from MediaFile:
Instagram’s Facebook filter
The startup had millions of users, but, from the beginning, just one customer.
The predominant way of interpreting Facebook’s billion-dollar purchase of Instagram, in light of the social-networking giant's forthcoming IPO, is that Mark Zuckerberg had to pick up the photo-sharing app to boost his company’s mobile engagement. That would allow him to guard the mobile flank against incursions from Google, Twitter, and whatever other social-media tools might next arise.
That may be true – and it may even be the way Zuck thought about the deal when he swallowed hard and ponied up the purchase price. But that way of analyzing Facebook’s pickup, and the pickup of dozens of other startups, not just by Facebook but by Google, Twitter, LinkedIn and others, is probably not telling the whole story. Here’s a different theory, one that better describes the tech world that we, the users of the Internet, now inhabit: Instagram may have had millions of us as its users, but it was really built for just one customer: Facebook.
Silicon Valley, for too long, has confused the issue of what it means to be a user of a website, service or app, and what it means to be a customer of the app. Intuitively, you’d think they would be one and the same: The person using the app is the person consuming the app. But increasingly, apps are being made to grab the attention of the hegemonic companies in tech. Whatever it takes to get bought.
Sure, startup CEOs are careful to refer to their user bases as just that – users – but even when money changes hands, those users are cattle to be herded toward a cell on a venture capitalist’s spreadsheet, to help the VC decide whether to fund another pivot, engineering acquisition, rack of servers, whatever. Users are just another dart, basically, that startups have to hurl at the bull's-eye and ensure success.
A colleague of mine tells a story: You can tell when a tractor was made to be purchased by a farmer, and you can tell when a tractor was made to be purchased by a corporation to be used by its employees. Tractors whose users are also the customers come equipped with every convenience, from a satellite radio to Wi-Fi to all the cupholders a farmer could dream of. They drive well, and their controls are intuitive, because that’s what the average tractor driver wants, and what the tractor competition provides. Tractors bought by companies, for earthmoving, rock breaking and the like, come equipped with nothing but a hard seat and a prayer. Employees – mere users – don’t get any say on the amenities, or lack thereof.
Morgan Stanley’s Facebook curse
As Morgan Stanley’s retail force is learning, it’s hard being the anointed one. To most of the world, Morgan Stanley got the plum job of lead manager for the most important public stock offering since Google in 2004. But among the retail sales force at the firm, the Facebook Blessing might as well be known as the Facebook Curse.
The refrain from Morgan Stanley’s rank and file: The IPO of the decade is a lose-lose proposition. That’s because retail investors as well as smaller institutions are likely to be disappointed with their Facebook allotment. Institutional players know how things roll, but for the retail brokerage force, the situation is particularly vexing. Many clients assume that because it is a lead underwriter, Morgan Stanley brokers are on the inside track. That’s true, but means less on a popular IPO like Facebook’s. Financial advisers in the lead group, which also includes Goldman Sachs and JPMorgan, do have an edge over the 30 other investment banks tasked with distributing shares. But it’s not much of an advantage. Global demand for the $11 billion in shares appears to be much bigger than the deal itself. Institutional salespeople at Morgan Stanley are already warning clients that they expect the deal to be 20 times oversubscribed, one source explained to me.
It’s always been the case that only a thin sliver of retail investors would be able to get hot IPO shares. They were typically high-net-worth clients who reliably invest in every single IPO that would come their way – hot or not. Shakier deals, of course, were always available to retail clients. In its heyday, Lehman Brothers brokers used to say that some of the mediocre IPOs they pushed were from the “institutional waste basket.”
Over time, retail investors have been even less likely to win any meaningful amounts of shares in hot IPOs. That’s in part because fewer companies are going public. Meanwhile, institutional investors have grown bigger and bigger – which means that they need a bigger slice of a new issue if it is to have any impact on portfolio performance. The most recent super-hot, social-media IPO, LinkedIn, went to a remarkably few number of institutions, my sources tell me.
