Internet Entrepreneurs Blog

I read a fascinating article today about Rupert Murdoch’s plans to charge for content on News Corp. websites within a year in a move that could start a much larger trend. Or it could totally backfire. Who knows.

A few choice quotes from the CNN.com article:

We are now in the midst of an epochal debate over the value of content and it is clear to many newspapers that the current model is malfunctioning.

Agreed, though these malfunctions aren’t for the reason you might assume (the death of print).

The people who are placing a low value on online content aren’t the readers - clearly they value content because they spend time consuming it - it’s actually the advertisers. If online ad revenues can’t support decent web content, it’s because advertisers haven’t recognized that’s where the eyeballs are. For years people said newspaper subscription sales just barely covered actual printing costs while ad sales covered everything else (paying reporters, etc.). By that logic, if print costs go to zero (online), shouldn’t subscriptions be free? Bottom line: major advertisers need to shift their budgets online and pay reasonable rates for display ads.

The current days of the Internet will soon be over.

Wow, that’s a bold statement but that’s what makes him Rupert Murdoch. The internet landscape is constantly shifting - who would have predicted that social networking would have stayed so hot for so long…

(Murdoch) said 360,000 people had downloaded an iPhone WSJ application in three weeks. Users would soon be made to pay “handsomely” for accessing WSJ content, he added.

Yikes, paying “handsomely” sounds a little evil. Then again, News Corp. is simply playing by the internet rules established thus far: entice a huge user base with free stuff, then (try to) start charging once they’re hooked. WSJ is a pretty big franchise with valuable content so I suspect they will be successful in monetizing mobile content. MySpace (another News Corp. brand), on the other hand, will probably have a difficult time convincing users to pay for content. Ever.

Only time will tell if “the current days of the internet days will soon be over”… stay tuned!

I prefer Office Max and to get to the nearest one I drive past a Kinko’s and an Office Depot. The prices are about the same but my Office Max has:

• Free coffee (though I don’t drink coffee myself, it’s nice to know it’s there)
• Free wi-fi and seating area with tables and chairs
• Free office supply usage (stapler, hole punch, scotch tape, scissors, etc.)
• Quick service - most times they make the copies while I wait

Another tip: sign up for the mailing list. It seems like I get 20% off print service coupons about once a month which is about how often I come in for $50+ print jobs.

Office Max has been a great asset to me as an entrepreneur running an online business and I can’t imagine what I’d do without it. I suppose I’d sooner buy a color laser printer and laminating machine myself than go to Kinko’s

Next week we’re heading to the annual cycling industry trade show to report for our mountain biking website and I thought I’d share this tip with you: trade shows are worthwhile, even for webmasters. Sure, the whole idea of a trade show where retailers place orders with manufacturers seems a bit antiquated what with telephones, email, the Internet, etc. but it’s still a great opportunity to build your online business while creating connections within your industry.

First things first: cost of attendance. Most industry trade show give out free ‘media passes’ to webmasters and even bloggers - in many cases all you need is a website and a business card. Part of the promise to trade show exhibitors is that they will get free media coverage so organizers are motivated to allow as many media representatives as possible into the show. Of course travel expenses can become cost prohibitive but often attending just a single day of a trade show is more than enough. If a trade show isn’t being held in your city, consider sending one of your local readers to report on the show.

Industry trade shows are also great sources of new content for your website or blog. The first time we attended an industry show we were overwhelmed with the number of stories we needed to report - literally a dozen or more for each day of the show. As a webmaster you’ll also be bombarded with press releases leading up to the show along with invitations to speak with company reps. Just be choosy about what you report, keeping in mind what your audience cares about the most.

Finally, trade shows offer an enormous opportunity to connect with industry players who may one day choose to become advertisers on your website. In meeting with company reps remember your conversation is as much about learning about new products and services as it is about introducing your online brand to industry insiders. Be sure to have plenty of business cards on hand and consider wearing a shirt with your web site logo as you walk the floor.

Industry trade shows aren’t just for pushy salesmen and hapless retailers any more - today bloggers and webmasters can gain a great deal by engaging in industry conversations. No matter what niche or industry your website represents, you’re sure to find a trade show worth attending to grow your online brand!

