Hadetoleaveitalone

Wednesday, December 8, 2010

Making Money on the Internet

Twitter launched a number of new features for its website today that allow more companies to embed their content in the site’s right-hand media pane, making the site feel even more “app-like.” Coincidentally enough, while Twitter was making this announcement Google was launching Chrome OS, and talking about all the great apps that users can download from the Chrome store — many of which cost money to download and have features that don’t work fully unless you are using a Chrome browser or the Chrome OS. One is about the web and the other is about apps.

Obviously, Twitter has apps too — it has an iPhone ( aapl) app, an iPad app and an Android app, and may even be working on a Chrome OS app. But the company has also been spending a lot of time and resources on its website and adding new features to it, including the ability to embed Slideshare presentatations, Instagram photos, iTunes links shared via Ping, YouTube videos, Rdio tunes and other multimedia content. The new version of the site (which is still being rolled out to users) even feels app-like in the way content slides out into the media pane. But you don’t have to download it and you don’t have to pay for it.

The features that Google’s Chrome OS apps have to offer are nice as well, and the user interface in many cases is very slick, but they still represent new apps that users have to find and download from a new app store, just as they have to download apps for their iPads or iPhones, or their Android devices. Everyone seems to want to have an app or an app store — even Mozilla is apparently developing one — in part because of the monetization potential that many see, not just from users paying to download the application, but also from in-app purchases or subscriptions or upgrades.

So what happened to just using the Internet and the regular web? The father of the web, Sir Tim Berners-Lee, wrote recently in Scientific American about the rise of the walled-garden approach to applications, and his concern about how users are being restricted by proprietary platforms, with limited abilities to link or share content, both of which are at the heart of the web’s power — and he is right to be concerned. In some ways, the web seems to be getting subsumed by a flurry of different platforms and app stores.

One of the powerful things about HTML5, as Google CEO Eric Schmidt noted in his talk following the Chrome OS launch, is that it allows developers to produce rich, interactive websites that look and feel like applications. So why don’t more companies take the approach that Twitter is taking, and develop better websites instead of focusing on building apps for a dozen different stores? Obviously apps have a number of benefits — monetization through downloads being one of them — but there are a ton of benefits to just having a better website as well, and one is that anyone can use it without having to pay for it.

Related GigaOM Pro content (sub req’d):

Why Google Should Fear the Social Web

Lessons From Twitter: How to Play Nice With Ecosystem Partners

What We Can Learn From the Guardian’s Open Platform

A new federal investigation is focusing on the legality of supply line leaks and their consequences on Wall Street. The poster boy for this would have to be Apple, around which an entire manufacturing and distribution channels has grown, and which is now too big to plug every leak — especially now that memetically propagating news magnifies every murmur into a clamor, for better or for worse.

The subjects of the probe are some research firms that make it their business to know what’s going on in, say, Shenzhen or Taiwan, where friends and industry experts dispense information that may or may not be confidential about such things as big new orders, equipment changes, and meetings with other companies. The feds say that at some point, these things must constitute insider trading. I say good luck drawing that particular line.

It’s funny watching various sectors react as their perimeters begin to come in conflict with the internet. Not only because that initial reaction usually simultaneously overreaches and underestimates, but because I relish that moment when an industry or person realizes exactly what a den of vipers they’ve stepped into. I wish I could actually be in the room when they first understand the situation.

The financial industry and its regulators demonstrate a strange mix of progressive and antiquated thinking. Not to get into political or big money issues here, but even the limited democratization of information currently underway could have serious implications, though there are channels of information deep enough and obscure enough that even 4chan might not be able to uncover them for quite some time.

In the meantime, more public forms of “inside” information are becoming public knowledge, and I think the feds are going to have a hell of a time laying down the law on what is confidential, what is privileged, what is within the bounds of journalistic anonymity, and so on. They’re getting hit with the industrial equivalent of privacy concerns.

For example, what role do confidentiality agreements signed in China by factory workers have in our laws? What about temporary agreements when they do contract work for an American company? Is a factory floor employee allowed to connect the dots by himself, with knowledge only of, say, what size the current iPad is and what size the unbranded display he’s assembling is? Is it the corporation’s responsibility to compartmentalize and enforce secrecy, or is it each individual company’s? Whose is the liability when a truck delivers an iPad 2 to the wrong address, and some Hong Kong blogger picks up on it?

The SEC and whoever else is involved here will have to make a huge number of judgment calls, and a large portion of them will be wrong. Not that I blame them, or that I could do much better myself. But I will say this: any government effort to make illegal the free passage of publicly available information will meet with failure. How can you forbid a research company from making use of anonymous information provided to an industry outlet like Digitimes? They publish “insider” information every day, and I check it every day, because that is valuable information for what I do. Is similar information made confidential simply by the fact that it hasn’t been reported yet?

There is a chance that citing such information in decisions to sell, buy, and so on will become illegal. Think about how stupid that is. Yet the regulators are caught between a rock and a hard place, and either the law must change or they must disregard the now-outdated law in light of (relatively) recent developments in technology and information markets.

At the moment, however, it’s still appears to be just a preliminary investigation, so there’s no need to get too worked up about it. Still, be prepared for some strange and labyrinthine regulations concerning what information does and doesn’t constitute a breach of confidentiality. And then watch every single party affected sidestep those regulations. “Better luck next time” is all we’ll be able to say.

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