Ecommerce Pitstop

In several countries more official data are being issued in raw form so that anybody can use them. This forces bureaucrats and creative types to interact in new ways

Correction to this article

YOU might think that Clay Johnson, a campaigner for transparency, would be pleased to see a ferret, with a deerstalker hat and magnifying glass, pop up on his screen. This creature is the mascot for BetaDataFerrett, an online application offered by America’s Census Bureau. ...

Small businesses are using networks to become bigger

“HEY first peaches of the season are here. Come and get your peach pie @10am.” Simple tweets like that have helped Mission Pie, a small shop in San Francisco, drum up interest in its mouth-watering array of sweet and savoury pies. As well as twittering about its wares, the store also alerts customers to poetry readings and other events it organises. Krystin Rubin, a co-owner of Mission Pie, says the business had just 150 or so followers for a while after one of its bakers started sending out tweets almost a year ago. Then that number suddenly shot up to over 1,000. Over the past few months business has been very brisk and Ms Rubin reckons Twitter deserves part of the credit. “It has a sort of street credibility that’s not there with traditional media,” she says.

Other companies have discovered the same thing. Kogi BBQ, which has several trucks serving Korean food in Los Angeles, now has over 52,000 followers on Twitter and uses the service to tell customers where they can find its vans each day. Sprinkles, a cupcake bakery with stores all over America and nearly 94,000 fans of its Facebook page, posts a password to that page each day which can be redeemed for a free cake by a certain number of visitors to its shops. Such offers can attract a lot of attention. A survey of 1,000 heavy users of social networks and other digital media conducted in August 2009 by Razorfish, an advertising agency, found that 44% of those following brands on Twitter said they did so because of the exclusive deals the firms offered to users. ...

A proposed new tax typifies France’s ambivalent attitude to the internet

FRENCH internet executives, bloggers and web users cringed in early January when an independent report for the ministry of culture proposed a tax on online advertising revenues, aimed at American firms such as Google, Microsoft, AOL, Yahoo! and Facebook, to pay for new subsidies for the music, film and publishing industries. “Will they send helicopters to America to take the money?” mocked Pierre Kosciusko-Morizet, boss of PriceMinister.com, an e-commerce site. “The world now takes us for fools,” commented Bluetouff, a blogger, echoing hundreds of comments on French newspapers’ websites opposing the tax.

France’s recorded-music industry has been particularly hard hit by illegal downloading. Sales of CDs have fallen faster than elsewhere, while legitimate downloads have grown more slowly. Whereas legal downloads have compensated for around 40% of the fall in CD sales in recent years in America and Britain, in France they have made up for only 19% of the drop. To help French content online, says the report, the government should spend €40m-50m ($58m-73m) a year on measures such as subsidies for digital purchases and faster digitisation of books. ...

More bad news for the embattled newspaper business

THE decision to give away newspaper content free online is increasingly viewed as the business equivalent of Eve’s decision to munch on an apple. But any proprietor who wants to undo this error has a problem. If one newspaper starts charging, readers may migrate to those that remain free. If, on the other hand, a lot of papers begin charging at the same time, readers might be jostled into paying. This plan has always seemed optimistic. A study released this week suggests it may be completely wrongheaded.

Oliver & Ohlbaum, a media consultancy, began by asking people what newspaper they tended to read and whether or not they subscribed to it (most get their papers from shops). Then they quizzed readers about where they went for news on the internet. The results were consistent: when it comes to online news, Britons are shamelessly promiscuous. ...

The “peaceful rise” hits some turbulence; but China’s economy is not about to crash

THE thunderous applause that China has become used to has suddenly been drowned by catcalls. Celebration that it had seen the light on climate change turned to condemnation of its spoiling role at Copenhagen. Foreign complaints about the jailing of a human-rights activist and the execution of a mentally disturbed British drug-smuggler recalled the bad old days of hectoring from Western governments. Barack Obama is (at last) due to meet the Dalai Lama, and his government has gone through with the sale of arms to Taiwan. And Google, an internet giant that had been notoriously willing to tailor its services in China to repressive local regulations, has said it may quit the market (see article). Even China’s strongest suit, its booming economy, has been damned. Rather than cheering China’s success in shrugging off the “Great Recession” of 2009, some analysts say China’s prosperity comes at the expense of the rest of the world and claim that, anyway, it is heading for a crash. One describes it as “Dubai times 1,000, or worse”.

Two Chinese bubbles, in other words, seem about to pop. One is a confection of naive optimism that the rise of a continent-sized, authoritarian power could be accommodated in the global system without serious strains. The other is a “bubble economy”, characterised by excessive lending, overinvestment and overvalued share and house prices. The obvious comparison is to Japan in the 1980s. When this bubble bursts, argue pessimists, China will suffer a prolonged slump similar to Japan’s after its bust two decades ago. ...