Since for many families Friday is movie night I thought I’d talk about one of my favorite internet-enabled companies: Netflix. Netflix delivers movies to customers through the mail under ongoing subscription plans starting at just $10 a month for one movie at a time. There are no late fees meaning customers can keep movies as long as they like and return shipping is included with each movie delivery.

Like most folks I used to rent movies from the local video store but I found the process frustrating - but not for the reasons you might think. In terms of convenience the video store can’t be beat: my last two homes were less than a mile from at least 3 or 4 Blockbuster franchise locations. I don’t watch a lot of movies (maybe two or three a month) so the cost of renting videos wasn’t an issue - I’m paying about the same amount with my subscription plan. Availability at the big video rental chains was generally good, especially following the innovative video lease agreements pioneered by Rentrak in the 1990s. But I digress..

Nope, for me the issue has always been FINDING good movies at the video store. Like most folks I would cruise the outer wall for looking for new releases and often leave with nothing when I didn’t see any familiar titles. Finding specific movies was even more difficult - is Indiana Jones in the adventure or comedy section? And when would the newest Indiana Jones movie make the switch from the new releases wall to its proper category section? (it seemed some movies were new releases for more than a year).

The point of all this is to say that Netflix has revolutionized the way I find and rent movies (though the finding is the real killer app for me). Finding a particular film is as easy as using the search box on the site and sorting movies by highest rated (rather than alphabetical) is a great way to find new releases you may have overlooked. The recommendation functions at Netflix are even more revolutionary since each movie recommendation is based on what Netflix thinks I might like rather than on a pimple-faced teenage worker’s recommendation at Blockbuster.

Of course online video rentals will be (are) the next big thing but it doesn’t really matter. Netflix used the power of the internet to transform an industry using existing technology (mail, plastic DVDs) rather than wasting money on pioneering the next technology. Sure, streaming video technology is coming along and broadband penetration is finally at a point where this starts to makes sense - but today it’s a lot cheaper and easier to do that it would have been just a couple years ago. In the meantime Netflix has built a huge user base and honed its recommendation engine to work well no matter the delivery medium.

Sometimes entrepreneurs need to take short-cuts to get to the ultimate goal; other times existing technologies still haven’t been fully utilized and optimized. Either way, we’re talking opportunity - the fuel of entrepreneurial dreams!

Sometimes businesses get confused by the latest technologies. Take movie theaters for example: Sure, theater owners have realized that selling tickets over the internet is a great idea because it means shorter lines at the box office, fewer ticket rolls to purchase, and convenience for the customer. But why charge customers for the privilige of saving the theater owners money? Most consumer would agree the price of a movie ticket is already pretty high (over $10 in most cities) and adding a $2 “convenience” charge per ticket is simply highway robbery. Theater owners can put a dollar amount on their savings due to internet sales but customers can’t (time is tough to value, especially when we’re talking minutes in line rather than hours at our jobs).

I can’t help but imagine how much MORE revenue theater owners would realize if they simply made online tickets the same price as box office purchases. I know I’d become a user and I’d certainly give preference to those theaters that offered free online ticketing over those that don’t. Lines at box offices would be shorter meaning theater owners would need fewer cashiers. Theater owners could also capitalize on increasing website traffic by promoting coming attractions while building brand exposure in the minds of some of their most affluent customers. That’s the internet for ya - cheaper, faster, more effective - but movie theater owners seem to think it’s just a novelty for the rich.

Which gets me to Kinko’s. Sure, Kinko’s allows you to upload your documents from your home computer to be printed in store but good luck setting a pick-up time for anything sooner than 4 hours from when you send your files (eons in internet time). The website is also missing important options like lamination, binding, and other services that go along with printing but that’s another story. No, my real frustration at Kinko’s is with the walk-in service.

Last weekend I needed to print and laminate some maps I had saved as PDFs on my flash drive. I only needed a couple copies so I stepped up to the print services counter. The gentleman informed me the turnaround time would be the ’standard’ 4 hours but that I could use the ’self-service’ area to make the prints myself. And here’s my problem: The computers in the ’self-service’ area charge you $0.20 per minute to use them. So to print out two copies of a PDF I had to insert my credit card into the reader beside the computer, open my file, hit ‘print’ in Adobe Acrobat, and logout. The process took 2 minutes - $0.40 on a $4 order (or a 10% surcharge for doing it myself).

