Paul Wallbank – Brilliant Communications

Tag: internet

  • Demand Media’s closed window of opportunity

    Demand Media’s closed window of opportunity

    A few years ago content farm Demand Media was being hailed in some quarters as the future of the media industry.

    Today its stock is languishing, revenues are falling and any thought that the cheap, low quality writing that Demand Media delivered will be the future of media is laughable.

    Variety magazine recently published a feature describing the of the fall of Demand Media  with a focus on how Google’s changes to its search engine algorithm undermined the content farm’s busines model. Variety’s story is an interesting case study on not relying on another company for your business plan and extends the hope that low quality writing is not the future of online media.

    Dodgy business

    Demand media evolved from the eHow and eNom businesses, both of which relied on dubious – if not downright dishonest – online practices.

    eNom was particularly irritating, basically just registering domain names around popular search terms that led to   pages full of advertising that delivered nothing of value to someone searching the web for information on a topic.

    It was very profitable for a while though, as Variety reports;

    Early on, Demand used eNom’s 1 million generic domain names (such as “3dblurayplayers.com”) to serve up relevant ads to people searching for specific topics. These “domain parking” pages were immensely profitable, generating north of $100,000 per day, according to a former Demand exec who requested anonymity. “That’s $35 million-$40 million per year without doing any work,” the exec said.

    The eHow business wasn’t any better, relying on low quality, cheap articles that only worked because they were stuffed full of the keywords that Google would base their search results on.

    On January 26 2011 Demand Media went public and the criticism of both the newly listed company and Google became intense.

    This story from Business Insider – which ha featured some gushing and dreadful analysis of Demand Media previously – illustrated the problem the company had of being overwhelming dependent on Google, although the writer believed Google were making too much money from content farms to really act against them.

    Google’s problem with the content farms was real, the quality of search results was falling and users were finding their pages were full of low value rubbish rather than authoritative sources which opened the search giant’s core business  to disruption from Microsoft’s Bing and other search engines. Something had to be done.

    Jason Calacanis, whose Mahalo was a competitor to Demand Media, flagged the risks to content farms in a presentation early in February 2011, “the one rule of working with Google is don’t make them look stupid. If you make ‘The Google’ look stupid, they’ll f- you up.” He said. “eHow makes Google look stupid.”

    Eventually Google decided they were sick of looking stupid and changed their algorithms and the rules for getting a page one search result suddenly changed.

    Demand Media’s business was doomed from the moment Google made that change, as Variety reports;

    By April 2011, third-party measurement services were reporting that the Google changes had reduced traffic to Demand sites by as much as 40%. Demand issued a statement that the reports “significantly overstated the negative impact” of the change, but the stock took a dive — plummeting 38% over two weeks — from which it has not recovered.

    As Demand Media was affected, so too was the entire Search Engine Optimisation (SEO) industry where thousands of consultants found their strategies of placing low quality pages and link rich website comments now damaged their clients’ businesses.

    For web surfers, Google’s change was good news as suddenly search results were relevant again.

    Demand Media was, in essence, a transition business that prospered during a brief windows of opportunity that quickly closed along with the company’s prospects.

    That window of opportunity was also dependent on someone else’s business strategy, which is always a dangerous position to be in.

    Demand Media’s lesson is that while there are opportunities to be had in markets that are being disrupted by new technologies, there’s no guarantees those opportunities will last. What works in SEO, digital media or social marketing today may not work tomorrow.

    It’s also a hopeful lesson that websites regurgitating low quality content is only a transition phase in the development of online media and that providing good, original writing and video is the best long term strategy for survival on the net.

    Should that lesson be true, then it’s good news for both writers and readers.

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  • Balkanising the internet

    Balkanising the internet

    Could the current internet spying scandals result in the internet become fragmented into different national empires?

    Over dinner with President Obama with fourteen other tech industry leaders, Yahoo!’s CEO Marissa Mayer warned that US spying threatens to ‘Balkanize the Internet’, Bloomberg reports.

    Mayer has reasons to be worried, the scale of the US National Security Agency’s multiple programs monitoring internet traffic around the world has surprised even the most hard bitten commentator and it is already affecting US technology sales to China.

    Coupled with  revelations that Britain’s GCHQ was tapping the subsea cables themselves in concert with US agencies almost every national government is now pondering the fact that, as an invention of the US military, the internet itself is open to being misused by its creators.

    The Internet’s critical economic role

    As online communications become more critical to nation’s economies and security it’s understandable that governments would be considering how to make their networks more hardened to interception or interference and creating whole new protocols outside current standards is one way of doing that.

    With the industrial sector increasingly being connected through the internet of machines the stakes suddenly become much higher, as the Iranian government discovered with the Stuxnet worm that crippled the country’s nuclear research program.

    After Stuxnet every country and business with critical systems exposed to the internet is now working on hardening those systems from similar attacks.

    Until recently, almost all the profits from the internet’s growth have gone to US technology companies so its not a surprise that Facebook chief Sheryl Sandberg and Google chairman Eric Schmidt were with Mayer when she expressed her concerns to President Obama.

    Balkanising the web

    A balkanisation of the internet along national lines and industrial sectors is bad for US business which already struggles to get traction in non-Western markets like China and India.

    The irony is though that Yahoo!, Google and Facebook are all trying to balkanize the internet themselves in locking users into their own networks.

    While that’s a concern for internet users, it appears those commercial walled gardens don’t seem to be working.

    The failure of commercial walled gardens

    Yahoo!’s attempt to monopolise their corner of the web has clearly failed and it’s appearing that Google’s attempts to take over social media are failing despite forcing YouTube users onto Google+ while Facebook is beginning to buckle under the sheer weight of its own News Feed.

