Google is trading above $400.  In the last quarter, their revenues were above $1.5B.  This means that they are selling a ton of ads.

The way Google’s advertising model works, most of these sales happen when someone clicks on an ad.  It’s very much a pay-for-performance model.  This means that a ton of people click on these ads.

Who are these people?  I don’t think I have ever clicked on a Google ad.  In my informal surveys, my friends and colleagues do not seem to click on these ads, either.  I am very curious.

The more I read about it in various blogs, the more upset I am that I missed Corante’s Symposium on Social Architecture.  Not only would it have been a good chance to catch up with a bunch of old friends, it would have also been a timely immersion in some of the best thinking in new media, especially around what’s being referred to as Web2.0.

I read in Marc’s stone that in one of the panels, Seth Goldstein said: "We all work for Google".  It distills a critical component of new media.  Root focuses on this issue.  As I blogged earlier, I am very curious to follow where it goes.

Is attention a new currency?

This seems to be a question that frequently gets asked in one form or another by old and new media participants.

I believe that attention has become a more liquid asset than before.  50 Years ago, when CBS was broadcasting a show, any individual’s attention to it mattered, but only to a certain extent. Any attention lost by CBS would likely go to ABC or NBC, and conversely, CBS benefited from all lost attention by ABC and NBC.  It was a closed system with no newcomers.

Fast forward to 2005.  Media is extremely fragmented, and getting more so by the minute. Technorati is tracking about 20 21.3 million blogs and that number is doubling every 5 months, according to David Sifry.

Simple economics.  Demand (population) grows slowly, supply is exploding.  Price of content is headed down, which means, the currency with which you can "purchase" content (explicitly here, I am speaking of advertising-supported content) is getting more valuable.  That currency is your attention.

I am  beginning to think about this in further depth.  Fortunately, there are many who must see enough (either economic or intellectual) value in this area and there has been some brilliant thinking.

– Tom Davenport, who may have coined the term "The Attention Economy" has a good book on the topic, co-authored by John Beck.

– Umair Haque explores the impact on the consumer.

– Seth Goldstein, who has recently founded Root has been thinking quite a bit on the topic.

I am very interested to follow the progress of Root.  Seth’s blog’s tagline is "Somewhere between Wall Street and Madison Avenue lies the future of both".  I suspect he’s hit the nail on the head.

Reading Fred Wilson this morning, I found out about Amazon’s new Mechanical Turk service.  (In a side note here, I am realizing that blogs like Fred’s have become my primary source of professional news. The losers include websites and newsletters, including Venture Wire – Alarm:Clock is much better – , atNewYork, Wired, Fast Company and a ton of human capital-related newsletters I had subscibed to in the past.)

Mechanical Turk is brilliant.  It reminded me of Jay Walker’s US HomeGuard, without the big-brothery implications.  (I presume Walker could not sell his idea to the Homeland Security folks, since I have not seen any press on it in a long while.)  I am curious to see if distributed collaboration will work more effectively in micro-chunks, as in the MT system, rather than large projects, as in eLance or Guru.com.

Also, the MT is a nice example how companies that have developed as platforms, especially with financial relationships with their users (such as eBay and Amazon), cnn jump into new areas with their user base.  In no time, Amazon has it’s own PayPal with credits going into its users’ accounts.  Reminds me of how large mobile operators have effectively launched their own currencies (with pre-paid cards and billing relationships with their customers) in developing countries.

Tom Evslin has posted a thoughtful commentary on why he thinks eBay’s made a mistake by acquiring Skype.  His principal points are:

1. In the markets where Skype’s strong, the primary barrier to eBay-type commerce is not lack of communications, but the existence of large "grey markets" where transactions go unrecorded. This fact devalues eBay’s access to new markets argument.

2. Skype’s not yet  "great standalone business" as eBay proclaims in its presentation on the topic.  Evslin thinks Skype is just an asset, with no guarantees of becoming a "business".

I still like eBay’s "friction reduction" thinking.

I have been thinking about eBay + Skype, and it is beginning to come together for me.  eBay’s presentation on the topic helps by putting it in the context of "The Power of 3", and the way they represent it, it makes sense.  I am skeptical of the 1% overlap figure, though.

