The recent announcement by Google that it would be consolidating it's several privacy policies into a new global one arose yet another wave of criticism and debate. It's not the first time and it won't be the last. It happened before regarding China and also about the unexcpected announcement of a deal with Verizon. And it also happens regularly towards Facebook (even considering that it is a walled garden) and even towards Twitter (which really still doesn't know what it is).

In my view this regular waves of criticism emerge from a basic misunderstanding of what's really at stake. And reflecting on it may shed some light on where we're coming from and where we're going.

First of all, one has to undestand why Google took such a move. In my view this decision is fueled by fear, not boldness. It's a defending move, not an attacking one. Google "ruled" the internet prior to the "explosion" of Facebook. It's business model seemed much more sucessful than Facebook's (which is basically the same) because when you search for something the ads that go along are much more relevant than when you chat with your friends in a social network. But the massive arrival of brands on Facebook created a very diferent business environment. That, multiplied by the explosive expansion in the user base, surprised and scared Google, that was for far to long not paying enough attention to the "social issue".

I see Google's overall work - as much as Facebook's, Twitter and all the other information companies -  like that of artificial inteligence. Google's search engine is "inteligent" enough to give us the right answer no any question we pose. If it didn't, we would have to look up the answer in books, for instance - using the book's author "intelect" - or arrive to the answer ourselves, thinking about it, and of course using our own "inteligence". For far too long, Google thought this apllied to information search, but not to social networks. It overlook social as something less rational and of inferior category. When it woke up it was to late to make G+ a real rival to Facebook. What Facebook proved - and now draws Google in, as much as so many other companies  - is the idea that there is racionality in social and that your social life can be as helped by artifical inteligence as any search of information. This is a trending shift that will change the technology landscape and on which Facebook has the edge. What Google is trying to do is combine all it's services to prodive it the social info inputs that it will convert into "social inteligence" in it's products. Facebook has an edge on time in the field, Google has an edge on expertise that it hopes to utilize. This is not Good or Evil! It's just the natural flow of business strategies.

But another thing always surprises me when companies like Google or Facebook are accused of being Evil. And that is both the aparent fragility of these companies and the kind of relationship we establish with them. I bundle both issues because I think both are connected and emerge from precisely the same causes.

First, why are Google or Facebook fragile? They certainly don't seem that way! Well, it's a matter of scale! Let's begin with this question: don't you find it strange that neither Google or Facebook or You Tube or Twitter really has any relevant competition and that either service has come to define what it does very much like a platform? Why shouldn't there be a search service really alternative to Google? Google search engine operates worlwide, Facebook has 800+ million users and Twitter is used in every continent. Yet none of them makes money in proportion to it's magnitude. Please put out of the equation the market value, which is based on expectations. I am talking about income. Can you imagine a Wal-Mart or a BP being used by pretty much everyone on the planet every single day? Or having 850 million costumers? Like someone who has worked in traditional media can tell you, you can derive more money from a single eyeball in a newspaper or tv commercial than 100 eyeballs in Google ads on your website. And Google's business model is certainly the most sucessful on the block. This means that the business is not changing; it's vanishing! The only thing that saves Google or Facebook or Twitter is their scale. Unscale them and they'll be gone as relevant players (hell, Twitter hasn't even found a way to make money yet! Nor has You Tube!). When stock markets value a company like Facebook, they are not assessing it's real value; they are considering the scale of it's 850 million users. But no one has told us yet how those 850 million users will be converted into comparatively big money. Probably they won't. If it wasn't for their scale, any of theses companies would be economically unsucessful. And that is why they have no relevant competitors.

It's pretty obvious companies like Google, Facebook, You Tube or Twitter are deregulating something, but it's not clear what it is is that they may be "regulating". We know they are undoing something there was, but we don't what will there be. Maybe there will be no business in the future and all these will evolve to community services with no profit involved. If we grant that a revelant share of their current estimated value derives from the expectation either of growth or of monetization of the user base, than that estimated value will cease to grow and will probably decline once de user base can't expand further or it becames clear (if it's not already) that there is no relevant monetization to be made (relevant, here, means accordingly to size, because we must never forget that Google, Facebook or Twitter are more global than any other company in the world's history).