These facts don’t do much for morale at Morgan Stanley, which announced earlier this year that advisers who have produced less than $500,000 per year in gross commissions would not get any shares in IPOs – that is, they don’t get to share in the syndicate for Facebook. That was just before Facebook announced its plans to go public. Talk about timing. Morgan Stanley’s joint venture with Smith Barney has not been the smoothest; adviser count has dropped 5 percent in the past year; this year alone, the firm lost at least 87 advisers who managed about $7.2 billion in assets. The Facebook deal is adding oil to that simmering fire. One broker at another wirehouse told me disaffected Morgan Stanley clients have announced that they will move their accounts to him if they don’t get any Facebook shares.
Meanwhile, another Morgan Stanley broker complained to me that even marginal clients are trying to ingratiate themselves with him in the mistaken belief that they can get a piece of the Facebook IPO from him. The joke’s on them. He doesn’t expect to get any shares. Even big producers who are confident that they can get some shares are bracing for flak because they are unlikely to get enough to satisfy client demand. Some are hoping that the firm will bend some rules by factoring in client account sizes, not just broker gross commissions, as a basis for handing out the prizes. This would widen distribution to large clients whose brokers aren’t usually part of the syndicate group.
from Paul Smalera:
What real Internet censorship looks like
Lately Internet users in the U.S. have been worried about censorship, copyright legalities and data privacy. Between Twitter’s new censorship policy, the global protests over SOPA/PIPA and ACTA and the outrage over Apple’s iOS allowing apps like Path to access the address book without prior approval, these fears have certainly seemed warranted. But we should also remember that Internet users around the world face far more insidious limitations and intrusions on their Internet usage -- practices, in fact, that would horrify the average American.
Sadly, most of the rest of the world has come to accept censorship as a necessary evil. Although I recently argued that Twitter’s censorship policy at least had the benefit of transparency, it’s still an unfortunate cost of doing global business for a company born and bred with the freedoms of the United States, and founded by tech pioneers whose opportunities and creativity stem directly from our Constitution. Yet by the standards of dictatorial regimes, Internet users in countries like China, Syria and Iran should consider themselves lucky if Twitter’s relatively modest censorship program actually keeps those countries’ governments from shutting down the service. As we are seeing around the world, chances are, unfortunately, it won’t.
Consider the freedoms -- or lack thereof -- Internet users have in Iran. Since this past week, some 30 million Iranian users have been without Internet service thanks to that country’s blocking of the SSL protocol, right at the time of its parliamentary elections. SSL is what turns “http” -- the basic way we access the Web -- into “https”, which Gmail, your bank, your credit card company and thousands of other services use to secure data. SSL provides data encryption so that only each end point -- your browser and the Web server you’re logging into -- can decrypt and access the data contained therein.
By blocking SSL, Iran has crippled Tor, a program that enables Internet users to anonymize not just their content but their physical location as well. Tor is a very common workaround for users in totalitarian regimes to access Twitter, Gmail, Facebook and other services. It’s hard to come up with an apt analogy for Iran’s unprecedented blockage -- it’s not just that the letters you send are read by the Post Office and photocopied for their records, it’s that the Post Roads themselves have been closed off, so you can’t even send a letter in the first place. That’s the net effect of blocking SSL in Iran.
The hacking group Anonymous has brought down all kinds of websites in protest, mostly over copyright, in the U.S. and Europe. I don’t advocate their targeting any country’s servers for retribution, but where is the outrage or public demonstration or media attention over the denials of Iranians’ basic freedoms to communicate, via the Internet?
