July 20th, 2006
I’ve been following an interesting trend of power grabs by Web 2.0 companies, from MySpace to YouTube to Google — Web 2.0 is supposed to be all about the “user,” but when it comes to profit making the user is getting shut out:
The most popular web site in the United States owes its phenomenal success to a canny exploitation of music. But while sound recordings command a performance royalty – the rules are optional in the exciting world of new media. So while composers get rewarded when music is played in hotel lobbies, clothes shops and pubs, they don’t get a penny from it being played, and endlessly replayed, over MySpace’s network.
It’s all very much in keeping with the new feudal economics of “Web 2.0″: the serfs must be grateful for the hospitality of the proprietor. As PlayLouder’s Paul Sanders noted last week, plenty of people appear to be profiting from digital music – except the people who create it.
Musicians like Billy Bragg have taken notice and have walked away from MySpace rather than grant the “non-exclusive, fully-paid and royalty-free, worldwide license.”
“Ã¢â‚¬Â¦by submitting the User Submissions to YouTube, you hereby grant YouTube a worldwide, non-exclusive, royalty-free, sublicenseable and transferable license to use, reproduce, distribute, prepare derivative works of, display, and perform the User Submissions in connection with the YouTube Website and YouTube’s (and its successor’s) businessÃ¢â‚¬Â¦ in any media formats and through any media channels.”
The new AdWords landing page quality score policy is clearly intended to wrestle away control of affiliate marketing from savvy AdWords users like Graywolf by artificially inflating minimum bids, with “user experience” being used as a smokescreen:
So what happened? Well I increased my bid, my thinking was with less competition I might get more conversions and afford to be able to pay more (Although tripling the price overnight is clearly excessive). In an effort to regain my lower price I made some changes to increase the Ã¢â‚¬Å“user experienceÃ¢â‚¬Â the customers now started meandering all over the site without purpose, they lost the plot. To make an analogy I paid triple price for my farm animals and threw open the fence and let them wander off into the sunset. Gee thanks Google, I have to say improving the user experience pretty much sucked!
I have yet to hear of anyone who requested a re-review have their prices lowered and adjusted down. So stop hoping for a miracle and stop the hemorrhaging. Move on and try something different, you may learn something if you donÃ¢â‚¬â„¢t think like an engineer Ã¢â‚¬Â¦
I think there’s more than a bit of coincidence in this trend of users getting screwed — Web 2.0 wants users to THINK they are in control, but then these companies use heavy-handed 1.0 tactics to maintain control of the profits.
I’ve written before about the 2.0 exploitation of users, and the argument I always hear in return is that users don’t really care about making money — they are just doing it for attention or out of the goodness of their hearts.
Jason Calacanis called this bluff with his offer to pay Digg users to work their magic for Netscape. Based on the reaction of the users over at Digg commenting on my Digg vs. Netscape post, I don’t know that he’ll get any takers in this round. But Nick Carr made the key observation here:
I think that what Calacanis is getting at is that the reason “social media” has existed outside the price system up until now is simply that a market hadn’t yet emerged for this new kind of labor. We weren’t yet able to assign a value – in monetary terms – to what these workers were doing; we weren’t even able to draw distinctions between what they were contributing. We couldn’t see the talent for the crowd. Now, though, the amateurs are being sorted according to their individual skills, calculations as to the monetary value of those skills are starting to be made, and a market appears to be taking shape. As buyers and sellers come into this market, we’ll see whether large-scale social media can in fact survive outside the price system, or whether it’s fated to be subsumed into professional media.
The ideology of 2.0 is supposed to be about ceding control — and MySpace, YouTube, Google, etc. are all for that — as long as they still control the profits.
I think most 2.0 users are smarter than that — and 2.0 companies that don’t share the wealth will find themselves in control of empty platforms and applications.
More news today of MySpace hostility towards users.
Ã¢â‚¬Å“MySpace now transparently adds Ã¢â‚¬ËœallowNetworking=Ã¢â‚¬ÂinternalÃ¢â‚¬ÂÃ¢â‚¬Ëœ to all Flash Player instanced placed in its pages, effectively disabling any buttons which link anywhere.Ã¢â‚¬Â
So: stuff like Slide.com, RockYou.com, and YouTubeÃ¢â‚¬â„¢s Flash video wrappers will no longer be able to link back to the sites if the user is using Flash 9. Generally adoption for Flash isnÃ¢â‚¬â„¢t that quick Ã¢â‚¬â€ but since all users with Flash 8 currently have broken MySpace video/audio players, you can expect that to have somewhat of an effect on the adoption rate (i.e.: skyrocket).
MySpace can say all they want about wanting to protect users, but really this is about them protecting their advertising dollars. The barnacle-like secondary market sites will have to find increasingly creative techniques to launch Flash-based content within the site if they want it to spread virally.
ThatÃ¢â‚¬â„¢s a major blow against the viral spread of services like YouTube, RockYou and countless emerging others. IÃ¢â‚¬â„¢ve been talking to a lot of widget vendors lately, and Ã¢â‚¬Å“it works in MySpaceÃ¢â‚¬Â is a now a primary selling point. Companies are investing large amounts of money in widgetizing content from one site onto another and MySpace is huge. This move, in the name of security, will likely do serious damage to the cottage industry of flash widgets in MySpace. In as much as users love their widgets, that means this will do serious damage to MySpace as well.
The tension between Web 2.0 “openness” and the need to control corporate profits is likely to accelerate and, sooner than many players expect, will start to separate winners from losers.