social media | Paul Wallbank - Communications Professional

Undermining the cloud

Google’s broad claim on users’ data risks the viability of their services

Whenever I do a presentation on cloud computing and social media for business, I focus on one important area – The Terms Of Service.

Google’s relaunch of their Cloud Drive product has reminded us of the risks that hide in these terms, particularly with the one clause;

When you upload or otherwise submit content to our Services, you give Google (and those we work with) a worldwide license to use, host, store, reproduce, modify, create derivative works (such as those resulting from translations, adaptations or other changes we make so that your content works better with our Services), communicate, publish, publicly perform, publicly display and distribute such content. The rights you grant in this license are for the limited purpose of operating, promoting, and improving our Services, and to develop new ones. This license continues even if you stop using our Services (for example, for a business listing you have added to Google Maps). Some Services may offer you ways to access and remove content that has been provided to that Service. Also, in some of our Services, there are terms or settings that narrow the scope of our use of the content submitted in those Services. Make sure you have the necessary rights to grant us this license for any content that you submit to our Services.

This is an almost identical clause to that introduced – and quickly dropped by file sharing Dropbox – last year. It’s also pretty well standard in the social media services including Facebook.

Basically it means that while you retain ownership of anything you post to Google Drive, or most of other Google’s services including Google Docs you’re giving the corporation the rights to use the data in any way they choose.

While the offending clause does go onto say this term is “for the limited purpose of operating, promoting, and improving our Services, and to develop new ones” there is no definition of what operating, promoting or improving their services actually means.

Not that it matters anyway, as one of the later terms says they reserve the right to change any clause at any time they choose. So if Google decided that selling your client spreadsheets to the highest bidder will improve the service for their shareholders, then so be it.

If you’re a photographer then the pictures you upload to Facebook or Google+ now are licensed to these organisations as are all the documents stored on Cloud Drive.

To be fair this is not just a Google issue, Facebook has similar terms as do many others. Surprisingly just as many premium, paid for services have these conditions as free ones.

Because these Terms Of Service are about establishing a power relationship, there’s usually an over-reach by large companies with these terms.

While an over-reach is understandable, its not healthy where the customer has to trust that the big corporation will do the right thing.

Right now, if you’re using a cloud or social media service for important business information you may want to check that service doesn’t have terms that grant them a license to your intellectual property.

Inflating titles, inflated apirations

How job title inflation can affect an organisation

This story first appeared in Smart Company on 19 April 2012.

“She listed her job on LinkedIn as my ghostwriter,” reflected the journalist about his publishing business’ Gen-Y staff member.

The journalist’s lament reflects an unexpected corporate risk in social media; that of employees giving themselves grandiose and sometimes damaging job profiles.

Over the last 20 years, title inflation has been rife in the business world as corporations and government agencies doled out grandiose titles to soothe the egos of fragile management egos.

So it isn’t surprising that many of us succumb to the temptation to give ourselves a grand title online.

In the journo’s case a young graduate working as an editor in his publishing business listed herself as his ghostwriter, risking a huge dent to his credibility among other the lizards at the pub or the Quill Awards.

That business journalist is not alone, in the connected economy what would have been a quaint title on a business card or nameplate is now being advertised to the world.

Making matters worse, we now have tools like LinkedIn and other social media sites to check out a business’ background and who are the key contacts in an organisation.

So what your staff call themselves is now important. It can confuse customers, cause internal staff problems (“how come he’s an Executive Group General Manager?”), damage business reputations and quite often put an unexpected workload on a relatively junior employee.

In your social media policy – which is now essential in any business that employs staff – you need to clarify what titles your people can bestow upon themselves.

As well as making this clear to new staff, a regular web search on your business that includes all of the popular social media sites should be a regular task.

Just as economic inflation can hurt your business, so too can uncontrolled title inflation. Watch it isn’t affecting your operations.

You hold us harmless

How the terms of social media sites risk your assets and their business

Social media site Pinterest was recently caught in one of the ongoing quandaries of social media – the ownership of content.

The subject is tricky; social media sites rely on a vibrant community of users posting news and interesting things for their online friends.

Unfortunately many of things social media users post are someone else’s property, so almost every service has a boilerplate legal indemnity term like Pinterest’s.

You agree to defend, indemnify, and hold Cold Brew Labs, its officers, directors, employees and agents, harmless from and against any claims, liabilities, damages, losses, and expenses, including, without limitation, reasonable legal and accounting fees, arising out of or in any way connected with (i) your access to or use of the Site, Application, Services or Site Content, (ii) your Member Content, or (iii) your violation of these Terms.

