Google was an advertising company.

Back in 2005, Daring Fireball’s John Gruber described Google’s business as follows:

Judged by their profits, Google is an advertising company. They don’t profit from search, they don’t profit from software. They profit by selling ads. This isn’t to belittle them — I think Google is a terrific company, and they are profiting handsomely from ad revenue ($369 million last quarter). […] If Google has a platform, it’s an advertising platform, not a developer platform. I’m not even saying Google should have a developer platform — I’m just saying they don’t.

Fast forward to 2009, and Internet advertising is beginning to fail, declining slightly during the first half of the year. Sites like TechCrunch were quick to herald its demise with articles like Why Advertising Is Failing On The Internet, which declared:

My basic premise is that the internet is not replacing advertising but shattering it, and all the king’s horses, all the king’s men, and all the creative talent of Madison Avenue cannot put it together again.

It’s become clear that for a lot of purposes, advertising is not a viable or useful business model. Although it may still be suitable for very high-volume, mass-market sites and applications, it’s almost impossible to make money through advertising with niche or specialized content in most areas. (Some areas, like real estate, remain relatively lucrative.) Additionally, targeted ads require the advertising software to track your activity and store data about you, which more consumers are becoming concerned about. And perhaps most importantly of all, nobody actually wants to see ads – and advertisers are having to become more creative and invasive in order to compensate.

Similarly, if you want to make headway in the enterprise or educational spaces, targeted ads are inappropriate or impossible, for legal and policy reasons. For publicly-funded organizations like educational institutions, allowing commercial companies to track users is an ethical nightmare. For private enterprise, the data collection required for ad targeting is unacceptable, and the visual presence of advertising threatens their brands.

However, they are willing to pay for software, to the tune of $222.6 billion worldwide.

Boldly going to the enterprise & paid software.

The web is fast becoming a viable platform for applications: rather than visiting websites, we are increasingly using applications that happen to use the web as an interface. Google is at the forefront of this change.

On November 11, Google announced SPDY, an “embrace and extend” version of the HTTP protocol that underpins the web (it’s how browsers and web servers talk to each other). This new version has numerous tweaks that result in pages that load up to 55% faster – important if you’re trying to build responsive applications with web interfaces. Google have also been betting big on HTML 5, which extends the web’s UI infrastructure to provide support for a much richer experience without falling back on plugins like Flash. Two of the most important requirements for enterprise applications that use a web-based interface are offline capability (the ability to use the application with no Internet connection) and support for concurrent processes (allowing your web interface to perform more than one task at once). HTML 5 has both.

Google has evolved from a consumer search and advertising company, into one that provides enterprise infrastructure applications. Its plan is clearly to dominate Microsoft’s leadership and become a bona-fide software power. Recently, Microsoft has been playing catch-up, by including web-based versions of its applications in its enterprise Sharepoint intranet offering. It has also be moving against the tide by planning on offering advertising-supported versions.

Google’s CEO, Eric Schmidt, told the Garner Symposium last month why it was charging for their enterprise applications:

"Enterprise is a huge priority for the management team and me personally […] It’s the next big billion-dollar opportunity after our display (ad) business. […] We looked at ad-supported enterprise applications and decided most corporations would not be comfortable with random ads showing up on somebody’s desktop."

The web is moving away from advertising.

It’s not just Google that is moving away from a purely ad-supported, consumer strategy. Markus Witte, co-founder of the language learning portal Babbel, wrote on their blog about adjusting their business model:

Our plan, in fact, was to partially finance Babbel with advertising. We intended to provide a “freemium” product that would have a basic version that was public, while providing additional premium content for those who might want to dig deeper. But now we see this just doesn’t work. It simply is not possible to build a high-quality online learning environment while simultaneously selling ad space effectively. We tried to bring these two objectives together. But ultimately we had to accept that a business model appropriate for social networks and news services is plain wrong when applied to online education.

The numbers speak for themselves. The US paid e-learning market has been estimated to be worth $16.7 billion in 2009 and has a relatively small number of players; the US advertising revenues for the Internet as a whole were estimated to be $10.9 billion for the first half of 2009. (That’s $10.9 billion to the advertising companies, rather than the amount content and site owners see, which will be a subset of that amount.) When you run a startup company, you can either put your trust in display advertising and number of eyeballs looking at your site, or you can employ a sales team and ask for cash. Entranced by the model that Google originally promoted, Babbel tried the former, and discovered that it didn’t work; recognizing that they were a software company rather than a mass-media outlet, they then reverted to traditional business methods.

