New Business Models, New Market Issues

The international tensions of the week haven’t been ended; far from them in fact.  Japan has raised its nuclear incident to a “5” on the international scale, between Three Mile Island and Chernobyl.  The UN, with both China and Russia abstaining, voted to approve any measures short of invasion in Libya, though at this point it may be too late to save the rebellion.  However, world markets see the moves as expected, anything expected isn’t as high a risk.  That’s sent stocks generally higher.

Libya has said it will halt its attacks, a move that’s sent futures up sharply, but of course we don’t know whether the promise will be kept and whether rebels will respond in kind.  Nobody seems to doubt that the world community wants the government of Khadafy toppled, and thus the move by the government in Libya may work against international interests unless it allows the rebels to win, which would mean that Libya’s cease-fire would have to be unilateral—hardly likely.

The big tech news is that Cisco intends to begin paying a dividend.  The decision has been long expected, and the dividend of six cents per share was enough to get the stock trading up a bit in pre-market action.  However, it’s little more than a percent, which hardly makes Cisco an income stock.  IBM’s yield is higher, for example.  Still, the move is important for Cisco in transitioning the company into a more mature model.  The question now is whether Cisco will be able to emulate IBM and continue to not only hold on to current incumbencies but also develop new ones (what the company calls “adjacencies”).

Continuing in tech, HP continues to talk up its own business shift, with WebOS, software, and the cloud being the big feature.  None of that is surprising, but there’s not a whole lot of order and architecture coming out of the company.  What does appear to be true is that HP will be pushing WebOS both in the consumer and business space, hoping to make it a true cloud partner.  Some analysts and media have speculated that the company would focus on business cloud users for WebOS, but I don’t think that’s likely.  The business cloud space is a good one for HP to be sure, but first they’d not have made WebOS a part of every PC had a business-only mission been their goal.  Second, the overall success of an appliance based on WebOS will depend on some consumer success; they can’t make a go of it on business opportunities alone.

Another interesting trend we’re seeing is the shifting of ad bidding from the book-space-annually “up-front” market of TV toward a more real-time bidding model.  RTB today doesn’t really mean real-time in the sense of when the ad is served a bunch of bidders collect and bid to be the one serving it.  Generally, it means that bidders have provided bidding policies to an engine that applies the policies to generate a bid for a given impression then awards the impression to the highest bidder.  The goal is to provide better targeting and better ad yield at the same time.

The tracking aspects of RTB certainly collide with the federal interest in do-not-track, which may well be why the topic has generated so much negative buzz.  Knowledge is money in the ad game, and when you consider that the total global ad budget is less than a quarter of total world communication service revenues you realize that only a successful few can hope to make a ton of money here.  RTB is a way to maximize yield, and thus it’s a driver to collect information that makes a given target valuable to advertisers.  The trend toward RTB will inevitably lead to higher monetization for social networks who can gather information more easily, pressure to accept DPI-based intelligence-gathering by ISPs, and much more tracking by more people, with the inevitable publicized privacy breaches.  Regulation here is coming, and largely because the industry won’t exercise collective discipline.  The browser players’ DNT technologies are only a gesture; more is needed and more is coming.  It’s only a question of who provides it.

Finally, the New York Times is following others into the world of the paywall, beginning yesterday for Canada and later this month in the US.  The decision is another indication that people are realizing that content is valuable and that those who can produce it have a right to expect some monetization, particularly when some of the use of news content in particular makes money for the user and not for the producer of the material (hence the tension with news aggregator sites).  While I certainly sympathize with the desire for free stuff, I also understand that this trend isn’t going to stop with the times.  Everyone in an ecosystem needs to live to play their own role, and that’s something we’re just now learning about the Internet ecosystem.  It’s not going to be an easy lesson for many.


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