Google, Facebook and Twitter, among others, are more like platforms than companies. They are more like a public service than a business. And that is why, in the end, we expect them to be Good and not Evil. In a way, they are ours. We connect to them in diferent ways than we connected to traditional companies. It may seem that that connection is diferent because they are quasi-monopolies. But it's really the other way around: they are quasi-monopolies because it's in their nature to be so, and that is why they are, in a way, a public service. "Information wants to be free!", and this is part of the information global system. Google always seemed to respect these principles. And that is why so many people think it has definitiely gone Evil. It hasn't. There's more to it than meets the eye.

The british singer, songwriter and drummer - and model - Florrie has an interesting approach to the issue of music's business model: she offers some of her tracks for free but in exchange for one of three things:

In an interesting recent article called "Why we need the news to be chaotic", Clay Shirky examines the future of news and concludes that media will have to try very diverse approaches, some profitable, some not.

I agree with him in most part, but I do not see the chaos as necessary but rather as a transitional period. It's really not "the media" that are searching for a new business model; it's society as a whole (even the civilization, if you want) that needs it, in order to maintain the "public good" of information spreading. And once it finds it, the "chaos" will be over!

Again, for me it all boils down to this basic idea: our information networks should be (and will be) - in fact CAN be! - inteligent enough to measure the value of the information they carry and reward it accordingly. This is what I commented on Clay Shirky's website:

The “Gutemberg Parentesis” hypotesis – don’t know if ou heard of it – is propably the most fresh idea I heard recently about the future of news. The special report published yesterday by The Economist folows that same route. It’s possible that the business of news is not really the natural condition of news and that the end of scarcity on the offer side really puts an end to any viable possibility of a news business model.

But – that’s the main flaw of the The Economist’s report – we must not look at the past to forsee the future. We will not go back to coffee shops! Twitter and Facebook are the new cofee-shops and the conversation we had with a couple of friends we now have with hundreds chatting and thousands hearing and spreading the news. The conversations we had oraly we will now have digitally. And that is a huge difference! It´s all the difference really!

Our digitally coded and digitally transmited information allows us to “embed” meta-information on that stream. That is how the search engines work, that’s how the social graph works. The network is increasingly intelligent enough to know what I want when I want it. Make no mistake: it will be more inteligent in the future. Not the same, nor less; it will be more intelligent, I repeat! It’s not crazy to predict that one day it will be intelligent enough to measure the value of the information it carries and pay for it accordingly, without the intervention of humans. Our forefathers who discussed public issues in coffe-shops gained prestige when they had valuable opinions to put forth. In those days, that “value” could not be measured. It the future it will.

That rationale is the basis for my rough proposal of a “New Business Model for the Media”, that can be read in detail here: http://josemoreno.posterous.com/a-new-business-model-for-the-media. The media are now in dire need of it. But it really transcends the media, in the way that it allows a new range of possbilities for content creation and information transmission in the future.

"When people say they like newspapers and books they aren’t just talking about the physical form of them: the feel and smell, the portability and tangibility. They are talking about the finiteness of them. Articles and books have beginnings and ends; they have boundaries and limits; they are packaged neatly in boxes with bows on top; they are a product of scarcity. Abundance is unsettling. That is precisely why the internet is disruptive not only to business and government but to culture and cognition. Threatening the dominion of the article is to threaten our very worldview. "
Jeff Jarvis - "The Storyteller strikes back"

In a recent post on GigaOm, Mathew Ingram looks at what he thinks traditional media companies need to learn from startups (following an also rich piece by Anil Dash and his presentation. Its a very interesting perspective.

The media business is not disapearing; it's "just" completely changing. We live in a world that has much more information fluxes than any era in our past. And the role of media companies has always been to "mediate" the information fluxes. That mediation is more necessary now than ever was before. The problem is that other companies than the media are doing it, launching services that take advantage of technology to curate and filter information to meet the need of information consumers.

