Raja Jasti’s Blog - Renaissance Thinking

Kevin Kelleher ponders over the threat posed by real-time web to google dominance.

Just how big a threat is the real-time web to Google? As Om has pointed out, real-time content marks a still-amorphous but important new phase of evolution in the web, allowing for the instantaneous discovery of newly added information. And Twitter and Facebook are emerging as an alternative to the traditional engine, which presents a big challenge to Google’s core business. As Larry Page admitted this week, the company finally gets that.

It’s easy to imagine Google falling further behind in the real-time content game. The company’s slow entry puts it in the position Yahoo has held for years in search: behind the leader, always playing catch-up instead of spending creative energy on new advances. Google has struggled with social content, producing mixed results. Orkut, for example, was a hit in Brazil, but not in other major markets; initiatives like Friend Connect have shown little traction. It’s had better success as a search partner, as with its MySpace deal.

Google’s search engine has thrived because PageRank uses democratic algorithms that tracked page links. By contrast, real-time discovery engines like Twitter and Facebok use a more dynamic kind of democracy, linking to content that users finds worthwhile. As a result, content on the web is splitting into two basic models, and understanding this distinction makes clear why Google’s centralized role is being threatened.

Simply put, it’s the difference between discovery and search, between the “Now Web” and the “Then Web.” Here’s a more specific analogy: In college, most of us spent a lot of time in the library but also in a social hub like the campus coffee shop. One was a place for digging up information, the other a more dynamic, conversational setting, where ideas were casually exchanged. Google has been the web’s library: archival, organized and oriented around research. Twitter and Facebook, on the other hand, are coffee shops: instantaneous, conversational and oriented around discovery.

I doubt Google will ever make a good coffee shop. But I also don’t see real-time content shutting down its library. Instead, it’s breaking open a new arena of the web over which Google has little control. That makes Google more of a specialized player, but still relevant.

I think real-time web is an important frontier of the web and this is a google’s achilles heel. It is not like Google has been asleep at the wheel on this front. They bought Jaiku a service similar to twitter. Bu it never really took off like twitter did. It is too late for google to create a twitter killer. The horse has already left the barn. If you can’t beat them, join them. So they should buy them or partner with them.

MG Siegler has an interesting post on fremium model and services that he would be happy to pay for but they won’t take his money.

The tech world is an interesting one when it comes to companies making money. Some at the top like Microsoft, Apple and Google are raking in billions in profits every year. And each of those do it with different models: Microsoft through software, Apple through hardware and Google through advertising. But at the other end of the spectrum, most startups, even the very popular ones, haven’t yet figured out how to make money beyond their costs.

While the advertising-based model is working for a select few, for most, it’s simply not proving to be a very good stand-alone model. Pandora is one of the companies that web-based advertising is actually working pretty well for. But even they’re not expecting to turn a profit until next year — and that’s based on projections. I bring them up because they recently decided to move forward with a freemium model in a serious way for the first time last week. As a large service with a rabid fan-base, this seems like a brilliant move. And I wonder if the time isn’t right for more services to try this?

The freemium model is hardly a new idea. VC Fred Wilson has been talking about it since 2006 — though the name came a little later — but the model was around well before that also. The idea that you have a core set of features that are free to all users, and charge a fee to the smaller subset of users who will want more advanced features, makes a lot of sense. But now it’s easier than it has ever been for startups of all sizes to be able to take payments for such a structure, thanks to a number of companies and new platforms, like app stores. And there are plenty of startups popping up around this space to further help with this, like the soon-to-launch Contenture.

But I think for the freemium model to work in today’s environment, it has be along the lines of the opening paragraph of Wilson’s post in 2006:

Give your service away for free, possibly ad supported but maybe not, acquire a lot of customers very efficiently through word of mouth, referral networks, organic search marketing, etc, then offer premium priced value added services or an enhanced version of your service to your customer base.

Rather than launching a service with a freemium model, I think it’s important to gain a large and passionate user-base first. That’s exactly why I think the model will work very well for Pandora. And that’s the same reason why it would work for Twitter, if it ever decides to go that route. Jason Calacanis has been talking about his desire to pay for premium features on Twitter since 2007. And plenty of others have since brought up the idea.

I’ll start with the ones I already pay for:

• Pandora. An easy choice for me. For $36-a-year, they remove all advertising, give you better quality music and a nice desktop app among other things. I paid for it immediately.
• Flickr. Another site that was a no-brainer for me. At $24.95-a-year, you get unlimited storage space for all your photos online. I’ve been a happy member for a few years now.
• Tweetie. An interesting one in that it’s a Twitter client . You have to pay for the iPhone app, but there’s also the new desktop app which offers a free ad-supported version, or a paid ($19.95 one-time fee) version minus the ads. Twitterrific, another Twitter client, has a similar model, but also has a free version of its iPhone app, alongside its paid version.

And here are some ones would I pay for:

• Twitter. While I’m already paying for some Twitter clients, I would gladly pay something between $25-$50 a year for a more robust version of the actual Twitter site if it included things like power-searching, analytics and filters.
• Facebook. Unlike the very simple Twitter, I think Facebook is already too complicated, so I wouldn’t really want or need any more features. But if it ever came down to it and Facebook really needed to make money and started shutting off features (which would raise a shitstorm like no other among its users), I would gladly pay to keep some of them intact. Again, probably in the $25-$50 a year range.
• FriendFeed. I would gladly pay a lesser fee, maybe $10 to $20 a year to use FriendFeed — especially if they gave me something like an iPhone app.
• Gmail. At some point soon, I likely will be paying to use Gmail, as I’m almost out of my free storage space. 10 GB is $20 a year, a bit high, I think, but I’d pay it.
• Digg. I’d pay to user Digg particularly if I get could easy ways to view more interesting data that they have, and the ability to sort and filter to see what other “Pro” users do. Digg’s comments are quite often absolutely ridiculous, but I think could actually be useful if I could only see ones by users who care enough to pay for the service, rather than trolls. I’d pay about $10-$15 a year for Digg.
• YouTube. Same as Digg, I’d pay to use YouTube to see only comments by other “Pro” users. And I’d pay for higher quality, longer uploads and a goddamn nicer player than that cheesy big-button box. I’d probably pay up for $30 a year if I could use YouTube to store long, HD videos.
• Instapaper. This is the service I use to bookmark nearly everything I want to read on the web. It’s very bare-bones, which is one of the reasons that I like it, but I would certainly pay a fee to add search and some other advanced options. I would probably pay like $10 a year to use this. Interestingly enough, like the Twitter clients, Instapaper does have a free and pay version of an iPhone app.