Adjacent to the synergies they claim, I especially like how they are viewing their challenge as "removing friction".

Friction: Trust -> Solution: Ratings
Friction: Payments -> Solution: PayPal
Friction: Communications -> Solution: Skype

I am noticing that del.icio.us has become much more than a social bookmarking utility for me.  I use it far less for searching or research, and more as a repository of my browsing experience.  It has become my web memory.

I now wish there were ways I could do the same (i.e. search, notice, relate, tag, recall) with my offline experiences.  In offline experiences, I notice that I try to accomplish this with conversations.  When I read an interesting article in the newspaper, I turn to an office-mate and comment about it.  The dialog then forces me to think a few steps further, add context to the topic, and as a result, I suspect, I can remember the topic better.  There is probably some neurological learning research that validates this notion.

With the current buzz about the mobile-phone-as-an-input-device issue, the ability to scan some text (or image, or record an audio file), tag, and store it in a searchable format (in, say, del.icio.us) would be a killer app.
 

While I was away sailing the gorgeous waters of Gocek, MySpace, the media-darling Friendster-killer SNS (NY Times Free Registration required) got acquired by News Corp. for a nice $580m.  Congratulations to Redpoint Ventures, and especially Vantage Point, who’d come in earlier, for a nice exit.

Mark Pincus mentions reported revenues of around $9m.  If this is true, what really is the asset being sold?  I suspect it is the:

a) Trust
b) Attention, and
c) Future loyalty

of the MySpace users, 12-25 year-old music fans.  What a miss for MTV Networks…  Continuing good news for Craigslist, who enjoys an even broader audience, with the above 3 factors present.

I suspect music is a fairly universal connector.  Another I can think of is sports; soccer, to be precise.  Will there be a MySpace for sports?  Or, is MySpace the MySpace for sports?

Do you remember Healtheon?  It was the company founded by the legendary entrepreneur Jim Clark (his 3rd billion-dollar venture, after SGI and Netscape), with backing by the legendary VC John Doerr.  The idea and the company’s early stages were chronicled in the book The New New Thing by Michael Lewis.

Healtheon had an impressive promise:  the trillion-dollar diamond made famous in Lewis’s book.  The company would be situated in the middle of the busy intersection of patients, providers, pharmaceutical companies and insurance companies (payers).  It went public (HLTH).  The stock went over $100 in bubbly 1999.

Then what?  As a public company, in May 1999, it merged with the private medical content site WebMD, eventually takings its name.  Today it’s a medical information portal, with its stock price floating around $10.

Have you paid attention to your dealings in the healthcare sector lately?  Last week I received a bill for care that was provided over 3 months ago, which I had already paid.  Next time you are in your primary care physicians office, observe the office environment.  Take note of the stacks of files and paper.  Then, talk to your doctor about his practice costs.  We have not even gone into the litigation system in the HC industry…

To make a long story short, the sector is inefficient and burdened by excessive litigation, driving the costs to record increases.  HLTH had a good idea, but apparently the bubble busting and the industry’s resistance to transparency and efficiency, combined to marginalize the company into a content provider as opposed to a transaction enabler.

Too bad for all of us.  I am looking forward to see the next set of superstars to tackle this messy area.

What are the factors that have contributed to the growth of e-commerce?  I think basic trust is an important one, followed closely with information security improvements (e.g. SSL).  However, one factor has long been in place before the internet: Payments and remittance infrastructure, beginning with the post office, banks and their money transfer mechanisms, credit cards and ending with PayPal.

eBay bought PayPal in 2002, for $1.5B.  At the time, they had already acquired Billpoint, but had failed to gain marketshare against PayPal.  in 2002, 25% of eBay transactions were settled using PayPal.  In 2000, the rate was almost zero.  Meg Whitman had commented back then that the target rate was over 60%.

I have not been able to find out what that rate currently is, but browsing eBay, it’s easy to see that it must be very high.

I wonder if the infrastructure for peer-to-peer payment systems would disappear overnight, what would happen.  Would volume on eBay decrease permanently?  Would nervous shoppers move to stronger-brand merchants like Amazon, from the unknown counterparts on eBay?

I suspect so…  So for the markets where the auction market is still immature, is the infrastructure still too undeveloped?  I think an opportunity is hidden in the infrastructure side.