Unfortunately, it’s still too easy for Internet companies and even the Internet’s founding fathers to dismiss the importance of the tools they created in fostering free and open public dialogue, especially in places like Iran. Recently, legendary engineer and Google Vice-President Vint Cerf published a New York Times op-ed entitled “Internet Access is Not a Human Right,” where he wrote: “Internet access is always just a tool for obtaining something else more important.” How wrong he is. Cerf’s line of thinking eviscerates the Internet -- the wonder of the modern world he helped build. Cerf argues that humans have the right to “lead healthy, meaningful lives,” including having “freedom from torture or freedom of conscience.” Yet, we live in the 21st century: It’s hard to see how, among people whose economies are developed enough to afford them communication devices, Cerf would excuse governments that curtail their citizens’ freedom and right to use the ultimate communications tool -- the global network of the Internet. In fact, in underdeveloped parts of the world, the cost to have a cell phone that connects to the Web can be quite affordable.
I’m not arguing semantics here -- if our society excludes the Internet from the fundamental rights of human communication, we also excuse totalitarian regimes like Iran’s from any repercussions when it comes to blocking that avenue of human contact. It’s a dangerous compromise to make in a world that only gets more digital with each passing day. And it also conveniently excuses the free world from having to do much of anything about it. We wouldn’t forgive Iran if it threw 30 million citizens into solitary confinement -- so why would we ignore it when the Iranian government effectively cuts the entire population off from the outside world, to stifle their voices during a critical electoral cycle?
The example of Iran is well taken in this article, but I would like to add one: I lived and taught in Zhuhai, China, from August 2007 to July 2009. As an expatriate, I didn’t seem to have my computer monitored and censored very much, but my students at United International College surely did.
We take our freedoms for granted. I don’t any more. I know what it is like to live in a country where “freedom of expression” is a sham. We shouldn’t let that happen here, which doesn’t mean condoning criminal activities on the net, but it does mean a conscious guarding of freedom of speech.
from Paul Smalera:
The piracy of online privacy
Online privacy doesn’t exist. It was lost years ago. And not only was it taken, we’ve all already gotten used to it. Loss of privacy is a fundamental tradeoff at the very core of social networking. Our privacy has been taken in service of the social tools we so crave and suddenly cannot live without. If not for the piracy of privacy, Facebook wouldn’t exist. Nor would Twitter. Nor even would Gmail, Foursquare, Groupon, Zynga, etc.
And yet people keep fretting about losing what’s already gone. This week, like most others of the past decade, has brought fresh new outrages for privacy advocates. Google, which a few weeks ago changed its privacy policy to allow the company to share your personal data across as many as 60 of its products, was again castigated this week for the changes. Except this time, the shouts came in the form of a lawsuit. The Electronic Privacy Information Center sued the FTC to compel it to block Google’s changes, saying they violated a privacy agreement Google signed less than a year ago.
Elsewhere, social photography app Path was caught storing users’ entire iPhone address books on their servers and have issued a red-faced apology. (The lesser-known app Hipster committed the same sin and also offered a mea culpa.) And Facebook’s IPO has brought fresh concerns that Mark Zuckerberg will find creative new ways to leverage user data into ever more desirable revenue-generating products.
This is the way we’re private now. It’s ludicrous for anyone who loves the Internet to expect otherwise. How else are these services supposed to exist -- let alone make any money? Theft or misuse of private user data is a crime, certainly. But no social web app -- not one -- can work without intense analytics performed on the huge data sets that users provide to them voluntarily (you did read the terms of service agreement...right?).
And the issue compounds when people connect one site to another. By linking their Twitter to their Facebook to their Google+ to their Foursquare to their Zynga to their Instagram to their iOS, users are consolidating their lives, and in the process making them more attractive to marketers. While Facebook, Twitter and other services have made attempts to warn users about hitting the “connect” button, many of us hit that button with reckless abandon, without a thought of who’s slavering on the other side.
The reason social media and digital information companies want that data is because of what we refuse to give them: money. No one wants to pay for the privilege of chatting with their friends or using a coupon, and to this day, no one has to: Go ahead, ring their doorbell or pick up the free coupon book from your front stoop. But if you want to chat using Facebook or Gmail, or you want to buy a groupon for an 80 percent-off Botox service, you will have to tell those companies who you are. And those companies will use that information to tailor their offerings to you, increasing your value as a user and a customer. They will slice their data sets into a million different pieces and show those pieces to people -- advertisers -- who will pay them money for the privilege of using their service. They’ll use it to get to you.
