Social media services like Facebook and LinkedIn are building API walled gardens that will change how online services work
One of the great strengths of the social and cloud business model was the idea of the open API, recent moves by Twitter and LinkedIn show that era might be coming to an end.
Earlier this year LinkedIn announced they would be restricting API access to all but “partnership integrations that we believe provide the most value to our members, developers and business.”
Monetizing APIs
Increasingly social media and web services companies are seeing access to APIs as being a revenue opportunity – something many of them are struggling to find – or as a way of building ‘strategic partnerships’ that will create their own walled gardens on the internet.
For developers this is irritating and for users it restricts the services and applications available but it may turn out to backfire on companies like LinkedIn and Twitter as closing down APIs opens opportunities for new platforms.
A few years ago industry pundits, like this blog, proclaimed open APIs will be a competitive advantage for online services. Now we’re about to find out how true that is.
One thing is for sure; many of the companies proclaiming their support for the ‘open internet’ are less free when it comes to allowing access to their own data.
W2O’s acquisition shows how data analytics and visualisation is increasingly an important tool for management in a world where businesses are drowning in information.
Last year Vintank co-founder Paul Mabray spoke to Decoding the New Economy about the company and how social media data is a valuable tool for the wine industry.
“The wine industry is last industry to have been changed by internet,” Mabray says. One reason for this in his view is how that the sector hasn’t had a disruptive startup like Yelp or Open Table to drive change and upset incumbents.
Despite the wine industry’s reluctance to adopt digital technologies, social media and the disruption of established media channels is having a profound effect on the sector’s marketing and sales.
“In the old days there was a playbook originating with Robert Mondavi in the 1970s which is create amazing wine, you get amazing reviews and you go find wholesalers who bring this wine to the market,” Mabray told Decoding the New Economy during a visit to Australia in 2014.
Dealing with global proliferation
Mabray also flags the massive growth in the wine industry as being one of Vintank’s driving forces, “the global proliferation of brands the increase of awareness and consumption patterns where people like wine more, those playbooks didn’t work in 2009 when the crisis started.”
A proliferation of new competitors coupled with disrupted communications channels isn’t unique to the wine industry, the attraction Vintank has to the w2O Group’s president Bob Pearson; “VinTank provides us with a way to create agile audience engines for a brand, where we can learn what an audience is doing online, understand what content they like.”
For many businesses social media is a both an opportunity and a mystery; while customers are telling the world what they’re buying through services like Facebook and Twitter capturing, managing and using that information remains a challenge.
Panning for digital gold
As Robyn Lewis of Visit Vineyards whose database holds details on over 30,000 Australian wineries and associated tourism business says, “the gold is in the data.”
Panning for that gold is Emma LoRusso of Sydney social analytics startup Digivizer who told Decoding The New Economy two years ago “the truth is in data”. Services like Vintank, Salesforce’s Radian6, Klout and startups like Digivizer attempt to add context to that data.
Another aspect of Vintank’s technology is the ‘geofencing’ of information, creating a virtual geographic perimeter so only data relevant in that region is flagged. As well as reducing noise, this increases the value to local wineries and tourist operations.
In some respects the geofencing is possibly the most powerful part of services like Vintank as it allows regional operators to focus on visitors and customers to their districts rather than worrying about national or global activity.
W2O’s acquisition gives Vintank access to a broader market outside the wine industry as well as deeper data analytics capabilities. For W20 the purchase adds to the social media tools the company can offer.
Data driven business
The Vintank deal with W2O shows how the marketing and advertising industries are increasingly becoming data driven. For other business functions this is true as well.
For businesses of all types, understanding the data pouring into their companies is going to be the difference between success and failure in an increasingly digital world. Providing those tools to do so is one of the great opportunities in today’s economy.
TripAdvisor is showing how the travel industry is adapting to the new world for brands
Last week this site looked at the idea from Colonial First State Funds Management economists James White and Stephen Halmarick that brands are doomed in a world of perfect information.
Forecasting the end of brands is a big call despite the massive changes the internet is bringing to industries. One of the things I suggested is that the concept of the brand – which was largely born out of Twentieth Century mass communications – is evolving with the social media and online world.
In Ireland Vanderbilt claims the hotel industry found TripAdvisor to be a harsh wakeup call that saw local hospitality businesses lift their game as they realised customers were now far better informed.
Across the Atlantic on Mexico’s Yucatan peninsula Vanderbilt describes how hotel owners in the town of Tulum had to realign their listings and marketing when TripAdvisor changed how they were grouped in the region. It shows how users are searching and finding accommodation.
Importantly for guests, hotel managers are using online reviews to measure how their premises are measuring up to expectations through social tools and using the results to justify capital expenses on upgrades.