Using a centralized software service for non-core activities like language learning is probably fine. However, enterprise organizations can be uneasy about trusting software hosted by third parties (in what’s almost ubiquitously called “the Cloud”). Blog posts and photos are one thing, but it’s quite another to place your internal strategy documents, confidential discussions and financial data on servers owned by another firm with no real guarantee that they’ll remain unseen by prying eyes. It’s also insecure on a technical level: by using the Cloud, you’re outsourcing the fidelity and availability of your data. A much more preferential option would be to gain the ease of use of web applications, but store them securely on local infrastructure.

Open source software is commercial.

Later in Markus Witte’s post, he discusses some of the things that are successfully given away for free on the Internet; among them is open source.

In contrast to Open Source software and Creative Commons, where developers and authors often work for free, ad-sponsored services are designed to make money – and they do. […] But there is another, more insidious, drawback of ad-sponsoring that is less visible to the naked eye: the true customers of these ad-sponsored services are not the users but rather the advertisers. And as everywhere else, the Customer is King.

His remark about open source developers is a misconception: most open source development is done for profit. For example, over 70% of Linux kernel development is done by paid professionals, with a commercial goal in mind. This may be the basis of directly commercial activities like support; a market-based goal, for example to diminish Microsoft’s share; or it may be to ensure the longevity of the infrastructure that a company relies on. (More web servers are powered by open source than not; Netcraft reported this month that 55.33% of active websites are running Apache.) Make no mistake: open source is a business model – one that marries the free ethos of the Internet with paid commerce.

The most common open source business strategy is to use your “community edition” – the unadulterated open source software – as a loss leader that brings users to your commercial products and services. Releasing your software under an open source license theoretically means you gain a community of developers; if your software doesn’t work in a particular set of circumstances, they will often contribute back a fix for the problem. They may also contribute plugins and extra code that extends the functionality of your product. They get software that works for them (and the security that they can always use and modify the code to fit their needs); you get a wider market that you can sell commercial services to, using a wider, more solid set of functionality. Whereas, as Markus points out, the advertiser is king in ad-supported software, in open source the user is king.

Here are some examples you’ve probably heard of:

• The database software MySQL is released for free under the GNU Public License. Unusually, you’re allowed to mix and match it with software released under other open source licenses (but not closed-source software): they really want their product to spread. This is because they’ve got commercial options based on training, certification, partner agreements and consultancy services, as well as extra features for power users that aren’t available in the community product. (See the article MySQL’s Quid Pro Quo.)
• Ubuntu is a version of Linux designed with ease of use in mind; it riffs on the interfaces of operating systems like Microsoft Windows and Mac OS X. Canonical, the company behind it, make money through extensive commercial support and partner services. The partner ecosystem is their main bread and butter; the more companies pay, the better access they get to the core Ubuntu team and project strategy, marketing materials, rights to use Ubuntu branding and so on. In turn, those things help the partner companies earn more through their downstream Ubuntu services.
• Android is an open source operating system sponsored by Google. Although it’s mostly been used on mobile phones so far, it can actually run on a much wider range of devices; Android-powered netbooks are beginning to appear. This has the benefit of holding back Microsoft’s market share – Google is positioning its application suite, which is paid software, against Microsoft Office. (Windows 7 is said to run well on netbooks, and Google will soon have two open source netbook operating systems out: Android and Chrome OS.) There is also a directly commercial component: although Android is open source, it has direct links to Google’s consumer applications like Gmail and Calendar. Those applications, both within Android and on the web, are not open source, and must be licensed.

There are many more. Check out Network World’s list of 10 open source companies to watch, and note that one thing links them: they are all providing services aimed at the business market.

Charging for web-based software.

Google and Microsoft have both demonstrated that the market is ready for web-based business software: products that have the benefits of the web (you can access it from anywhere, on any compatible device) but are designed with the needs of enterprise organizations in mind. It must be secure, have the ability to be installed on an organization’s own infrastructure, and have a solid business model that ensures longevity of the product.

I also strongly believe that an open source development and licensing model, when coupled with a strong commercial strategy from the outset, is a great way to build a product’s feature set, userbase and reputation on the kinds of budgets that web startups are used to. It also makes it easily available to students, as well as a vast talent pool in places where buying software at western license prices is a trickier proposition; two groups that can be invaluable for promotion, feedback and involvement.

Finally, the commercial open source model for web-based applications allows you to easily create an ecosystem: if you create a compelling application that really does have a solid business model, other companies will be very interested in taking a cut. The more people who have an interest in your product succeeding, the better. If you give them a solid commercial reason to invest upstream, and create a great product that makes end-users’ lives easier, everyone wins.