This is an update on an old media model. Magazines and newspapers for decades could only guess at the readership of their product and the demographic of their customers. But now social and new media demand to -- and can -- know exactly who you are before they agree to let you use their free services. Even email newsletter services like the increasingly hot Thrillist -- which might innocuously start you on their service by asking only for your simple email address -- deploy click trackers, pixel trackers and other online data-gathering techniques to start to put together a picture of you as a user, both individually and in aggregate. A deceased magazine like Spy could only dream of that kind of intel.
It is utter rubbish to claim that we cannot have a better internet than the one we have right now. Most users simply do not really understand what and how much they have given up. And what has been given up unknowingly can be reclaimed. That is what laws are for.
Europe has a much better system, and much more privacy. And we can improve on that, without wrecking the essentials of the internet.
from Paul Smalera:
Facebook.coop
Facebook shouldn't pay its users. Its users should pay to own Facebook.
“Facebook was not originally created to be a company,” founder Mark Zuckerberg wrote in his letter to investors announcing the IPO of his already hugely successful and profitable company. “It was built to accomplish a social mission — to make the world more open and connected.”
Facebook has succeeded wildly, despite internal admonitions that its “journey” is only 1 percent finished. Journalists have latched onto Zuckerberg’s statement that Facebook wants to “rewire” the way the world works. In a world of thousands of self-anointed “social media experts,” only Zuckerberg can claim to have basically invented what the world thinks of as social media. He has etched himself into the timeline of human innovation.
Pity then, that Zuckerberg hasn’t turned his talents or attention toward Facebook’s financial underpinnings. After all, an IPO? How ho-hum can he get? If Mark really wants to accomplish his social mission with Facebook, he should share the company’s ownership with the people who helped him create it. Not just his Harvard contemporaries. Not just the programmers. Not even just the venture capitalists.
I’m talking about us. All of us. The users. Facebook should be a user-owned, user-managed company, run for the benefit of users. For the Facebook, by the Facebook. The company should be a cooperative.
Before I explain further, let me lay out the case in four simple points:
For what it’s worth, the largest co-operative in the world, The Co-operative Group, had £11.9 billion in revenue last year and has 6 million members.
Stopping the Stop Online Piracy Act
Now that Congress has hit pause on its controversial Stop Online Piracy Act and nearly every argument about the merits and failings of the piece of copyright legislation has been made, it’s a good time to ask: what, in 2012, will it take to actually stop a bill like this?
Because despite the delay, the situation still isn’t looking so hot for those looking to bring down SOPA. Amendments to tone down the bill’s more disliked points have been routinely defeated in the House Judiciary Committee by numbers sufficient to pass the bill to the full House floor.
But, at this point in the process, numbers aren’t everything. In the wake of the Arab Spring, talk of censoring technology hits the ears differently. More important is that in SOPA’s short two-month life, opposition to it has catalyzed online and off. But to succeed, its opponents will have to both boost the volume of their public alarm and convince Congress that, in an Internet-soaked 2012, questioning SOPA needn’t be politically fatal.
Washington isn’t the land of Luddites it once was. Members of Congress, of course, love their smartphones; Twitter, Facebook, and YouTube are political staples. (Twitter says just over 85 percent of representatives in each chamber are on the service.) But the challenge for SOPA’s opponents has been to demonstrate that the power and joys of Facebook and, say, SOPA’s questionable domain-name filtering policy are two parts of the same webby whole.
We’re seeing that understanding catalyze amazingly quickly—at least among web users. Starting with a small band of early objectors, resistance to SOPA has been spreading out, gathering steam, and popping up in all sorts of places. There’s been a tsunami of Twitter traffic against the bill, much of it tagged with the #SOPA hashtag. That chatter has driven blog posts, given journalists fodder, and provided constant commentary on Congress’s often convoluted and confusing proceedings.
