The Paradigm Shift

One of the funny things about single handily creating a massive User Generated Content site is that you instantly become an expert on everything user generated.    This means I get to see emails from stock brokers and investment bankers on what I think of deals.

Now that the bubble is back i’ve started to see some crazy things,  like Video Sharing Sites and other web 2.0  sites looking to go IPO/Reverse Take over in the next few weeks/months.    It makes me think that we are back in the good old bubble  1.0 days

At Idate lots of companies where trying to sell mobile dating,  but every owner I talked to said thought mobile dating was a joke and would never amount to much.    The basic problem is that there is no such thing as mobile dating.  Sure you can put up profiles and make it look like a dating site  but no one actually uses it.    People who use “mobile dating”  are  mostly under the age of 24  and are looking to chat with others.  Mobile dating as it stands today is nothing more then a chat line, and most of the  mobile “dating” users don’t even have computers.    Online daters on the other hand are between ages 30 and 40 and are looking for longer messages and serious conversations.   Mobile daters are mostly looking to kill time and to chat for entertainment.

When trying to create a mobile dating site your existing brand is meaningless,  the only thing that matters is being on deck at a carrier as it is the only way to get users.  It is strange that all these mobile companies are pitching mobile dating as an extension of online dating.  They all know full well and admit in private that “mobile dating” and online dating are completely different markets with different demographics that don’t overlap.

Its been a really busy week this week,  i’ve been playing tour guide and i’m off to Europe early next week.   In my spare time today I was able to check up on various rankings of the dating industry.

The overture data has shown a steady rise in searches for plentyoffish over the last 6 months,  now behind only Match.com in the US market.   Hitwise just released their data set which comes from over 20 million users surfing history.  ISP’s send hitwise their data every night and 2 of the top 5 search terms in the dating industry are related to plentyoffish.com in the US.

This chart shows trends over the last few months based on overtures keyword data.  MSN search banned my site for a few weeks hence my drop in may.

I’ve found that domain name searches reflect the true indication of a sites traffic.   For things like economic indicators its even more accurate as the information is nearly real time.    People searching for homes corresponds extremely well to housing starts.   Americansingles.com  decline of 20%+ subscribers per quarter is reflected in the decrease in their domain searches.    There will come a time when traders, banks etc pay more attention to keyword search data then government  housing stats and other economic reports that are months out of date.   I predict in the next 5 years search data such as trends in search terms like “buy new home”  will have major impact and move markets and reports on housing starts will do nothing.

Jason Calacanistalks about how hiring the top digg users has brought netscape forward and will change the future etc etc.

Techcrunch asks if the balance is shifting towards paying users and also says netscapes pageviews have increased etc.

I think both views are wrong,  this is one of the few cases where I can look at whats going on with hindsight and the current players think this is all new unique and exciting.

The top 20 or so users on these sites will direct and set the culture of a site.  People who do not agree with the leaders,  ie their stories don’t make it to the top  will get pissed off and leave the site.   Eventually  you will start to get cliques forming that vote each others stories and take over a category,  much like what is happening at digg right now.

Now unless the top 20 of your users are intune with your audaince  your site will go nowhere.   Jason was able to buy his way into the market by taking away diggs leadership and instantly have some good stories brought up to the top. 

So what will happen to digg?   Pretty much nothing,  even if they banned the top 50 users the next 50 users would step up and become the top users and work as hard as the top users are now.    Because of the way the system works  the users 50 -100 have very similar interests as the top 50.  The top 50 just happen to get them up faster for whatever reason.  Social Media follows the power law,  if the A listers in the tech industry got hit by a train tomorrow,  there would be a completely new A list within a month.  This only works  if you have website or industry with thousands of contributors.

So what is the take away from all this?   If you want to buy your way into a market buy the top contributors your competitors.   If you are a huge site, develop a LOT of clique busting techniques.   When you get large numbers of contributors they all end up becoming friends,  or share a very narrow range of interests and ideas.   I have hundreds of thousands of users contributing to my site in various ways.   In places such as the forums i’ve gone and banned the top 50 users several times as cliques just get to out of control and have no connection to the mainstream anymore.   In the next few months  we will see digg  battle its top members as they fight to control the cliques and its not going to be pretty.