Related entries

• Using game dynamics to drive participation (1)
• Activity Streams and OAuth: a social web architecture (3)
• How social networks can replace email (11)

It’s not a Google strategy, but they’ve chosen to embrace and extend it: the web is turning into an application platform.

Google announced Chrome OS today – an operating system for netbooks, designed to boot up in seconds directly to a browser. Applications run using HTML 5 standards, which include support for offline applications and advanced interface capabilities.

More than that, it’s an attack – not just on Microsoft, but on the old model for operating systems and home computing. The web allows greater ease of use (no application installs!), lower resource requirements (perfect for those netbook CPUs) and instant connectivity. Social functionality becomes intrinsic to all software on the platform, rather than a product in itself. See Building the User-Centered Web for a detailed analysis of how software will change, and why.

Of course, if this revolution happens through Google Apps (or applications hosted on the Google App Engine), running Google advertising and saving to a central Google Account, well, they’ll just have to live with it. I’ve argued before that Google Wave is a Sharepoint killer, but this move makes that positioning explicit; Google is set to directly take on Microsoft. By making the operating system open source, they’ve invited everyone to join in.

It’ll be an interesting battle: while Windows 7 won’t ship with a browser in Europe, Chrome OS is all browser. More broadly, web applications could help with much-needed cost cutting in places like schools and public institutions, so there’s a lot at stake here.

As regular readers will know, I’m very interested in this change, and I plan on getting my hands dirty helping to build a decentralized user-centered web that, like the web at large, is owned by nobody. There’s still more to be done. Watch this space.

Related entries

• Building the user-centered web (8)
• Charging for software in the age of web apps (2)
• Social networking: beyond the silo (1)

The following post contains my notes for a talk I gave at the Hauser Center for Nonprofit Organizations at Harvard University on June 25, 2009.

What is a social network?

I would like to reclaim some language:

Social is an adjective that means relating to human society and its members.

A network is an interconnected system of things or people.

Therefore, I’d suggest that we can define a social network as just being an interconnected system of people.

The audience of this talk is a social network; so are your friends, colleagues, interest groups and so on. Social networking tools facilitate social networks. The universe of social tools certainly includes web applications with social functionality, but it also includes structured face to face interactions, telephone, post, SMS, email. In other words, the web is just one possible tool for this purpose – albeit a very effective one.

If you build it, they will come

You can’t install a social networking tool and instantly expect usage: Field of Dreams is not a good model for community development. The web is littered with ghost sites created using Ning, Elgg and more that have been established in the hope that a user-base will magically appear; however, if your main selling point is the social network itself, nobody’s going to join until that network of people exists and is actively using it. It’s a chicken-and-egg problem.

Therefore, you either need to have an existing network of people to facilitate interactions between (for example, when Facebook launched at Harvard) or compelling functionality that is useful without a network of existing users (for example, Delicious).

If we’re creating a tool that’s useful for the first user who signs up, without a pre-existing social network, then what we’re really talking is a software application that uses the web as an interface, and happens to have social functionality as one of its features.

The web as applications

When the web was conceived, it consisted of documents and pages linked with hypertext: linked words and phrases that, when clicked, would load another, relevant document. Each page had its own Uniform Resource Locator, which allowed you to return to that specific page at any time. Each page could be a destination in itself, and although the sites (collections of pages) could be linked together through hypertext, each one had no need to know about your activities elsewhere on the web. Why would they? Documents don’t have memory; their role is simply to impart information.

Step forward to today, and the web is not entirely made of pages: applications now represent a large amount of the web. (Princeton WordNet defines an application as “a program that gives a computer instructions that provide the user with tools to accomplish a task”; Google Docs, Remember The Milk, Flickr, Delicious etc are all applications by this definition.)

The benefits are tangible: you can access an application’s functionality from any web-compatible device, anywhere in the world. You’re no longer bound to the software you happen to have installed on a particular machine, and you no longer need to worry about whether you’ve remembered to save a particular file onto a particular drive. Because of historic resource limitations, web applications tend to be easier to use, and entirely bypass the need for IT departments, which have unfortunately earned a reputation for being obstacles to productivity in many organizations.

This change of web usage has been reflected in the ongoing development of HTML, the markup language that all web interfaces are written in. The first four versions were largely orientated towards documents; however, HTML 5, currently in development, is the first version that explicitly contains functionality to support web applications. That includes offline storage and usage, sessions, and more advanced interface features. However, aspects of the document-orientated model remain.