And, notably, the bill has prodded the entrepreneurs who run some of the Internet’s best-known sites into creative acts of protest. The blogging site Tumblr mock-censored itself. The file-sharing site Scribd posted a SOPA button that, when clicked, disappeared documents. Wikipedia is considering a temporary block on access to its millions of entries. Beyond that, heaps of calls have been made to Congress, engineers have written letters, and SOPA-doubting editorials have been penned by such newspapers as the New York Times and the Los Angeles Times.
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from MediaFile:
Should you trust Facebook with your email?
- Michael Fertik is the CEO and Founder of ReputationDefender, the online privacy and reputation company. The views expressed are his own. -
Facebook already knows a massive amount about you. They know your age, what you look like, what you like, what you do for fun, where you go, what you eat, whom you know, whom you know well, whom you sleep with, who your best friends and family are, and, again, how old they are, what they like, and so on.
On top of that, Facebook has a well-known history of privacy breaches or at least snafus. Publicly they seem committed to the notion that privacy is dead. Their CEO and Founder has said as much.
Never mind that this view is not shared by the public, which is hungry for privacy in the digital age. And never mind that the “death of privacy” would serve exactly the interests of a digital media company. It seems that it may be an honestly held belief among top leadership of Facebook that privacy is and should be dead.
Now, Facebook is expanding its reach even further. It will be rolling out a unified, cross-platform messaging system that will combine features of email, SMS, and chat. The company will offer users @facebook.com email addresses. At first blush, there’s nothing altogether new about the development from a technical standpoint. Unified messaging has been a goal since the advent of disunified messaging—more or less since SMS, IM, and chat became comparably popular and used in parallel.
But a Facebook-based unified messaging system may offer different appeal and new risks, and not just because it can instantaneously distribute its feature set to its 500 million-plus user base.
It is impossible for a digital media company to care deeply about privacy. You are the only asset they have to sell. The promise of advertising in the Internet age is that the platform can connect a brand with the individual person most likely to buy. The only way that happens is through the collection and use of huge amounts of data about each of us, followed by the sale of access to the data or the person they describe.
Is social media losing its lure … and return on investment?
How do you know that social media is folded into the narrative of American life? Perhaps when people are being encouraged to give it up for a religious holiday.
Offlining Inc., a group of Silicon Valley types, is promoting the occasional break from social media and tech devices in general by blasting an ad showing Lindsay Lohan. The message: “You don’t have to be Jewish to make amends for your tweets on Yom Kippur.”
It’s a good idea — we could all use time off from our iPhones, not to mention Twitter, Facebook, et al. But Americans don’t actually spend that much time on social media. Which is good because the reason many people have embraced social media (which would be marketing) is turning out to have a lousy return on investment, if you consider the opportunity cost of time.
Certainly, the numbers of folks using social media is on the rise. Over 100 million people are on Twitter, and more than 500 million on Facebook. People keep guessing which will be the next big one: Foursquare? It’s got over 3 million users. Missed in these numbers is that most of us aren’t heavy users.
Nielsen recently released figures reporting that Americans spend 906 million hours per month on social media. That sounds like a lot, until you consider that there are 240 million of us online. That means Americans are logging less than 4 hours per month on social media, or less than 1 out of the 168 hours we have each week.
Of course, there are heavy users. Someone is sending the 50 million tweets per day that Twitter reports, and judging by the number of posts in my News Feed, plenty of people (like me) spend a lot of time on Facebook as well. Many are doing it solely for the social outlet. Or something.
With all due respect, Laura, your perspective seems to reflect a fundamental misunderstanding of how social networking platforms should be leveraged. Though they may have some (limited) value in generating sales, that should not be viewed as their primary purpose, especially for small and independently-owned businesses. As you noted (unwittingly perhaps) in your piece, their value is far greater with respect to general brand development and marketing. For example, though I don’t follow Dan Schwabel on Twitter or FB, and I’ve probably never read his blog (which reminds me: blogs are social media too … and so are book reviews), I certainly know who he his because of his strong digital presence.