This could justify White and Halmarick’s view that the major global brands such as the Marriots, Hiltons and Sheratons are in decline however it more likely shows those chains are having to raise their game to maintain their worldwide position.
What Vanderbilt, White and Halmarick indicate though is social channels are changing the way the hospitality industry works. This is an opportunity for smaller operators to build strong brands in their own niche or region.
One of Halmarick and White’s assertions is that brands are dead as consumers in emerging economies don’t care about corporate names and in developed nations people have better information about local businesses.
The former argument seems flawed from the beginning; Apple for example is making huge inroads in China while local manufacturers like Lenovo, Huawei, Great Wall and Haier are all working hard to establish their names in international markets.
In developed markets, White and Halmarick’s views have more basis with brand names not having the cachet they once did now consumers have a global platform to voice complaints and find alternatives.
A good example of brands that are struggling are companies like Microsoft and McDonalds, although in the case of both companies this could be more because of a shift in the marketplace rather than better informed consumers.
However brands are surviving as they lift their game and adapt to changed marketplaces, in fact its possible to argue that today’s consumers are more responsive to brand names than ever in the past.
We should also remember that brands as we currently know them are largely a Twentieth Century phenomenon born out of the development of mass media communications and many of today’s household names came into the culture thanks to television in the 1950s and 60s.
So as creatures of last century’s media it’s not surprising that brands are having to evolve to a changed world, some of them will thrive and grow while others will shrivel away.
It’s safe to say though that the concept of brands isn’t dead, although many of the names we know today may not exist by the end of the decade.
Are the online gatekeepers becoming too aggressive?
Quartz magazine is held up as one of the most innovative news websites and one of the models for the future of online publishing however its president Jay Lauf suggested at the Digital Media Strategies conference in London yesterday that web users are increasingly shifting towards social sites to find their content.
This isn’t new, most sites have been dependent upon referrals from the popular social media services and companies like Buzzfeed have built their entire strategies upon traffic from Facebook.
Lauf suggests that sites like Quartz and Buzzfeed are increasingly losing control of their own audiences which raises risks for publishers and readers as they become dependent upon the social media gatekeepers.
Quartz’s traffic from LinkedIn is a good example of how a gatekeeper can control traffic with referrals falling away as the social site pivots into a publishing platform of its own.
It could turn out that control of traffic backfires however as people find those services deliver less value or relevant information.
Ultimately it may be the gatekeepers who suffer from restricting traffic as readers decide they aren’t getting the news they want.
Bigger smartphones are redefining media consumption, how does Google and traditional media companies respond to this?
Last week Google and Facebook announced their quarterly results with the search engine giant continuing its worrying slowing of advertising revenue. The respective changes of the two online services show how online advertising is changing.
While Google slows, Facebook is showing accelerating growth for its advertising, driven mainly by mobile users, illustrating the shift in internet usage from desktops to smartphones.
In its 2014 New Digital Consumer report, market research company Nielsen observed that US consumers in 2013 were spending more time accessing the internet on their smartphones than on personal computers; PC use had fallen seven percent to 27 hours a week while mobile use had surged 40% in 2013 to 34 hours.
Television still remained dominant with the combination of live and time shifted TV viewing making up 144 hours of the average American’s week, although it did fall slightly.
Those figures are a year out of date and there’s no doubt the numbers have accelerated since then. One of Tim Cook’s triumphs at Apple has been the release of the iPhone 6 and the larger form factors in the current generation of smartphones is a response to consumers’ demand to watch video on their devices.
Bigger Android, Windows and Apple smartphones will only seen even more people using their mobiles to watch video and surf the web.
Which puts Google’s predicament in sharp focus; we are definitely in the post-PC world yet their revenue still overwhelmingly comes in from desktop users while Facebook’s is increasingly coming from mobile consumers.
A strength Google has is that its revenues still dwarf the social media upstart’s – Google’s income is currently six times greater and its gross profit margin doubles that of Facebook’s – giving it plenty of leeway to change.
The question is where do the new revenues come from? Probably the biggest opportunity Google missed was in replacing the Yellow Pages franchises with their own local small business listings with Google Your Business (aka Google Place and Google Plus for Business) being lost in a confused and bureaucratic corporate strategy.
Compounding the problem for Google in the small business space is Apple’s entry and while Apple Maps is no contender against Google’s far superior product, an integration with Apple Pay would give Apple far more rich data to enhance listings with – not to mention more of an incentive for merchants to sign up.
With the changing web, Google are going to have to change as well. If advertising is going to remain the mainstay of their business then the company needs to find a way to capture smartphone users.
It could be worse however, a report from consulting firm Strategy Analytics estimates print media’s share of advertising revenue fell another seven percent this year. Time is running out for newspapers.
