploding traffic growth but barely any conversions to paying users.
Many startups, of course, track one set of numbers internally and selectively share another set of vanity numbers externally with the press. The worst is when startups try to pitch us with raw growth numbers (we are up 400%), but without any context (400% from what, 1,000 users or 100,000?). We always ask for more meaningful numbers, but those are not always forthcoming.
The vanity metrics aren’t completely useless, just don’t be fooled by them. There are ways to back into real numbers from the vanity metrics. VC Fred Wilson blogged today about his 30/10/10 rule: 30 percent of downloads or registered users are active once a month, 10 percent are active once a day, and 10 percent of the daily users will be the maximum number of concurrent users. These are the patterns he is seeing in his portfolio companies and the startups pitching him.
Startups would be better off, however, reporting real metrics from the start. Vanity metrics can catch up to them, especially if those numbers do not correspond to the real numbers. Facebook is a great example of a company that focuses on the right numbers. Even in its college-only days, it would always talk about daily active users (the users who come back every day) and how fast it took them to take over a particular campus. If more startups would measure and share the right metrics from the start, the rest of us would focus on them too.
Photo credit: Skye Suicide
Technology Is The New Smoking
We’ve all been there; You’re at an outing or a dinner table with friends but itching to check your email or Facebook or Twitter or Instagram or Google+ or Yammer or what ever digital hit of serotonin you prefer. Have you ever “gone to the bathroom” in order to check email or come up with a socially appropriate excuse to pull out your smartphone just so you can check your @ replies on Twitter?
Remember when the critical mass of smokers used to leave the table or meeting in groups to go indulge their habit? I straight up open my laptop at bars and parties, and then feel more guilty about that than drinking.
A new British study released today backs up what we otherwise know intuitively, that Internet usage is increasingly becoming an addiction. Out of 1000 people surveyed after being cut off from the Internet for 24 hours, 53% reported feeling “upset” about being deprived of online access and 40% said that they felt lonely after not being able to connect to the Internet. Participants described the digital detox akin to quitting drinking or smoking and one even said it was like having his hand chopped off (!).
This British survey comes after a University of Maryland study in April that came to pretty much the same conclusion — With one student saying that she was “itching like a crackhead” after abstaining from any form of media for 24 hours. Geez.
Add this insight to the yet un-proven concerns that smartphone usage leads to Cancer and the smoking analogy becomes more and more apt (see image left). But for the moment Googling the name of a movie you can’t remember is hands down a lot healthier than smoking an actual cigarette, at least physically. For the moment.
PayPal VP: Supporting Payments In The Physical World Is Critical For PayPal
eBay owned PayPal has been making some interesting acquisitions over the past few months that clearly show the direction of the company in capturing payments flow from digital goods, and physical products at a local level. The company bought local payments and advertising company Where for over $100 million in April, snapped up mobile payments company Fig Card and most recently shelled out $240 million for mobile payments company Zong. The payments giant is clearly serious about mobile and local payments and is buying its way into commanding the space. In terms of future strategy, PayPal believes that by 2015 digital currency will be accepted everywhere in the U.S., from local businesses to large chains.
Of course, this ambitious goal is easier said than done. Considering that PayPal is a digital product and doesn’t have built in reach to local businesses with point of sale systems, scaling to the local level is going to take a significant amount of work. We were able to chat with Sam Shrauger, VP of global product and strategy for PayPal about the company’s future strategy to dominate the ‘digital wallet.’
Shrauger tells us that PayPal’s plan is less about making the wallet digital and more about letting people take advantage of technology to use money better. As for making this a reality, Shrauger says that letting people use PayPal in the physical world is critical for the payments technology.
He explains that innovating in the payments space in the physical world is about giving customers mor options to pay, as opposed to offering a single technology. PayPal wants to add more ways your money can work for you, beyond just the payment itself. As for what that means, Shrauger declined the reveal the company’s plans but did say that PayPal would be launching new products later this year dealing with this issue.
There are two advantates PayPal has in its favor. First, the company now has over 100 million active users, which is impressive. And second, the company’s userbase is increasingly using mobile devices to pay for products. PayPal recently announced that it was upping the estimates of the amount of mobile payments transactions using the technology this year; doubling the estimate to $3 billion in mobile total payments volume (TPV) in 2011.
Payments in the physical world is going to be a big step for PayPal and I’m very curious how the company is planning to use its technology in this expansion. For Google, NFC and mobile phones are part of the gateway for payments in local, with the launch of Google Wallet. For Square, small businesses popularity and ease of use have been helping the mobile payments startup grow like crazy.
It’s not the first time I’ve pointed out that PayPal has an ambitious plan on its hands by becoming the digital wallet. And it should be interesting to see what killer technology the company has up its sleeve later this year.
Check out this video below in which PayPal President Scott Thompson challenges his employees to use only digital currency to pay for all of their purchases.