Facebook have similar terms (clause 15.1) as do LinkedIn (clause 2.E) and Tumblr (clause 15). Interestingly, Google’s master terms of service only holds businesses liable for the company’s legal costs, not individuals.

Boilerplate terms like these are necessary to provide at least an illusion of legal protections for investors – those venture capital investors, greater fool buyers or punters jumping into the latest hot technology stock offering need a fig leaf that covers the real risk of being sued for copyright infringement by one of their users.

The risk in these terms shouldn’t be understated; by agreeing to them a user assumes the liability of any costs the service incurs from the user’s posts. Those costs don’t have to be a successful lawsuit against the service, it could be something as minor as responding to a lawyer’s nastygram or DMCA takedown notice.

Of course, none of the major social media platforms have any intention of using these indemnity terms; they know that the first time they go after a user all trust in the service will evaporate and their business collapse.

Somewhere among the thousands of social media services though there is going to be one that will pull this stunt. Strapped for cash and slapped with an outrageous claim for copyright damages, the company’s board will settle then send out their own demands to the users responsible.

Those “responsible” users – probably white, middle class folk sitting in somewhere in the US Midwest, South East England or North Island of New Zealand – will be baffled by the legal demand that requires them to file a defense somewhere obscure in California or Texas and will go to their lawyer friends.

When the lawyers tell them what it means their next step will be to their local news outlet.

The moment the story of a middle class person facing losing all their assets hits the wires is the moment the entire social media business model starts to wobble.

In many ways what the social media sites are trying to do is offset risk.

Risk though is like toothpaste. Squeeze the tube in one place and the pressure moves elsewhere.

By laying off a real risk by using legal terms the social media sites create new, even bigger risks elsewhere in their business.

The dumb thing is these terms really don’t protect the services anyway – it’s unlikely the typical social media user will have anything like the assets to cover the costs of a major copyright action by a rich, determined plaintiff.

It’s going to be interesting to see how many services still have these indemnity clauses in 12 months.

For the industry’s sake, the big players will need to have ditched these terms before that first dumb attempt to claim damages from users hits the wires.

Overstuffing the social media goose

Businesses are struggling with too many online services

“Small business has to get on Pinterest” urges the social media advisor.

“Oh no, not another of these social media thingummies” thinks the business owner or marketing manager.

Pinterest is just the latest of a dozen online services that businesses have been urged to join in recent years. An incomplete list would include the following;

Pinterest
Google Plus
Facebook
Facebook Timeline
Quora
Color
Yelp
Tumblr
Google Places
True Local
Blogging
LinkedIn
LinkedIn Groups
Twitter

The question for the time poor business owner or under resourced manager is “where do I find the hours for all this?”

It’s not just smaller businesses either – most corporations don’t have the resources to dedicate to all of these services, let alone provide the 24×7 coverage many are beginning to expect.

When it comes to online services and social media businesses owners and managers are like geese being stuffed for foie gras, they’ve had so much stuffed down their necks they can barely move.

Like the foie gras ducks, businesses have become glassy eyed – when someone tells them they have to sign up to another online service they just switch off.

We’ve reached the point where are too many networks for event the most underemployed social media expert to handle.

For those advocating social networking or other online services for business, it’s time to start acknowledging the time poor reality of most businesses and consider exactly which services are best suited for the organisation.

In businesss it’s not time to switch off, that could be the worst thing to do as so many new ways of talking with customers are developing.

Instead of feeling overwhelmed, it’s time to start carefully considering which services will work best with your markets, products and staff and choose carefully.

The days of just charging into the latest social media sensation are over, these services are growing up and they have to prove its worthwhile for businesses – or individuals – to invest their time.

The allure of free data

It’s user generated, but is it worthwhile.

It looks like a nice business model, you get users to generate your content for you. Many of the new digital media empires like YouTube, Facebook and Foursquare are built upon it.

The Register’s Simon Sharwood looked at the downside of this business model – junk data.

Even the most well intentioned users makes mistakes with thing like addresses and that’s before you get mischief makers or competitors putting in false information.

There’s another aspect too, what one person thinks is relevant may not be to other users or to the people running the service, Simon cites the dozens of “mom’s kitchens” on Foursquare.

For those who’ve added their mom’s house, that’s relevant and maybe even funny to them.

All of this illustrates the downside to the free, User Generated Content (UGC) model; you have to accept what the users give you.

Which means it isn’t free – it has to be collated, processed and the noise has to be filtered out.

