The world of measuring intellectual capital has gone through some highs and lows over the last decade. Coming from a capital markets background, I was excited when in the mid-1990s significant attention began to be paid to the valuation of intangible assets, and I was involved in a number of initiatives of institutional investors to value intellectual capital. In a knowledge-based economy, the tangible assets of a company – which is all an accountant can assess – have little correlation to the worth of the firm. However I soon realized that a couple of decades of hard work would be required to get traction on the issues, and I was happy to leave that slog to others. Now some of the hard work is really starting to pay fruit. The GAP Congress on Knowledge Capital in Melbourne, Australia in early November has high-level government support, and will establish a “Melbourne Protocol” on developing and implementing intellectual capital reporting. The background reading provided for the conference provides a good overview of the current state of intellectual capital reporting. The current poster-child is Denmark, whose Ministry of Science, Technology, and Innovation provides guidelines to companies on how to implement intellectual capital reports, and where a broad array of companies provide supplements to their annual reports. Intellectual capital supplements will be where the real action will take place over the next years. The question is which of the major players in the reporting space: listed companies, investors, regulators, and third-parties (e.g. auditors), will drive the uptake?
The amazing eMachineShop represents a turning point in personal manufacturing. The company enables anyone to create machine-shopped pieces using a vast arrray of techniques including milling, extruding, thermoforming, water jet cutting and far more, on any choice of materials, to create whatever they want. The company provides free, extremely easy-to-use 3D CAD (computer aided design) software which automatically inputs into their systems, so you can, within an hour of having logged onto their site, sent off a design to be created. The applications are vast – in essence you can make for yourself anything you want, at a low cost. No more unavailable car parts or overpriced spare parts for machinery, and sculptors can simply imagine their sculptures rather than work for years to acquire mechanical skills. The next phase from here is the rise of “fab labs“, where the creation of the piece is done in your own office or home rather than having to be sent away. This truly is about power to the people. What will be unleashed by the power of these tools, available to anyone?
I frequently refer to online services exchanges to illustrate the inexorable drive of globalization and commoditization. These sites, such as Elance.com, Guru.com – both of which cover all personal services – RentaCoder.com specifically for software development, the Europe-based GetaFreelancer.com, and a host of others, allow anyone anywhere to post a job they need done, and to get talented professionals globally to bid their lowest price for the work. Graphic design, web development, marketing, writing, administration, sales – anything that can be done virtually is offered on these exchanges. Elance’s tagline “Everyday Outsourcing” says it all, particularly when 40% of work performed crosses national borders. The exchanges first rose during the dot-com boom, then struggled, with notably eLance changing its model – as many other B2B exchanges – to selling software and corporate processes to complement the actual exchange itself. Now the approach has been validated and increasingly, independent professionals are offering their services online. The most obvious implications are global competition, and that services are becoming commodities. Most professionals who experiment with the sites are shocked at the prices at which some people are prepared to offer their services. Yet some people do make a good living from the business they win on the exchanges. The exchanges bring home the idea of “polarization” that I believe is one of the key aspects of the future of work. Many people around the world will find their work increasingly commoditized in the face of global online competition, with constant pressures on fees and their livelihoods. However those who have deep specialist knowledge, and can create unique insights and value by collaborating with other knowledge specialists – be they colleagues, professionals at other firms, or at their clients – will command an increasing proportion of economic value. These are realities of the network economy. Yet we must guard against the dangers brought about by this polarization.
The New York Times reports on increasing valuations for start-ups, with venture capitalists having to pay more to get into deals such as the recent rounds for the school social networking company Facebook and podcasting platform Odeo. That these companies are so hot is a great illustration of the themes explored by this blog.
On another level, this is one possible early-warning sign of another tech boom. For around four years now the technology sector has been subdued, hardly surprising after the extravagances of the dot-com boom. What’s interesting is that in this decade we have in fact seen many of the wild predictions of the late 90s quietly come to pass. Moving on from the selling-pet-food-over-the-Internet phase of technology commercialization, there is now a swelter of new technologies and – more importantly – applications that are compelling (or at least appear to be). Social networking technologies, pattern recognition, bioinformatics, new generation content production and distribution, location-based services and far more represent some of the new wave of opportunities. I believe it is inevitable that at some point within the next five years we will go through another technology boom, perhaps not dissimilar to that of the turn of the century. Those fateful words: “This time it’s different,” will be heard. So for those that missed out on the first boom, position yourself well!
The news that Google is moving into print advertising has aroused strong interest and commentary across the web. It is buying full page advertisements in technology publications, and slicing them into smaller pieces to sell to existing advertising clients. This is the first time Google has done anything outside the Internet. However advertising accounts for 99% of its revenue, so it’s equally fair to characterize it as an advertising company as an online search engine. One of the key features of the print ads is that Google supplies its own 800 numbers for people to call in, with calls forwarded to the advertisers. In the first instance, this allows direct measurement of results, in the same way as online advertisting offers. Google clients pay for clicks from online advertisements through to their website. Receiving a phone call as a result of an ad is the offline equivalent of this. Om Malik suggests that the 800 numbers could be part of a Voice over IP play for Google, while Gary Stein of Jupiter Research sees a related move by Microsoft as leading to a “pay per call” advertising model. This relates to FreeConferenceCall‘s business model, that offers (surprise!) free conference calls, and makes money on the traffic carried on its infrastructure.