Silos of information

Each application is its own atomic destination with its own URL, and is by default only aware of data created within it. That means we need to register for each application we want to use, fragmenting our accounts over potentially hundreds of products and company data centers, and that the documents, files and data we create within them can’t easily be shared with other applications. On my desktop, I can write a document in Word and open it in OpenOffice, or take a Paint doodle and load it in Photoshop, but there’s no easy, generic way to take my bookmarks from Delicious into another bookmarking tool, or to take my Google Docs and open them in Acrobat.com.

Currently, each web application is like a silo: they exist on their own, and if they interoperate at all, it’s through specific links between applications that have to be individually developed. Certainly, data created in an application stays in that application; sometimes you can check your GMail address book for contacts in order to find existing friends on a service you’ve just signed up to, for example, but it’s rare that you can actually export data fully into another product. As many of these services are free, a significant portion of their business models revolve around being able to control user-contributed data, keep users coming back, and sell user-generated activity data for marketing purposes. (One has to question whether the market for personal details will continue to be profitable, or whether, like the web advertising market before it, it will saturate and crash.)

In a social networking tool, the site model means that your contacts, the information you share and any detailed access permissions all relate solely to the application they were created in. However, collaborative spaces in social web applications are like documents: they’re one of the currencies of the social web. Just as I need to be able to use my wordprocessor of choice to edit a document, I need to be able to use my social tool of choice to collaborate with others.

Turning the model upside down

Right now, we have to register with each application we want to use. What if we required each application we used to register with us, in digital identities under our own control?

What if, using these identities, anyone could connect to anyone else, and anyone could store their data anywhere as long as the storage provider followed the same broad standards?

The web itself would become a social networking tool.

This is far more flexible, and future-proof:

• Your ability to collaborate is not subject to a single company’s success: social functionality and application infrastructure are inherent in the web itself
• The possibilities for collaboration are not subject to technology beyond common open standards, which can evolve
• A wider range of application possibilities is ensured, because web applications gain the ability to interoperate in a general way
• Privacy and user control are established by allowing a person to determine which application has access to which data

By establishing a general standard for social application interactions, the services and technologies used to make connections become less relevant; the Internet is people, one big social network, and users no longer have to worry about how they connect. We can all get on with communicating and collaborating rather than worrying about where we connect.

User-centered identities

Under this model, providing the software that hosts your digital identity becomes big business. This hasn’t gone unnoticed by the main service providers, and they’re already fiercely competing to be your identity on the web:

• Facebook wants your central identity to be a Facebook account (and arguably have made the user-centric model for the web part of their strategy for a very long time)
• Google wants it to be a Google account
• Twitter wants it to be a Twitter account
• Microsoft wants it to be a Live ID
• OpenID want it to be any OpenID-capable URL

Because I use all of these services, the result is a very complicated identity space. These are a subset of my profiles:

• facebook.com/ben.werdmuller
• google.com/profiles/benwerd
• twitter.com/benwerd
• profiles.yahoo.com/u/4IZCH2K6PEV775MICYR3DXMAMQ
• benwerd@gmail.com [my Microsoft ID, ironically]
• benwerd.com [my OpenID]

For identities to be usable as a generic standard, you should be able to use any of these – or all of them. Nobody has just one facet (or persona) comprising their identity; everyone has a collection, representing the different parts of their lives. Ben Werdmuller the web strategist for hire doesn’t need to be connected to Ben Werdmuller the Doctor Who fan, who in turn doesn’t need to be connected to the Oxford resident. They can be connected if I choose to make them, but separating parts of your life is part of a user’s control over their identity.

However, that needs to be context-specific, not application-specific. Currently, for example, my Facebook account tends to be personal, while my Twitter tends to be professional. That doesn’t make sense: in order to write personally on Twitter, I either have to accept the collision of those two parts of my life, or I need to create an entirely separate, fragmented Twitter account. Wouldn’t it be better to be able to control who sees which interactions, and choose tools based on the functionality they add to a conversation? Otherwise you have the situation I present above: one identity per communication context per application. That will quickly become unmanageable, and the web will be littered with dead profiles.

Conversely, I believe the future of the web is in atomic digital identities based on permissive, open standards, linked together as an application framework.

How do we make this work?

Problem to solve: user control

First and foremost, the framework for decentralization must be established – in other words, the actual social mesh standards that will make it possible.

Technical mechanisms need to be established for controlling access to a resource or collaborative space, which should be easy to use without removing any of the flexibility of the platform, and should allow for the maintenance of multiple personas.

Another part of access control is allowing a resource to expire gracefully. It’s important to know when to lose data: sometimes documents, resources, spaces, personas or entire identities may be transient and only required for a certain length of time. There’s no need for everything on the web to exist indefinitely; currently, rigorous indexes like Google ensure that much of it does.