The magic of 140 characters

BIZ STONE, one of Twitter’s co-founders, uses the term “social alchemy” to describe the way in which short, seemingly inconsequential 140-character messages are often transformed into something of real value. Imagine, he says, that you are having a drink at an airport bar waiting to catch your flight. You send out a tweet explaining where you are and what you are drinking. Perhaps you get no response. But it is also possible that a friend who is “following” you on Twitter happens to be in the airport at the same time, sees your tweet and comes over to say hello. Thus what would otherwise have been a solitary moment is magically transformed into a pleasant encounter.

Such serendipity helped Twitter attract 58m web visitors in October last year, according to comScore. Recently its growth appears to have faltered in America, but the service is still expanding in countries such as Japan and Germany. This has led to speculation that it could eventually make a dent in Facebook’s fortunes, even though size-wise it is not in the same league. Those who see a looming clash note that both companies are in the business of helping people to share information, and both have a real-time element to their services. ...

A row over climate change e-mails grows louder

AS POLITICIANS, policy wonks, businessmen, NGO types, hacks and hangers-on converge in Copenhagen for the forthcoming climate conference, a row over a set of e-mails from a previously obscure part of Britain's University of East Anglia is becoming ever louder, if no more illuminating. Two weeks ago e-mails and other documents that had been leaked or hacked from the university's Climatic Research Unit (CRU) were sent to various websites. Those with a longstanding opposition to action on climate change, from bloggers to members of the American Senate to the Saudi government, are touting the e-mails as a resource with which to derail the Copenhagen talks.

CRU's researchers use various techniques to reconstruct the temperatures of times past. Some of the reconstructions they have been party to have long been the subject of technical criticism, sometimes in peer-reviewed literature, more frequently on blogs, notably Climate Audit, an award-winning blog by Stephen McIntyre. The critics have made many attempts to get CRU to distribute the raw data and computer codes which its scientists work on. The e-mails and other documents read as though the researchers were obstructive in dealing with some of these requests, that some of the data they used were in poor shape, that they may have indulged in spin when presenting some results and that they really did not care for their critics. ...

Give a little, take a little

IF THERE is one thing that could halt the ascent of social networks, it is the vexed question of privacy. This is controversial because it goes right to the heart of the social-networking business model. In order to attract users, sites need to offer ways for members to restrict the information about themselves that gets shared with a wider public. Without effective controls people would be reluctant to sign up. But if a site allows members to keep too much of their information private, there will be less traffic that can be turned into profit through advertising and various other means, so the network’s business will suffer.

“There is a tension here because these networking sites are based on the idea that people will share information about themselves,” says Amanda Lenhart of the Pew Institute for the Internet & American Life, a non-profit research group. “If people stop swapping content then the sites will fade away.” There is some evidence that people are starting to become more sophisticated about the way in which they manage their data, which could have longer-term implications for the networks’ growth. ...

Two fallen internet titans are trying to regain their footing

“THEY never come back” may be an ironclad law of boxing, but AOL and Yahoo! are trying to prove that it does not apply to lumbering online giants. On December 9th Time Warner span off AOL, undoing a famously ill-conceived merger. A couple of days earlier Yahoo! and Microsoft finalised an agreement to merge their web-search and much of their advertising businesses, freeing Yahoo! to hone a new strategy. Peculiarly, both firms’ comeback plans hinge on giving away content to attract traffic and thus advertising—an online strategy that has disappointed many media companies.

AOL and Yahoo! came of age a decade ago in different corners of the internet: one as the biggest provider of dial-up access, the other as the leading web directory. Both soon turned into “portals” providing both content and communications tools, such as web-mail and instant messaging. More recently, both have drifted while the internet evolved around them. A series of weak bosses failed to do away with fiefs, professionalise management and keep the brands fresh, even as competition—from broadband in the case of AOL, and from rivals such as Google and Facebook for Yahoo!—ate into revenues. ...

Social networks have a better chance of making money than their critics think

ENTREPRENEURS in Silicon Valley, only half-jokingly, call it the URL strategy. The three letters usually stand for Uniform Resource Locator—the unique address of any file that is accessible via the internet. But in the world of internet start-ups, URL has another meaning: Ubiquity first, Revenue Later. This pretty much describes the strategy of most big online social networks, which over the past few years have concentrated on piling on users rather than worrying about profits. That has allowed them to build huge followings, but it has also raised a big question-mark over their ability to make money from the audiences they have put together.