If I had given the files to the print services team it would have cost me $0.40 less and would have wasted 5 minutes of a worker’s time (which, at $8 an hour costs Kinko’s $0.67). So Kinko’s clearly has an incentive to steer customers to the self-service area but they’re providing a DISINCENTIVE to customers to actually make that choice. Of course a 4 hour turnaround time is usually enough of a deterrent for most folks but this isn’t how savvy business owners treat customers.

It’s as if the grocery store with self checkout lanes started charging a ‘convenience fee’ for scanning and bagging your own groceries. In a sense customers are already paying for self-checkout by doing the work store owners used to pay their employees to perform.

Technology and in particular the internet have the power to improve efficiency in all types of businesses - but customers shouldn’t be double charged for such improvements. Business owners: Improve your bottom line AND improve the customer experience at once by making convience free!

One website I look at virtually every day is Digg, a social news aggregator that allows members to recommend (or “dig”) content from all around the internet. Each day the Digg algorithm selects the top stories based on member recommendations and displays links to the articles on the homepage. Members can also comment on the recommended articles and oftentimes the comments are just as interesting as the content itself.

Digg started out as a site used mostly by internet ‘geeks’ and as such the top stories tend to reflect the tastes of the members (which is perhaps why I like it so much). It’s not uncommon to see articles on Apple, web design, and the latest XBox games make it to the front page, though as the user based becomes more diverse these types of articles are becoming less popular on the site. Still, Digg is dominated by a specific demographic that tends to recommend articles that are not necessarily ‘mainstream’ and those users continue to fight for their voices to be heard on the site.

The whole idea of a user-generated ‘news’ site is a great one but it still hasn’t really hit the mainstream like Facebook or even YouTube. Unlike Facebook or YouTube, where I argued niche version of the sites are counterproductive, a niche version of Digg could make sense for certain user groups. Take politics for instance: It’s safe to say the majority of Digg users are left-leaning and as such the top news on the site is chock full of articles sympathetic to the Democratic cause. But what if you’re a Republican? Where do you go to find the best articles on John McCain (other than Fox News )? You need like-minded members to help you find the articles that fit your interests and unfortunately, Digg is not the place. Digg is working on integrating social features to help solve this problem but it’s still a long way from working the way it should.

I suspect that some news sites like CNN.com are already employing ideas gleaned from Digg like using news item popularity to populate the home page. For instance, an article on Brittany Spears may start near the bottom of the page but after CNN editors see the story is receiving more views than ‘hard hitting’ news stories they may decide to ‘promote’ the article.

Is there a large demographic that’s being ignored by Digg that should have its own social news aggregator?

According to the latest rumors Apple is set to unveil the newest version of iTunes next week with some interesting features, most notably, something called ‘Genius.’ One description we read had this to say:

iTunes 8 includes Genius, which makes playlists from songs in your library that go great together. Genius also includes Genius sidebar, which recommends music from the iTunes Store that you don’t already have.

Of course to make a feature like this possible iTunes would have to start aggregating user playlist and purchase information much like Last.fm already does to provide recommendations (though I’m not sure if this fits within the current iTunes EULA). Assuming the legal hurdles can be cleared it’s only a matter of time before large companies like Apple (or perhaps Amazon) crash the Last.fm party.

As an entrepreneur it’s always important to consider how you business might be affected if a large industry player simply added your “product” as a “feature” to one of their own mega-products. In a marketplace where business eco-systems and feeder products are becoming more common, having a solid contingency plan and exit strategy are key. We’ll be watching to see how Last.fm responds to the iTunes social integration threat…

A friend recently asked my opinion on building an online version of her company’s print magazine - a virtual “flip book” or “e-magazine” that would look just like the print version. Of course I told her it was a bad idea for all these reasons:

• People read magazines because they sometimes prefer a more portable, tactile experience than what is available online. At other times people prefer the online experience because it’s fast, interactive, and ultra current. Trying to bring one experience to the other medium is a losing battle - and don’t think folks haven’t tried to go the other way as well. Anyone remember Business 2.0 magazine? Shortly after they redesigned the print edition to look more like a web 2.0 site the magazine folded.
• Most online magazine / catalog implementations are simply scans of printed pages meaning rich text content is locked away from search engines in big image files. Without search engines reading your content it’s unlikely anyone else will ever find it.
• Some digital magazine / catalog implementations require a browser plug-in just to view them meaning you’ll be limiting your audience right away. A PDF version is probably the most innocuous (though still annoying) but we’ve even seen some e-magazines that require a special browser plug-in that no one has ever heard of. Internet browsers weren’t meant to act as magazine readers - though perhaps the Kindle will one day fulfill that need. Until then, build the online version of your magazine using web standards.
• The most successful print publications that have added digital distribution (NY Times, Wired) are good examples of what an online magazine should look like. For digital catalogs just consider this - what is an e-commerce site other than an interactive, digital catalog? Check out Amazon.com just to get an idea of the possiblities!

In 2008 the whole idea of a digitized version of a print magazine or catalog is pretty laughable. The internet is here to stay and the existing base of web standards is amazingly flexible for doing pretty much anything you can imagine. Don’t waste time making a literal translation of your offline publication for the web - embrace the medium and watch your business grow!

Once your website is up and running it’s important to get feedback on aspects of the customer experience that just can’t be quantified by analytics alone. An online survey is even a great tool for folks thinking of starting a business to gain important market intelligence before jumping in. We run surveys on our sites from time to time when we have specific questions - like what our paid members think of our service offerings or user interface tweaks - and our tool of choice is Surveymonkey.

You can use Surveymonkey to create simple to complex online surveys and it’s free if you have less than 10 questions and 100 respondents. Otherwise most businesses can get by with the $20 a month plan that lets you send unlimited surveys to a predetermined number of respondents. Unfortunately there’s no ala carte option so if you run surveys infrequently like we do you’ll want to cancel your survey subscription once you’ve gathered your responses.

Surveymonkey even provides email tools to help you send out a survey link to you customers - just upload an excel file with your email addresses and it’s done! The analyticial tools provided online are adequate but if you want to do in depth statistical analysis I recommend popping your data into Excel. Even the online interface at Surveymonkey.com is superb - one of the best we’ve used.

A well designed survey is a great way to gather market intelligence that can give you a leg up on the competition while improving your online business. With powerful and easy to use tools like Surveymonkey anyone can get results quickly and cheaply.

Along the same lines of social network ghettos I wrote about a couple years ago, there are still thousands of  websites trying to be the YouTube for fill in the blank. “The blank” could be adrenaline sports (BroadbandSports.com) or Christian values (GodTube.com) and everything in between. Heck, there’s even a pornographic YouTube that’s actually one of the few successful incarnations but that’s another story

In this analysis I’ll stick to discussing BroadbandSports.com since it’s the video site I’m most familiar with but the lessons here are applicable to all the YouTube wannabes. The idea behind these sites is that niche audiences want their own place to share videos with like-minded viewers, something that isn’t possible with YouTube. Or is it?

YouTube already allows members to tag, rate, and comment on videos, making it easy for anyone to find what they’re looking for. For example, a mountain biker doesn’t need to go to BroadbandSports.com to find mountain biking videos - just type in ‘mountain biking’ and you’ll see YouTube has more than 39,000 videos (compared to a lower but respectable 800 videos on BBSports). Of course there is also a social aspect to sharing videos and YouTube has that covered as well with channels and groups which help segment viewers and videos into niche specific mini-sites.

BBSports faces an uphill challenge on the technical side as well. Processing and distributing online video isn’t trivial and the associated bandwidth costs can be excessive. The latest press releases from BBSports tout new features that allow folks to embed BBSports videos on MySpace and other social networks - a feature YouTube has included since its beginning years ago!

On the business side online video is still a fairly new concept and advertisers are still trying to figure out how to reach video consumers effectively. Even YouTube, owned by the internet advertising Goliath Google, isn’t a profitable endeavor on its own - not to mention the fact that it’s practically a lawsuit magnet for copyright holders. It seems the best finanical outcome for sites like BBSports is that someday they will be purchased by YouTube since all the money is in acquisition these days rather than in meaningful ad revenue.

For me video, like pure social networking, is an opportunity that is quickly vanishing for smaller internet players. While it’s still possible to start up a blog or a rich online community for your niche, I’d say stay away from video unless you’re prepared to slog it out with the big boys or you have a killer technological innovation up your sleeves.