Social media encompasses far more than the public social networking platforms (e.g., LinkedIn, Twitter, Facebook) that garner most of the media attention. Folks who want a richer understanding of Digital Era technologies are invited to read Part 1 of the Social Media Primer I’m developing, which can be accessed at http://www.sminorgs.net/social-media-pri mer.html.
It’s also important for folks to take a longer-term view of their social media investments and realize that trying to apply a linear metric to capture ROI may not be an appropriate way to measure success in the non-linear world of the Digital Era.
Courtney Hunt
Founder, Social Media in Organizations (SMinOrgs) Community
from The Great Debate UK:
Facebook group defends “harassed” BP
BP’s chief executive Tony Hayward branded “the most hated man in America” may be surprised to find himself cast in the role of victim by a growing clan of web-based supporters on Facebook.
One such group ‘Support BP’ calls itself the defender of an “undeservedly harassed institution” and seeks to show that the public opprobrium BP faces over its now 60-day-old Gulf of Mexico oil spill is not universal.
Members have been increasingly vocal since a succession of strong rebukes of BP by U.S. President Obama and lawmakers at Thursday’s congressional hearing, which they are calling a “lynch mob”.
The outburst of sympathy follows an apology to Hayward from Texas Republican Representative Joe Barton on Thursday, later withdrawn, for having to agree to a deal with President Obama to set up a $20 billion fund for Gulf claim damages.
Some of the Facebook posts echoed this same spirit of regret: “My apologies as an American to Tony Hayward for the rude and insulting conduct as well as the rush to judgement by U.S. politicians on 16/7,” wrote George Gray, 50, from Pennsylvania, referring to Thursday’s hearing.
The bulk of the group’s posts are written by Americans.
Are social media platforms the Jurassic Park of computing?
– Kevin Prince is chief technology officer of Perimeter E-Security. The views expressed are his own. –
Social Networks have grown out of control. Literally. Today, neither users nor social networking companies can control the monsters they have created. Think Jurassic Park: where John Hammond wanted to build something no one else had ever done, a fun theme park combined with a zoo of cloned dinosaurs. He built what he thought would be adequate security, but in reality, didn’t understand nearly enough about the environment he was trying to control. People naturally trusted that proper security was in place and that they would of course be safe. Quickly things spiral out of control, and nearly everyone gets eaten by the end of the movie.
The creators of social networking sites — yes all of them — are just like John Hammond. Their unique ideas caught on in such a viral way that just keeping up with the bandwidth, processing power, storage, development, and everything else required to keep the system online is an amazingly complex, never-ending task. For most of these sites, security is – and has always been – an afterthought. Some of them try, but it’s a bit like closing the amusement park gates after the Tyrannosaurus has bolted.
The users of social networking sites also contribute to the problem. Most are absolutely reckless when it comes to behavior on the sites. A while ago, I ran a social networking experiment on Facebook. I created a new user profile based on a free Google mail account. I chose the name Rebecca Johnson, made her 26, and used a profile picture of a three-year-old girl in a dress that I snagged from a department store website. No other information was in the profile. I wanted to see what would happen when I invited random strangers to be friends with this fictitious person.
Lucky for me, Facebook presents you with people it thinks you might know. Due to a lack of information in my profile, Facebook presented me with people of all ages that live in my county (obviously they were looking at my IP address and correlating that with my city). I of course knew none of these people but went ahead and invited them and others. In all, I invited 250 totally random people to be my friends. The only criteria I used: they had to have profile pictures. My logic: if you don’t have a profile picture, you’re probably not a serious or frequent user. Here’s a timetable of what happened next.
8:00am – Invite Friends 8:02am – My first friend accepts the invitation 9:00am – 6 Friends 10:00am – 12 Friends 3:00pm – 28 Friends
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