While print is ailing, the advertising battleground is mobile digital although TV still dwarfs the market. How this evolves in the next five years will define the next generation of media tycoons.
How much can we trust technology? A World Economic Forum panel discusses the issues.
“There is a big problem with trust today,” says cable operator Liberty Global’s Micheal T. Fries.
He was sitting on a fascinating panel at the World Economic Forum this week with Yahoo! CEO Marissa Mayer, Salesforce founder Marc Benioff and World Wide Web creator Tim Berners-Lee looks at the issue of trust in the tech world.
In a world where everyone wants access to our data, it’s a pertinent and timely discussion from people at the front line of where these issues of ethics and privacy are being dealt with.
Has Facebook really been responsible for creating over four million jobs?
It’s always best to treat a business’ or industry group’s claims of economic benefits with a grain of salt and the survey released yesterday by Deloitte on measuring Facebook’s effects on the global economy is a good example.
Facebook’s Global Economic Impact looks at what the social media service added to the world’s economy and finds the company created 4.5m jobs and $227 billion of value in 2014 outside of its own operations.
Deloitte’s analysis breaks down Facebook’s effects into three general categories; platform effects, connectivity effects and market effects.
In coming to their figures, Deloitte’s researchers further broke the numbers down into the direct revenues of businesses using Facebook, the indirect impact upon suppliers and the ‘induced effect’ of employee spending patterns.
The basic formula, although the methodology gets quite complex in extrapolating the value added, is described in this illustration.
The main areas of contention are the employment multiplier effect, which Deloitte marks at 3.1 in Brazil down to 2.1 in the UK with the United States coming in at 2.7, and the valuation of individual Facebook actions.
For example here is the description of how companies’ page engagement is valued;
Sales from Page engagement are estimated as
a product of the total sales of businesses with
Pages and the sales uplift estimated due to their engagement on Pages (see section A3 for how elasticities are estimated by econometric methods). The total sales of the businesses that have a Facebook Page are estimated using the revenues of the private sector in the economy based on national statistics. Survey evidence is then used on the percentage of businesses with a Page in the US and the UK.
For the rest of the world, the value of a liking action of a Page is estimated using relative GDP per capita of each country to the UK and USA to reflect the local economic conditions.
The gross revenue supported by Pages is then the product of the number of Pages liked and the value of a liking action of a Page.
The key here is the word estimated, there’s no doubt it’s in the interests of Facebook, the marketing agencies and the staff employed to manage social media to overstate this effect; it’s an arbitrary at best measure.
Marketing is claimed to be the most valuable aspect of Facebook, accounting for about two thirds of the service’s claimed economic value with a $148 billion contribution. Deloitte defines marketing effects as “the impact from businesses’ use of Facebook marketing tools to drive online and offline sales, and to increase awareness of their brand.”
Again this is subject to a number of arbitrary definitions and guesstimates which take us into the tricky area on measuring social media’s Return On Investment.
The reason why the numbers don’t pass the smell test is because of the sheer size; in Australia for instance the company’s effects are valued at $5.7 billion and employment generated at 63,000 workers. If we fully apply the 2.6 multiplier Deloitte attributes to the country this would suggest over 17,000 Australian workers are directly employed full time in running Facebook related tasks.
While it’s hard not to be sceptical of Deloitte’s numbers, it certainly is true that social media platforms have opened new roles for administrators, developers and other staff. We just need to be a touch cautious of overstating the benefits.
For businesses, probably the best lesson from Deloitte’s survey is to measure the genuine effects of social media on a business there have to be properly thought out measures and objectives. Guesstimates are not good enough.
Why social media numbers don’t matter, what are teenagers doing on Twitter and why tech companies are firing, not hiring.
Links today have a bit of a social media theme with Twitter co-founder Ev Williams explaining his view that Instagram’s numbers don’t really matter to his business while researcher Danah Boyd explains the complexities of teenagers’ social media use.
Apple’s patents and why the tech industry is firing, not hiring, round out today’s stories.
Twitter co-founder Ev Williams attracted attention last month with his comment that he couldn’t care about Instagram’s user numbers, in A Mile Wide, An Inch Deep he explains exactly what he meant at the time and why online companies need to focus more on content and value.
One of the frustrations with following the modern tech industry is how patents are used to stifle innovation. How an Apple patent for something that seems obvious caused camera vendor GoPro’s shares to fall is a good example.
Despite the tech industry’s growth, the industry’s giants are shedding jobs. This Bloomberg article describes some of the struggles facing the tech industry’s old dinosaurs.
Researcher Danah Boyd provides a rebuttal of the story about young peoples’ use of social media. “Teens’ use of social media is significantly shaped by race and class, geography and cultural background,” she says. Sometimes it’s necessary to state the obvious.