At worst, somebody has to make the decision what is relevant and what has to go. This isn’t easy and, as Google found with their Name Wars, can upset a lot of users if it isn’t handled well.

Nothing in life is truly free and with data becoming increasingly important to business it’s worthwhile considering the quality of that free or cheap stuff you get from the net.

Paying the piper – the cost of the internet’s walled gardens

The web’s walled gardens have a real business cost

With the web increasingly dominated by four major, and many minor, fiefdoms the cost of being part of those groups is gradually becoming clear.

As part of Facebook filings in advance of their public float they published the key agreements with their developer partners including that with games provider Zygna, technology journalist Tom Foremski has a disturbing look at Facebook’s conditions that illustrate the costs and risks.

In terms of the costs, Tom identifies Clause 2.1 of Facebook’s “Statement of Rights and Responsibilities” – shown as Annex 1 in the Developers as probably the biggest price for all content creators;

… you grant us a non-exclusive, transferable, sub-licensable, royalty-free, worldwide license to use any IP content that you post on or in connection with Facebook (“IP License”). This IP License ends when you delete your IP content or your account unless your content has been shared with others, and they have not deleted it.

So by sharing something on Facebook, you grant Facebook the right to do what they like with what you’ve created. That’s something worth thinking about.

For anybody trying to make a living off Facebook, it’s important to consider they also retain the right to throw you off the service at any time. From clause 4.10 of the Statement Of Rights Annex;

If you select a username for your account we reserve the right to remove or reclaim it if we believe appropriate (such as when a trademark owner complains about a username that does not closely relate to a user’s actual name).

So get into a trademark dispute with a big corporation – and often their lawyers cast a very wide net on potential similar spellings – and your account is shut down.

There’s also the specifics of the Zynga agreement that should concern anyone investing in the games company. Right at the beginning of the agreement we see this clause;

The parties further acknowledge that Zynga is making a significant commitment to the Facebook Platform (i.e., using Facebook as the exclusive Social Platform on the Zynga Properties and granting FB certain title exclusivities to Zynga games on the Facebook Platform). In exchange for such commitment, [*] the parties have committed to set certain growth targets for monthly unique users of Covered Zynga Games.

So Zynga is closely tied into the fortunes of Facebook, we knew that on a business level but now we know just how deep and binding the agreements are.

We should be clear, all the major social media and online services have similar clauses on intellectual property and copyright infringements; there’s no shortage of businesses who’ve been caught out by eBay or Paypal and plenty of people found their Google accounts shut down by their obsession with real names.

For all businesses the message is clear – be careful before committing totally to one online platform or another. Should you end up in a dispute, or find you’ve backed the wrong service, it may be a very costly process to get your company off that platform.

The Internet Kool-Aide Machine

Don’t buy the hype when you read about the hot new product

Every few months, the web lights up with hype about the latest technology or website. For a few weeks, every tech conversation mentions this hot new product.

Almost always this hype is driven by the company in question duchessing a few key “opinion leaders” in the tech, social media or other circles. These folk start writing up this product and, if they are lucky, the stories get picked up by the broader media and the product becomes “hot.”

The aim is to find the greater fools, for the investors and founders of these business they want to cash out by selling the operation to a bigger entity.

When you read the hype about the latest user generated, online sharing social media service that’s growing at a remarkable rate be aware you’re actually seeing a pitch to a big company being framed along the lines that “you can’t afford to miss out.”

By all means sign up to the service to have a look but don’t buy the hype and remember you’re not the customer – the gullible big business manager looking for the next big thing is.

Image courtesy of Blary54 through sxh.hu

Valuing Facebook

Is Facebook really worth fifty billion dollars?

After over a year of speculation, Facebook has finally announced the terms of its US stock market float, valuing the company at $50 billion dollars according to Facebook’s SEC filing.

The financial details that we’ve speculated over are now public and we can now make more than informed guesses about what Facebook is worth.

What jumps out when first looking at Facebook’s financial figures is the exponential growth in their revenue from 153 million dollars in 2007 to $3,700 million last year. A twenty-fold increase over four years.

Expenses though haven’t grown at the same rate going from 277 million to 1.95 billion over the same period. Like all bigger social media and web 2.0 companies, sales and marketing is the biggest expense.

The Google Experience

The closest comparison to Facebook is Google’s float in 2004. Google floated at a market capitalisation of 23 billion dollars on a reported revenue in their SEC statement of 389 million.

At the time, Google’s profit margins were substantially lower with costs coming in at 234 million. These figures alone indicate Facebook today is a better prospect that Google was at the time of being floated.

