RealTime IT News

IT Heavies Lifting Dollars For Blogs

BERKELEY, Calif. -- Once a unique place for hackers and geeks, blogging and social networking have now become multi-million dollar enterprises where IT heavies roam in search of money-making opportunities.

Few doubt the growing influence of Web loggers on the media and on the Internet. Just look at thousands of individual blogs documenting this week's Democratic National Convention in Boston as one example.

The industry itself has shifted from its early adopter stage to an "awkward adolescence," according to experts attending last Friday's BlogOn 2004 conference here. But major IT players like Microsoft, IBM, and others are finding that they can embrace blogs instead of fearing them and transition the communication platform from a technical tool to an enterprise goldmine.

"This is becoming a global phenomenon," Chris Shipley, BlogOn executive producer, said during her introduction to more than 300 industry leaders. "It is not accidental that this is happening in the social media marketplace and is happening faster than Web adoption. In the last three months, we have seen tens of millions of dollars of investments in this space. We are finding a community that is looking at this marketplace and is getting excited."

Using aggregation technologies of the day such as XML, RSS, for Really Simple Syndication or Rich Site Summary and Atom, blogs and personal journals are supplying tens of millions of bits of information every day. Polling firm comScore Media Metrix recently reported Google's Blogspot.com received 3.38 million unique visitors in March alone.

Socialtext CEO Ross Mayfield attributes much of the recent explosion in blogs to a ease of use and the relatively low cost aspects of the technology built on top of a Linux, Apache, MySQL, and Perl stack.

"Social media builds relationships. Connection happens before conversation, but still, this is business," Mayfield said. "What you will not find on your balance sheet is an underlying value proposition of enhancing social capital."

Some of the major IT players have tossed their hats in the blog ring early. One of the largest projects is Microsoft's Channel 9. launched in April, the community was built in about two to three weeks. Microsoft evangelist Jeff Sandquist said the idea was to humanize Microsoft and get people talking

"We embed video in there. Lean and mean," Sandquist said. "People shoot footage on campus. We edit. We put it up on the home page. There are all sorts of ways to participate in Channel 9. Not every employee can write a Web log. Some people contribute video. Some people just take a snapshot of what they're doing on any given day."

Channel 9 also has a wiki . "Whoever thought that people would want to help us edit Microsoft.com?" Sandquist said. "People are working to improve Explorer. The product group is working with those customers. There are many different ways to participate in channel 9, and people can also participate without even visiting the site."

The revolution is expected to eventually impact all of Microsoft's software. For its new Visual Studio Express Edition for C# programmers, the company is including sample code that allows users to build their own RSS Screen Saver.

IBM is also at the forefront of social media. Jim Spohrer, IBM venture capital relations group CTO, said the company is seeing a lot of value that can be created inside organizations with tools like RSS, Atom and XML.

"Businesses can be more efficient in tapping into their internal IQ," Spohrer said. "I'm on calls every day with people all over the world, and it appears that there's a lot of value that could be captured instantly. There's a thing called Coase's Law that touches on transaction costs inside a firm versus transaction costs outside the firm. The point is to have the internal transaction costs as low as possible. This first hit home with me at a recent meeting. We went out to dinner, we're sitting around a table, and there were 15 people other than myself. There was a sense of discomfort I hadn't felt for a while, and I realized that I wished I was on a teleconference with these people. I couldn't use my tools to learn more about them and their work, their goals, their achievements. I felt I was in the Stone Age. I'd have to be very slow to get information and rely on conversation."

Spohrer also pointed out that the environment for social media has to get smarter.

"Cell phones are going to keep getting better," he said. "You won't even have to open up your laptop; you could make a presentation through your phone. The cell phone, to me, is the more interesting platform to me. With cell phones, cameras, and GPS, which allows us to get into augmented reality -- walking around with your cell phone in China and Japan, you can see a sign, take a picture, and get a translation. It's getting better, but not as fast as we would like. This is a very inefficient meeting. Look at the archaic forum. I couldn't get online with the wireless. And the most social media is [the program]. There's a lot of information about people in here. I just wish I knew more about you in the audience."