The future of Goodle,,how the name ‘Silicon Valley’ came about, why solar power is getting cheaper and how some startups die.
On many measures Google are in trouble, but one analyst thinks we’re panicking and his view is the lead of today’s links of the day. We also look at how the name ‘Silicon Valley’ came about, why solar power is getting cheaper and how some startups die.
“Google is down but it’s not out” is the warning of this analyst’s report on the company’s earnings and strategy. Interestingly Google outspends Apple by $4bn a year on research and development, but both of them are dwarfed by Microsoft’s spending, which indicates R&D investment doesn’t guarantee success.
Last Sunday marked the 44th anniversary of the first time the label ‘Silicon Valley’ appeared in print. The US Computer History Museum looks at how the name came about and no-one will be surprised it was a marketing person who coined it.
A few years ago putting solar cells on a building was expensive, now in many parts of the world the price of PV panels is becoming competitive with mains power. Vox Magazine looks at the factors driving the price drops and finds that economies of scale are now the main factor affecting the falling cost of installed solar power systems.
One of the earliest food review platforms was Urbanspoon which was founded on the basis it would only grow as a bootstrapped company. In 2009 the founders sold out to a larger company who have now sold it onto an Indian business who is going to shut the name down.
Apple extends its lead over Android in smartphone activations, a teenager’s view on social media and Google’s declining market share.
Today’s links are somewhat more upbeat; starting with Apple extending its lead over Android in smartphone activations, a teenager’s view on social media and Google’s declining market share.
Apple takes the lead in smartphone activations
In their regular survey of mobile phone activations, research company Kantor found that Apple have taken the lead back from Android phones. The Kantar Worldpanel ComTech global consumer panel monitors the brands of phones being connected through selected apps to give them an idea of what’s going on in the smartphone marketplace.
While not an absolute numbers, and one that was inflated by the new range of Apple iPhones released late in the year, it’s clear Apple are by no means out for the count when it comes to the smartphone market.
I’m not sure how accurate or scientific this story is, but it illustrates how complex the social media industry is and how dangerous assumptions are with what age groups use new media channels for.
Document service Evernote cuts jobs proving that even a job in the hottest parts of the tech sector isn’t safe. Notable in this story is the concentration of employment in two locations which shows Silicon Valley isn’t keen on remote working at all.
Links for Sunday, January 4 – Terrorists and social media, cooks and smartphones and what an old nuclear power station looks like inside
From a quiet Sunday here’s some of the stories that have kept me occupied; terrorists misusing their Twitter accounts, what chefs really think of smartphone toting customers and more musings on the future of work in an age where robots and algorithms dominate.
To kick off the post, what does a nuclear power plant looks like after it’s been shut down?
Touring a decommissioned nuclear plant
Yesterday former New York Governor Mario Cuomo passed away, one of the most contraversial moves of his administration was closing down the state’s only nuclear power plant at Shoreham, Long Island.
Economist Nouriel Roubini adds to the discussion about jobs in an age of robotics and algorithms in Where Will All The Workers Go? In his Project Syndicate piece, Roubini focuses on how the current wave of automation will affect jobs in emerging markets.
Today, for example, a patient in New York may have his MRI sent digitally to, say, Bangalore, where a highly skilled radiologist reads it for one-quarter of what a New York-based radiologist would cost. But how long will it be before a computer software can read those images faster, better, and cheaper than the radiologist in Bangalore can?
Like the rest of us he doesn’t have any firm answers except to suggest we may have to accept a new age of under-employment. This has serious consequences for today’s consumerist societies and the economic assumptions that underpins them.
The risks of Instagramming your Jihad
A clumsy Kiwi jihadist gave away the location of secret training camps in Syria through his Twitter account reports the iBrabo website. Mark Taylor joined an insurgent group in June this year and publicly burned his New Zealand passport on declaring he had no intention of returning to his homeland.
How do chefs really feel about cell phone use in restaurants?
Many articles have been written about how restaurateurs are driven to distraction by mobile phone users in their establishments, but how true are those tales.
The Daily Meal interviewed a dozen US chefs about their attitude towards diners taking selfies and instagramming their meals. It turns out they are more concerned about their customers enjoying their meal rather than being upset at them shooting photos.
Hyundai connects their cars to Google Android watches
Korean conglomerate Hyundai has joined the connected car race with an Android Wear app that works with the company’s Blue Link system. The app, designed to work on Google’s wearable devices as well as smartphones, will work allow users to lock, open and locate their cars.
It’s another example of how car manufacturers are integrating wearable and mobile apps into vehicles and it’s a small taste of what’s possible when the smart home and the connected car start talking to each other.