Google today is valued at $190 billion on a revenue of $38 billion and a profit of $25 billion. On those measures, Facebook investors will be expecting that exponential growth to continue.

Growing Income

How Facebook continues to grow their revenue is the big question. Currently over half of their revenue comes from advertising in the United States and the bulk of the rest from Canada, Australia and Western Europe.

If online advertising continues to grow spectacularly, as a 2010 Morgan Stanley research paper illustrated then Facebook, as the biggest social medial platform, will get a large slice of that $50 billion global market opportunity. This in itself would justify their valuation.

One of Facebook’s biggest growth opportunities comes from games. Already Zynga, the developers of Farmville and Mafia Wars, contribute 12% of Facebook’s revenues.

The global games business is valued at 60 billion dollars and much of this market is moving to web based, online platforms. Facebook’s 30% cut of income from games on their service is another lucrative revenue stream with few operating costs.

While advertising remains Facebook’s main income stream, other payments from games and online payments went from almost 0 in 2010 to nearly 17% of income at the end of 2011.

The threats

This isn’t to say Facebook doesn’t face any threats in their businesses. The concentration of income from North America, Europe and Australia exposes how the service is a first world phenomenon, although they have high penetration rates in some countries like Chile and hope to achieve similar in India.

Social media though is a fast moving field and there are plenty of opportunities for upstart businesses to displace Facebook just as MySpace faded away.

In their established markets there’s the question of how sustainable social media as an advertising platform is; until recently social media was a novelty to most households and still is to businesses and advertisers.

User fatigue is possible in the mature markets and Facebook – along with other social media services – not achieve the advertising revenue they hope.

Privacy issues are also another concern; as users realise the value of their private information it may be that they demand more for it than seeing where their friends are drinking or playing an online game for free.

Overall though, Facebook does appear to be worth the 50 billion dollar valuation when compared to other similar businesses like Google and is probably more sensibly priced than recent other IPOs like Groupon and Zynga.

Whether the service will deliver on its promise remains to be seen, but those are the risks when investing in new industries.

Is Twitter’s censorship a good thing?

National laws are a reality for web based businesses

Since Twitter announced they were going to start blocking messages on a country by country basis if required by the laws of that land they have received a lot of criticism.

Most of this criticism of Twitter revolves around the belief that every message should only edited or deleted by the person who posted the tweet.

Anything else a breach of free speech and a threat to the underlying principles of the internet.

That utopian view of the Internet doesn’t translate into real life; the online world is as subject to laws as any other part of life and social media companies have to comply with the same laws as newspaper organisations or fast food chains.

Regardless of what you think of those laws – and in many countries they certainly are unreasonable and oppressive – they do matter.

Were Twitter not to comply then the entire service would be at least blocked in those countries and, should an action be enforced in a US court, then the tweet removed anyway for every user around the world.

By introducing country specific blocking, the service can let the rest of the world see a tweet that would otherwise be lost and in countries with restrictive or authoritarian laws, local people can still use the service.

A particularly clever way of dealing with removal requests is to note that the specific message has been blocked in a country. This adds a level of transparency and accountability to the actions of courts and governments that want to close the service.

We can see that being particularly effective in jurisdictions like the UK where British judges have been quick to apply “superinjunctions” preventing the merest mention of something by anybody.

Should Britain’s overeager judges start demanding Twitter block tweets, those in the UK will quickly realise something is amiss. The effect will probably be to increase the interest in the blocked tweets that can be seen anywhere around the world.

Despite the utopian view that transparency and openess will solve the world’s problems, we don’t live in that world right now and people can – rightly or wrongly – ask that false, defamatory and damaging posts on the Internet can be removed.

Interestingly Google this morning announced they will be introducing a similar system to deal with country specific problems on their blogger platform.

Twitter’s handled this in the best way possible, in many ways this could be a step forward for social media and the Internet in general.

Facebook and your Family: 702 Sydney Weekend computers

How should you use Facebook in your house?

Tune into ABC 702 Sydney this Sunday, February 5 from 10.15am to join Paul Wallbank and Simon Marnie discussing how to use Facebook in your family.

Some of the topics we’ll be looking at include;

What are the minimum ages for using Facebook
How should parents monitor usage
Setting up privacy settings
Being careful about sharing
Deciding what applications should you allow
How do other social networks affect your family

We love to hear from listeners so feel free call in with your questions or comments on 1300 222 702 or text on 19922702. If you’re on Twitter you can tweet 702 Sydney on @702sydney and Paul at @paulwallbank.