    Common wisdom about internet markets is that you have to be the number one provider in your niche to succeed, what we may well be seeing is those niches are smaller than we thought and leadership in one sector doesn’t automatically guarantee success in another.

    As Deloitte’s Eric Openshaw told this blog last week, ““one way or another, these things can be problematic in the short run but typically over time they are resolved.”

    Tesla, Edison and Jonathan Swift

    One of the reasons for the internet being one of the most successful technologies is that it was standardised relatively early, it didn’t have the battles over industry standards like the AC versus DC electricity arguments between Edison and Tesla, or the insanity of different railway gauges plaguing countries and international trade.

    Jonathan Swift parodied these technological arguments in Gulliver’s Travels where the main point of contention between the warring empires of Lilliput and Blefuscu was over which end boiled eggs should be cracked.

    It would be a great economic loss if security concerns or commercial opportunities saw the internet follow those examples and saw the online world carved up into many little empires.

    Should it happen, we deserve a future Jonathan Swift to parody us mercilessly.

    Walls of Constantinople by Bigdaddy1204 through Wikimedia

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  • Greetings from the scammers

    Greetings from the scammers

    The notorious “419 scams” have been around since the early days of the consumer internet.

    419 scams are the elaborate internet frauds that try to convince people they unexpectedly come into money. Once a gullible victim takes the bait, they are duped into paying a range of ‘facilitation fees’ and costs that drains their saving.

    The term 419 scam comes from the Nigerian criminal code that covers this crime, which was appropriate as most — although not all — of these emails originated from the country.

    For a while in the early 2000s, internet users became used to receiving a few 419 scam emails every day but by the middle of the decade they largely dried up as the even the most gullible and greedy idiots became wise to the schemes.

    That’s not to say they have completely vanished, this morning quite a distasteful one landed in my inbox.

    Greetings,
    I wish to seek your assistance to execute a business deal. I am Paul Williams a Contract Agent based in London. I require your consent to present you as next of kin to a client of mine, who died along with his wife and Two kids in the Asian Typhoon Haiyan in the Philippines leaving behind a large sum of money without a next of kin. With your co-operation and information available to me you can make a claim on the funds as the next of kin to my deceased client. After release of the funds to you by the financial institution where it is lodged, we can share according to a percentage we agree upon. If you may be of assistance, please reply for further co-operation.
    Best Regards,

    Paul Williams.

    It’s unlikely that Paul Williams exists and even if he did it’s unlikely he’d have anything to do with this unsavory scam that most people would immediate bin when they receive it.

    Binning the message was my reaction as well, but as I was about to, it occurred to me that there are enough venal, stupid people in the world who would agree to be involved in such a deal.

    No doubt if you asked them they’d say defrauding the deceased family’s estate is a victimless crime as the money would only end up with the government anyway, these people would swear blind they are honest, honourable folk and no doubt they would think they are rather clever.

    It’s worth reflecting that dishonest, venal and somewhat dim people do occasionally get their come-uppance in today’s world.

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  • Will the internet’s insecurities damage economic growth?

    Will the internet’s insecurities damage economic growth?

    “No country is cyber-ready” warns Melissa Hathaway, author the Cyber-Readiness Report.

    Hathaway’s warning is that the economic benefits of the internet are being lost to the various vulnerabilities in our information infrastructure.

    Dutch research company TNO claims that the Netherlands lost up to 2% of their GDP to cybercrime in 2010 and Hathaway claims similar losses are being incurred in other developed countries.

    Supporting Hathaway’s views at a function in Sydney today, Cisco System’s Senior Vice President and Chief Security Officer, John Stewart, made a frightening observation about corporate networks.

    “Every single customer we have checked with, and these are the Fortune 2000, has high threat malware operating in their environment – every single one of them.”

    So the bad guys are in our networks and causing real economic damage. The question for businesses and governments is how do we manage this threat and mitigate any losses?

    On our more intimate level, how do we manage our own systems and online behaviour to limit our personal or business losses?

    Hathaway makes the point that the internet was never intended to do the job we now expect it to do and as consequence security was never built into the net’s design.

    Today, we rely upon the internet regardless of its lack of inbuilt security. With everyone from governments through to organised crime and petty scammers wanting to peek at our data, we have to start taking security far more seriously.

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  • Malware writing becomes bigtime crime.

    Malware writing becomes bigtime crime.

    “Fifteen years ago we saw a thousand types a malware a month, now we see a three thousand a day,” states Richard Cohen, Threat Operations Manager of Sophos Lab during a tour of the company’s head office outside Oxford in England last week.

    That one statistic alone describes the scale of online security risks facing every computer user. Making matters worse is that the attackers have moved from enthusiastic amateurs to committed professionals.

    A particularly notable change for home and small businesses has been the risk of ‘ransomware’ where a computer’s data is held hostage by the bad guys until an unlock code is paid for.

    Like many things in the computer world, ransomware isn’t new however the latest breed uses the latest cryptographic tools.

    “Now there’s money involved, there’s serious effort,” says Sophos Labs’ Vice President Simon Reed. “The quality of malware has gone up.”

    The early versions of ransomware were a joke, usually just being a scary opening screen warning people of the FBI or a similar agency had detected illegal downloads on their computer. Today – according to Sophos’ researchers – the new breed of malware features high level encryption that locks away data fairly comprehensively.

    While the researchers at Sophos were briefing me on the online risks they see, on the other side of the world Eugene Kasperski, founder of Russia’s most successful computer security company, was addressing an Australian National Press Club lunch on the state of the anti-virus market.

    “Traditional criminals are stupid,” Kasperski told the lunch. “Computer criminals are different. They are geeks; geeks with broken minds.”

    The message to homes and small business from both Kasperski and Sophos is quite clear – you have to take online security seriously. Start doing so now.

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