Why can't media companies do it? Mathew Ingram lists some of the reasons. Most media companies are more focused on defending it's past than conquering it's future. They are like old animals in a jungle crowded with lethal predators (that don´t want the pray but only it's nourish). The more they try to preserve its traditional profits in the new media landscape, the more they loose new ones. The other reason is that even the efforts many media companies do to stay ahead with change are limited by the constraints its internal bureaucracy imposes on them. Media should create fully independent teams or even new outside companies with none but one tie to the old: full acess to it's content.

The content media companies have at its disposal, either archived or daily produced, is its great advantage in today's highly competitive media landscape. The problem is that many times they just don´t know how to use it other than in it's paper or website formats. In some cases they don't even suspect there can be other uses for it.

An independent or outside unit, hoghy focused on inovation through technology, would call most today media companies its paradise. They just call it their hell!

This infographic published in Paidcontent.org (and made by Scout Analytics) is very interesting in various ways.

First because it reflects one of the greatest changes the media landscape has suffered ir recent years (and is still experiencing): the current abundance of information as opposed to its previous scarcity has the effect or lowering the value of each information unit. That is the most solid argument against the possibility of the media ever discovering an alternatively sucessful business model. The problem is that argument departs from the assumption that the social role of the media would be the same in a new information environment. It will not! Maybe the social role of the media in the new world of abundant information will no longer be to carry scarce and valuable information but rather to filter and curate the referred abundance of information, which may turn out to be just as valuable. We're not sure that is the way we're heading, but we cannot also be sure it insn't.

Secondly, that infographic draws its conclusions from the comparison between a reality in which media use printed paper to carry information and another reality in which they use digital processing. The two realities simply aren't comparable. Why? Because one is "intelligent" and the other isn't hardly as much (per comparison, it may well be considered "dumb"). The digital processing and distribution of information has been made possible by advancements in science that could not be forseen. Why would not the same advancements in science allow an "intelligent" and efficient allocation of revenue to the bits and pieces of information that flow through the web? If we can control that information in a greater number of its variables why would we not be able to control its cost and attribute its correspondent revenue? We don't do it today, but I see no reason why we should not do it tomorow. And, of course, on that day the link between the production of content and its monetization will again be established, now in the digital world.

This is my presentation to the WAN-IFRA Iberica 2010, that took place ina Madrid almost an year ago.

In the context of the roundtable regarding "pay per content and revenue generation models in digital markets" (in which there were representatives from El Mundo, ABC e El Confidencial, among others) the debate was very interesting and got me thinking about this issue. The notion that there was money flowing that simply was not paying for the content whose value generated it was the spark to this.

PresWan-IfraMadrid2010

I've been a newspaper guy all my life and I've always respected very much the social role of the media in society. And I really think that role is even more crucial today than ever before.

But I've always paid extreme attention to the new ways information flows in society and experimented with most of them: blogs, social media of all kind, video and audio sharing, etc. And I really think the freedom of information that is changing society (and the world...) is ultimately a good thing.

 Last year I paneled in a WAN-IFRA international gathering in Madrid in which the issue of online media monetization was debated. And - summing up all the opinions - it became gradually clear to me that if news media really wanted to make money online, they needed a very different approach than the ones they were trying and that neither the paywalls (however sophisticated) nor the apps would be the definitive solution. In the following months I evolved this new business model for the media in the digital age, which I think responds to the needs of information consumers but also of the media companies, as well as those of society as a whole.
 

In the business model of the traditional media - that served well for decades both the consumers and the producers of information - the price paid for those who bought a newspaper or a magazine was redistributed through the chain feeding the necessary professional operations of each and every agent of the process. In the current business model of the digital distribution of  information, the client also pays a fee for the broad spectrum of information he gets, but that money is not redistributed to the chain. This business model proposed explains why and how that should be done.

In the backbone of this new business model for the digital media is this basic ideia: there is not enough intelligence in the network. If we want navigation to me seamless and profitable, we got to have a network that is smarter and capable of measuring and value the content that is channeled. The business model also explains how it can be done.
In this blog I will evolve this issue as a work in progress. I will refer to the posts and documents that led me to this conclusion and will try to illustrate in which ways this business model responds to the ongoing debate about the viability of the media companies in the digital age. That is why I called it SmartMedia!

Of course, all kind of commentaries are welcomed, especially those that point to flaws in the system.

A New Business Model for the Media