Other major companies active in blogging and social media include Nokia, which is beta testing a program called Lifeblog. The 30 Euro (USD$36) software platform connects Nokia's new 7610 camera phone -- and later its 60 Series phones like the 6630 -- with a desktop aggregator that can automatically publish to an RSS feed. The program is scheduled to officially launch in either October or November.

Apple Computer recently included an RSS aggregator in its next generation Macintosh operating system that developers can take advantage of RSS and Atom technologies in their Mac-compatible applications.

And while the giants of IT take their swipe at XML and RSS aggregators, hundreds of startups are positioning themselves to take advantage of the situation. During the conference, VC investors like John Zeisler, a venture partner with Gabriel Venture Partners, are keeping their eyes on the future of social networking.

"You have to start at the bottom of the pyramid -- with the technology -- before you can move up the stack," Zeisler told internetnews.com . "There are a lot of startup companies that are working on bringing this to the enterprise. Some of the funding will come from large companies like Microsoft and IBM. Some will come from investment houses. But RSS and blogging is in its very early stages. this is the cognoscente."

Place Your Ad Here

As RSS goes mainstream, publishers have also started experimenting with ways to make their feeds pay for themselves.

For example, the New York Times partnered with blogging software maker Userland to provide ad-free news summary feeds; InfoWorld.com and some other publications have begun inserting plain text ads immediately after the text of their RSS feed items, much as Yahoo Groups mailing lists do with e-mail subscriptions.

Daypop.com -- a current-events search engine that crawls major news sites and Web logs -- paid its bandwidth bills for the year simply by placing ads on its front page and inside its RSS Top News feed. And then there are the myriads of value-added services that sell custom RSS feeds based on searches. For example, RSSJobs.com will monitor the results of your job searches on HotJobs, Monster.com, and other sites, and deliver the results in an RSS feed.

Blogs are also breaking the rules when it comes to traditional marketing methods. Founder and COO of ActiveWords.com, Buzz Bruggeman said his company launched its first product in 1999, just before the Y2K event.

"We didn't sell a thing for nine months. Then the dot com crash hit us, and we didn't sell a thing for nine more months," Bruggeman recounted. "So I had to figure out how these things work. I read a little book called the Cluetrain Manifesto. If a market is a conversation, what if a product was a conversation? How could I get bloggers to engage in a conversation about our product? I found who the really smart bloggers were, sent them our software, and they began writing about our product," he said.

"More than half of our downloads came about because of people blogging about ActiveWords. If it's about making it easier, making it better, and participating in this dialogue, it's extremely important. We got a four-star review in a major publication that has a circulation of 2.3 millions. They said, 'Get ready. And brace yourselves for the onslaught.' We got 32 downloads. Later, [Microsoft blogging guru] Robert Scoble blogged about our stuff, and we got 400 downloads. We need to learn how to leverage this stuff."

No Fear in the Enterprise

So how should corporations contend with social media? Lisa Poulson, a business consultant with Kirtland Enterprise Group, suggests enterprises watch and learn.

"There are a lot of people who have a lot of opinions about every corporation, and they're having conversations. That's free market research," Poulson said. "A corporation that is afraid of the participation that comes with conversation has larger problems. With social media, corporations lose control of when news gets released. That's OK."

Poulson also told internetnews.com that public relations agencies have to be flexible in using blogs and other social media.

"PR firms love to control the message, control who says the message, control who has access to who says the message and the timing of the message," she said. "Blogs upset the applecart in all four ways. But building that credibility and trust are still the basis for that individual relationship."

As in the case of Channel 9, Poulson said that the issues being discussed are not the voice of Microsoft directly, but of its user base. In that case, she points out that third-party sites can then give validation to the company's message or at least serve as a public domain for discussion and valuable customer feedback.

Editor's note: Internetnews.com freelancer Craig McGuire contributed to this report.