A guy went on craigslist posing as a woman wanting sex.   He then got a lot of responses and nude pictures sent to him from a lot of men many of them married which he then publically posted. 

http://www.waxy.org/archive/2006/09/08/sex_bait.shtml

I have to scan millions of profiles before they are allowed to post to my dating site and I also know much of the internal workings of other sites.  I have found the following.

1.   Adult sites  have 10 male profiles for every female profile.
2.   30% of female profiles looking for sex are actually men or otherwise fake.
3.   another 20% are escorts or intro’s to porn sites
4.  Another 20%+  are married couples, or just married cheaters
5.  There are a few real women,  but not many.
I delete the vast majority of “intimate encounters” uploaded to my site because people have to register to email and use the site I can detect all this crap.   Sites like craigslist can not detect this.

Lots of people say this guy is going to get sued or should get sued for publically posting information.   One can argue that there is no expecation of privacy, because you know before hand that the chance you are actually talking to a real person is far less then 50%.  

I just just amazed that there are enough men aka suckers out there making the sex personals industry a 1 billion dollar+ a year business,   several times that of the  “online dating”  business.

My ideas are simple, and if ever implemented will change how a lot of ecommerce works online especially via communities.

I believe all these other sites are going about monetizing communities completely wrong,  its not about selling stuff to users its about users selling stuff to each other. 

Idea 1.  To put it simply it would be a double blind gift system.

User A wants to buy flowers for User B on my site.   I send user A to flowers.com or some other site,  they fill out all their info and order  the flowers for user B,  flowers.com sends back user A to my site with a confirmation number and I then email  User B.  User B then comes back fills in their address info and the order is processed.

In this example,  I would pocket my $20.00 commission for selling flowers and there is a absolutely massive market for this stuff.   I tried to sell that idea to the flower companies 2 years ago  but they say its to hard to implement.  This is of course complete BS and right now this kind of ecommerce is not possible because no one supports it.  There are millions of people online that have online only friends.  For flower companies to completely ignor this market is pure stupidity.

Idea 2.

Lets say that myspace.com  puts a for sale sign  for the person that can be first on your friends list.   I come along and offer to pay $40.00  to appear as your number 1 friend for the next 3 months.   Myspace can pocket $5.00 and the user gets the other $35.00  How much is Honda going to pay  to become some rock stars number 1 friend ?  You can bet its more then $40.

Social networking sites can be like ebay,  instead of selling goods  they can auction off things like peoples popularity and influence.  Social networks should also allow things like the double blind gift system so they can buy things for each other like flowers, get well gifts, small Christmas gifts  ETC all with complete anonymity about the recievers address.

A interview on techcrunch has brought out a lot of responses from various bloggers.  Scoble mentions my site and talks about the need for others to think outside of the bubble,  do adwords  SEO etc and build things that people will actually use. 

The other comments about the article seem to focus around saying that we are in a bubble and companies are going to crash and burn etc etc etc.

I think there is a little bubble of stupid ideas, and many many people can’t seem to understand that you need to build products for the mass market  not for a bunch of extreme techies that just jump from one thing to the next.

If you have a lot of traffic  you can always monetize it.   The days of  the first bubble are long gone and there are now hundreds of thousands of sites looking to sell stuff online and buying advertising.  

The worst you could possiblely do with an advertising model is make 1 cent a unique visitor per day.

digg.com  800k uniques a day? = $8,000/day from advertising.

If you sell stuff you could of course make well over $1.00 a unique visitor per day.

Quote from the article.

“Paul: What I tell founders is not to sweat the business model too much at first. The most important task at first is to build something people want. If you don’t do that, it won’t matter how clever your business model is.

Of course you have to have a business model eventually. But experience so far suggests that figuring out how to make money from something popular is a lot easier than making something popular. “

In my opinion  if the cost of your operations are 2-3 cents a unique visitor  chances are plain advertising will bring you to profitability.   If your costs are over 10 cents a unique visitor then you will need to sell a product or service  this of course assumes a high traffic site with at least 100k uniques per day.    In about 2 years from now we will probably see a 30-50% decrease in operational costs as hardware and software costs continue to fall.

In this day and age you just can’t make up random crap and not expect to get sued.  There should be no difference between a blog and other forms of media.

 http://www.shoemoney.com/2006/09/01/shoemoneycom-involved-in-a-landmark-blog-case-slander-in-comments/