Finally, the tools and standards we create must be permissive of goals, content and structure that we might not have thought of. There certainly doesn’t need to be an overarching structure or taxonomy between individual identity spaces, and constraining the technology to a rigid set of activities and data types would limit the scope of the platform.

Problem to solve: ownership

Existing web applications tend to have a single-ownership model for resources. However, Silona Bonewald rightly pointed out to me that this isn’t always the case, and in a free-flowing social mesh, multiple ownership needs to be represented. For example, all collaborators on a resource should have ownership access, unless they explicitly choose to rescind that right.

In a company environment, a user’s employer may have shared ownership (or full ownership, with author access available to the employee). The same may be true with students in a university environment. On sites like Facebook, the service owner may in reality have some ownership rights over the content.

How can we maintain this granularity, but also retain user control?

Problem to solve: privacy & transparency

There is a very public attitude of "when you put something online, it’s published" in some parts of the software development community, which is a useful concept that gives developers carte blanche to share data freely. In a fully user-controlled environment, this public-or-completely-private binary situation can no longer be the case; a resource may have been published to a few select people. Ignoring this trait disallows the platform’s use in important environments like enterprises or public bodies.

When you sign up to a service, you agree to that service’s terms and conditions and privacy policy. However, your data may be farmed out to a collection of other, secondary services via APIs, without your knowledge or consent.

An important aspect of user control is knowing how your data is used and where it is transmitted by the applications you use, so I propose a simple, human-identifiable and machine-readable mark that:

1. Applies permissions to how my data can be used by applications (like Creative Commons does for shared content)
2. Tells you in a visual way what happens to your data when you visit a site
3. Incorporates multi-ownership

It may be that these issues are addressed within the terms and conditions of a service. However, it’s very unlikely that a user will actually read the full contract. Therefore, a simple graphic icon with a link to a plain-English description, with an underlying microformat for machine-readable use, would be a welcome addition to the user experience. As the web becomes more mesh-like and data moves around more freely, conveying what happens to data owned by less-technical end users will become more and more important.

Problem to solve: platform

Finally, while it’s great having a conversation about this, these ideas aren’t useful to anyone unless someone goes ahead and builds it.

There are some existing projects and thinkers who are on these tracks:

• The Diso Project is turning the WordPress open source blogging tool into a decentralized digital identity through an array of open standards, and the project’s Chris Messina has a lot of wise things to say about its development.
• Laconi.ca is a decentralized microblogging platform, whose Open Microblogging standard may be adaptable into a more widely-scoped technology.
• The Open Stack is a set of developing technologies that address some of the issues.
• Marc Canter’s Open Mesh treatise goes into detail on many of the issues.

All of these are important contributions that strongly address some of the issues; however, we’re still a long way away from the vision of an open, social web.

Conclusion

I believe strongly, for the reasons stated above, that a decentralized, user-centered model for the web is the best way to advance it as an application platform.

Needless to say, I have my own ideas about how to actually build the platform, based on my Making the most of the web principles. However, it has to be a collaborative process: there’s no sense in building an open collaborative standard by yourself. My main concern is that the platform is created and works in an open, lightweight, flexible, easy-to-develop-for way while remaining secure and yielding control to the main user. The result will be an entirely new kind of platform, and presents a unique opportunity for anyone who wants to jump on board.

Images:

• WOW! My 1000 Friends by Cavin was released under a CC Attribution Generic 2.0 License
• Lonely Tree by Jule Berlin was released under a CC Attribution Generic 2.0 License
• Logo 2.0 part II by Stabilo Boss was released under a CC Attribution-Noncommercial-Share Alike 2.0 Generic License
• Upside Down by Johnny Jet was released under a CC Attribution Generic 2.0 License
• Pro Control 24 by Aud1073cH was released under a CC Attribution-Share Alike Generic 2.0 License

Related entries

• Social networking: beyond the silo (1)
• The Internet is People (3)
• User control on the open web (8)

TI sees projectors as popular as cell cameras.

And they may well be right. The cellphone really is turning into the ‘portable multimedia computer’ that Nokia always talks about: an Internet connected device that allows you to download and play content, as well as record voice, video, photographs and documents and send them back into the cloud.

I think Apple and Google both see this; Microsoft seems to be a step or two behind, insisting on marrying its mobile operating system to its legacy Windows platform. I’m sure they’ll wake up eventually.

Related entries

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• iBooks is a killer app for ebooks (1)
• Reflecting on 2009 (1)