Internet advertising in 2004 rose 33% to $9.6 billion out of $358 billion of global advertising revenue. Not an enormous proportion, but enough to change how advertisers think about reaching their audiences. Google’s model – and the Internet generally – allows completely tailored targetting of advertising messages. This thinking is beginning to go beyond the online domain. How far will it go? Certainly to interactive television and interactive print. Once combined with location-based technologies, tailored advertising will start to become immersive.
In a startling development, the Australian Army is considering sending broadcast SMS for recruitment purposes. Presumably they would meet Australia’s strict Privacy Act, however this is not fully clear from the news release. Particularly as SMS marketing is a relatively new medium, people tend to respond negatively unless they have actively opted-in to receiving messages, rather than having forgotten to tick a box somewhere to avoid getting on a generic list that will be sold to all-comers, the Australian Army included. The Australian government has implemented strong ant-spam legislation, so it is rather disappointing that one of its arms is undermining those messages. Legitimate SMS marketing definitely has a role, but if the medium is abused, there will be a backlash.
The BBC has just announced that its television channels will be available on the internet. “MyBBCplayer” will initially give access to selected programs, then potentially simulcast entire BBC channels. It will also give access to selected television archives. This a significant step towards the internet becoming a true broadcast medium, though that will play out over a quite a few years yet. BBC taking this step will definitely encourage other broadcasters to consider their play in this space.
On another front, video blogging (known as vlogging) is rapidly gaining traction. There aren’t many vlogs yet, however they are growing apace as tools such as Vlog It! become available. What kicked blogs off in the first place were the early tools such as Blogger.com, that meant anyone could create their own personal web presence for free and with no technical expertise. In between the free-format vlogs and online television, you have initiatives such as former Vice President Al Gore’s new cable television network Current TV, which asks for its viewers to submit their own video content, for example on news ignored by mainstream media. The channel still acts as a filter and arbiter, however it gets its content from the community. Perhaps the biggest impact of Current TV, for now, will be to build video production talent in the community. Less than a month after launch, the jury is still out on whether it is, as it claims to be, true community television. Douglas Rushkoff believes it’s a “kind of MTV-News, without the news.”
Blogs are a tool that can help us to see whether and how mainstream media are distorting the news. Anyone who has ever been interviewed by a journalist knows that what’s reported is rarely quite what was intended, with gross distortions through selective quoting commonplace. These misrepresentations are usually not malicious, often simply attempts by the journalist to make comments more “newsworthy”. However now interviewees have a right to reply. Prof. Roger Pielke Sr., a leading climatologist who resigned from the Bush administration’s advisory team on climate change had problems with how this was reported in the New York Times. He posted a blog on how he felt he’d been misrepresented, resulting in an exchange with the journalist. The end result was Pielke’s viewpoint came through as he wished. Our world is still far from transparent, but today, far more than ever before, mainstream media’s distortions – deliberate or otherwise – are becoming more visible.
When Google Talk was announced yesterday after months of swirling rumors, I decided not to blog about it, as I thought there would already be more than sufficient discussion on the topic. This blog is primarily intended to cover not-so-obvious yet deeply important developments. However a number of people have asked me for my opinion about the announcement, so here’s my take in a nutshell. The main response so far has been “So what?”, as on the face of it the instant messaging and voice capabilities of Google Talk don’t match the competition. However remember that Google’s free email service Gmail has been in Beta for 17 months, requiring a personal invitation to join, and has done well despite this pretty major constraint. Google wasn’t looking to take over the world on day one with free email. Same story with Google Talk. It doesn’t need to be whiz-bang for it to be positioned over time for synergies with other parts of their suite. Which is exactly the point in that Gmail is now open to the public, and having a Gmail account a requirement to use Google Talk. The bigger part of the story is that Google Talk is based on the open-source, open standard Jabber. The refusal of Yahoo, AOL, and MSN to allow interoperability of their instant messaging networks is one of the classic standards battle case studies. Of course, Google adopting an open standard and inviting the other players to interoperate doesn’t change the world. However it’s one of the more powerful single events that is likely to shift the status quo. If Google Talk gets traction, which as it adds features and integration into other Google tools it is very likely to do, the benefits of interoperability may finally shift the IM landscape. As a latecomer to the space, that’s exactly what Google wants.
The media landscape is rapidly shifting. Newspapers and magazines have seen the writing on the wall, with over the last six months US newspaper circulation dropping 1.9% and newsweeklies also slipping fast. Classifieds – which represent almost half of newspapers’ advertising revenue – are being assailed by online alternatives. McKinsey & Co executives recently forecast newspapers will lose 20% of their classifieds revenue by 2007. This is undoubtedly too optimistic. Competition is not just coming from the online recruitment sites such as Monster.com and local city classifieds such as Craigslist. An entrepreneurial unit in eBay has established Kijiji as an independent classifieds site, with local operations around the world, including across many Chinese cities. Newspapers have been responding by buying online properties, notably Washington Post buying Microsoft’s online magazine Slate in January, and New York Times acquiring About.com in March for $410 million.
In the next phase media is focusing on the power of social networking technologies. News Corporation spent $580 million last month to buy Intermix, with the youth networking site MySpace the jewel that merited the price. This gives News Corp access to a whole strata of society who are not prime consumers of traditional media. Its Australian rival Fairfax recently spent $A39 million to acquire online dating site RSVP. Google, which is increasingly moving into media space itself, acquired mobile social networking company Dodgeball earlier this year. The future of news media – and especially its revenue models – is increasingly focused on running the networks within which people interact, rather than simply broadcasting information one-to-many. Watch this space.