At issue is whether the social-networking industry can come up with a wildly successful form of advertising that propels it to stardom in the same way that Google has been able to make billions of dollars from the targeted ads that run alongside the search results it serves up. Without such a formula, runs the argument, social networks such as Facebook will never amount to much. ...

The film business tries to learn from others’ mistakes

HOLLYWOOD came late to the internet. Protected for years from digital piracy by huge file sizes, it was not forced to develop an online retail model, as the music business was. Nor, having watched newspapers struggle on the internet, did it much want to try. This week it finally stepped forward, touting two systems for selling films and television shows online. The initiatives are well thought-out, reflecting the lessons learned from watching others’ mistakes. But they may also be too late.

Legal film downloads in America accounted for just $250m last year, according to Adams Media Research. In many countries there is no legitimate market. That would not worry anybody, except that sales of DVDs, the silver discs that rebuilt Hollywood’s fortunes over the past decade, are faltering. They have fallen from $12 billion in 2004 to $8.7 billion in 2009 (see chart). It seems that consumers have rediscovered renting—which is less lucrative for Hollywood—through the post and the rapidly-proliferating kiosks owned by Redbox. ...

A distraction or a bonus?

AN ASTONISHING amount of time is being wasted on investigating the amount of time being wasted on social networks. Studies regularly claim that the use of Twitter, Facebook and other such services poses a threat to corporate wealth. One published last year by Morse, an IT company, estimated that personal use of social networks during the working day was costing the British economy almost GBP1.4 billion ($2.3 billion) a year in lost productivity. Another, by Nucleus Research, an American firm, concluded that if companies banned employees from using Facebook while at work, their productivity would improve by 1.5%.

This assumes that people would actually work rather than find some other way to pass the time they have to spare. In the same vein, perhaps companies should also ban water coolers and prohibit people sending e-mails to their friends. The assumption that firms can block access to the networks altogether is also rather heroic. Some employees now have web-enabled smart phones, so trying to stop them from surfing their favourite sites will be another waste of time. ...

The smart way to hire workers

WHEN it comes to online networking, cyberspace often mimics the real world. There are networks such as Facebook and MySpace that are mainly for socialising with friends, and there are others such as LinkedIn, France’s Viadeo and Germany’s Xing that concentrate on work-related matters. The sites aimed at professionals, although much smaller than the ones for hanging out with friends, are already having a big effect on labour markets.

In many ways the world of commerce is a perfect place for a social network to flourish. Doing business, after all, boils down to managing a complex web of relationships with customers, suppliers and others. Professional networks make it easier for people to maintain such relationships and to forge new ones. LinkedIn, for instance, has over 500,000 groups—some better than others—on specialised subjects that people can join to share ideas and make new contacts. ...

The joy of unlimited communication

WHAT will the future of social networking look like? Imagine this: your digital video recorder automatically copies a television show that several of your friends were talking about on a social network before the show went on air. Or this: you get into your car, switch on its navigation system and ask it to guide you to a friend’s house. As you pull out of the driveway, the network to which you both belong automatically alerts her that you are on your way. And this: as you are buying a pair of running shoes that you think one of your friends might be interested in, you can send a picture to their network page with a couple of clicks on a keypad next to the checkout counter.

Networking types like to talk about the idea that there is a pervasive social element in all of the things people interact with. Listen to them long enough and you come away with the impression that your teapot will soon be twittering about what you had for breakfast. Some of the ideas outlined above may sound far-fetched, but a service such as Facebook Connect, which already lets people export their social graph of online relationships to other web-enabled gizmos, suggests they are not completely outlandish. Everything from cars to cookers could ultimately have social connectivity embedded in it. ...

Online social networks are changing the way people communicate, work and play, and mostly for the better, says Martin Giles (interviewed here)

THE annual meeting of the World Economic Forum in Davos, currently in progress, is famous for making connections among the global great and good. But when the delegates go home again, getting even a few of them together in a room becomes difficult. To allow the leaders to keep talking, the forum’s organisers last year launched a pilot version of a secure online service where members can post mini-biographies and other information, and create links with other users to form collaborative working groups. Dubbed the World Electronic Community, or WELCOM, the forum’s exclusive online network has only about 5,000 members.

But if any service deserves such a grand title it is surely Facebook, which celebrates its sixth birthday next month and is now the second most popular site on the internet after Google. The globe’s largest online social network boasts over 350m users—which, were it a nation, would make Facebook the world’s third most populous after China and India. That is not the only striking statistic associated with the business. Its users now post over 55m updates a day on the site and share more than 3.5 billion pieces of content with one another every week. As it has grown like Topsy, the site has also expanded way beyond its American roots: today some 70% of its audience is outside the United States. ...