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AOL, 2006 Called and Wants Its Content Commoditization Strategy Back…

Photo by jdlasica on Flickr
It was a Monday like any other Monday. After a weekend of too much drinking, low-key football-centric Sunday celebrations (Go Packers!) and an early night to bed, I woke up this morning in the way I normally do on a Monday: Cursing ye gods of Mondays past, and hoping the day would not turn into the inevitable case of the Mondays that they all do.

Wearily, I reached for my laptop to find out what the Monday morning tech news buzz was and my eyes flew open in surprise: AOL had acquired the Huffington Post for $315M in a hybrid cash and stock transaction. This only a few months after TechCrunch had been acquired, also by AOL, for an undisclosed amount.

It was a deja vu kind of moment this morning as I saw the stereotypical business model of the mid-2000s flash before my eyes. In those days, everyone thought they could make money purely on advertising and content. Crank out the content, get more eyeballs, get more ad dollars, PROFIT!

The problem was (and still is!) is that the more content that is produced, the less valuable it becomes. It’s really very simple economics. More importantly, the advertising world has two buckets… maybe three if you put Adsense by itself in the lowest bracket. You have direct-buy, expensive, high-return type ads. These are most often purchased by big companies with big advertising budgets like Apple, Cisco, etc.

The second type of advertising (putting aside alphabet soup forms like CPA, CPM, CPC, etc) is generically called “remnant advertising”. Remnant ads make up the vast majority of internet advertising. It’s cheap to buy in bulk (and in a less targeted way), doesn’t usually pay a lot and, in general, is a good way to do commodity advertising.

This is what we did at b5media. I’ve not spoken much about my time at b5media because, frankly, it disgusts me where they’ve come. We actually had a good product going and things went awry. I won’t place blame. But what I will say is… we built that company on commodity advertising, commodity content, and had a tough time growing the company. I left with over 350 blogs in a dozen “channels”, each channel being a grouping of 20-30 blogs around a topic like sports or entertainment.

It was easier to try to do ad sales for a group of blogs on a topic, than it was to do targeted, lucrative advertising.

The problem with the b5media model, along with the Weblogs Inc model that sold (ironically also to AOL), the Gawker model, the Glam model, and now the AOL model, is that the content quality sucks. When I pick up a magazine or newspaper, I would not liken most media to The Atlantic or The New Yorker, both of which are highly intelligent publications that put out content that is exceptionally tuned and academic. The quality of the content is orders of magnitude higher than most newspapers or magazines (obviously including this blog).

Those publications are rare and can get private money from subscriptions, etc. The advertising route is the cheap route, and the route that business models go when they aren’t good enough to charge for access (a more reliable revenue source).

For the record, commodity business don’t normally pay their writers anything comparable to what their “colleagues” at uncommoditized media organizations get paid. That’s because, their work is not valuable unless it is in bulk.

Going back to the $25M Weblogs Inc acquisition in 2005, AOL has gone down this road of commodity content before. They even killed off a bunch of the WIN properties keeping only the ones that were truly valuable – like Engadget. They are taking a different approach and buying individual high-productivity sites now – which is better – but then their strategy is one that involves combining these sites, at least on a content integration level, into a mass-produced, commoditized content machine.

So is it really different?

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HipHop, PHP, and the Evolution of Language

A lively little discussion developed over the past few days on the DC-PHP developers mailing list. We have a very active developers group here in the DC area – much larger than most cities, in fact. Part of what makes our group great is the diversity of background and experience that is in the group.

This was front and center over the past few days when one of our members, Hans, offered his opinions on Facebook’s new HipHop for PHP product. We have already expressed our intent to help make WordPress compliant with HipHop, something that will be beneficial to major WordPress sites like TechCrunch, Mashable, VentureBeat, WordPress.com, the NFL Blogs, the NY Times blogs, the Cheezeburger network (LOLcats, FAILBlog, etc) that carry large amounts of traffic. I hope to be able to consult with some of these organizations on moving into a HipHop system once my head is wrapped around it and WordPress is compliant.

Photo by Josh Hunter
Photo by Josh Hunter

Hans is an extraordinary developer. I have never met him personally, but his depth of knowledge on issues of security and scalability is downright frightening. He offered his own opinion of HipHop on the mailing list and so I’m going to pick on him a bit:

This HipHop thing is interesting, perhaps in much the same way as HipHop music: it feels like a hack. — And I mean that respectfully in both cases; I like hip-hop music, and appreciate how it pays homage to R&B roots, remixing/reinterpreting them, etc; and I think that the idea of taking one language and building it out to something else is also something I should support. After all, I’ve embroiled myself in code generation tools (e.g. Propel) that are operating on the same philosophical groundwork. But I also believe that there’s a general rule like “if you need code generation, there’s something wrong [in your design or in the tools you've chosen or ...]” … so those tools also feel like hacks.

In all of life, there is an evolution that happens. One iteration of something becomes better with improvements over time. This has happened on a micro level inside PHP. Without PHP 3 there would be no PHP 4. Without PHP 4, there would be no PHP 5. Ben Ramsey talked about this evolution before Christmas.

Why is it a hack to improve upon the tools used with a language? Is it a hack to use Memcached with PHP? Is it a hack to run on nginx instead of Apache or to implement FastCGI? All of these are third party software or extensions outside of PHP. So how is HipHop any different?

That’s all fair, but I feel like the problem here is that somewhere a long, long time ago, Facebook *must* have realized that they were going to have scaling problems. Long before they started having a problem, someone *must* have thought “maybe a compile-at-runtime language isn’t the right solution here”. I guess to me this cross-compiler is just a public way to admit that PHP is not the right tool for the job, but they’re stuck with all these developers that only know PHP so it was somehow cheaper to engineer a way to change PHP to C++ than it was to retrain developers on C++ (or, probably more realistic, Java).

I responded in that conversation with an only slightly edited response. While I appreciate, and always have appreciated, his frank, honest, high level view of PHP, web security, web applications, etc., he strikes me as somewhat naive and puritanical.

What I can say is *I*, along with dozens of other technology people in and out of DC, in and out of PHP, never look at our initial ideas as scaling ideas. We look at them as ideas and experiments to see if they have legs. In fact, I’d go so far as to say it is counter-productive to think about scale before thinking of concievability (is that a word?).

There’s a reason why Rails (God help us) is popular. It’s a great prototyping tool. You stand up an app quickly and let it into the wild to see if it has legs. Does it go? What are the market influences? What are the
pros and cons? Do we have to adjust?

After a concept is proven, then a solid dev team with solid tech leadership brings in their expertise to see if the idea can be built into something sustainable. As a sidebar, please take a read of Brad Feld’s very awesome
post from a few years ago “The first 25,000 Users are Irrelevant“.

My point is, it’s silly and a waste of resources for startup people to start thinking about how big they might get maybe 5 years down the road. I think you’d find out that, in most cases, successful technology, web-based companies happened by some dumb luck. Twitter. Facebook. Name-the-popular-app. Dumb luck.

Hey, I’d even argue that when too much comp-sci brain energy goes into an app, you get things like Wolfram Alpha. Cool. But useless. And not nimble enough to actually do the scaling necessary to need all that comp-sci engineering prowess.

Balance, my friend. Balance.

Facebook (and others) start with PHP because PHP is fairly ubiquitous and easy as pie to drop into production. However, there is a point of no return where you are committed to PHP and that’s where HipHop comes in.

Personally, I wish we had HipHop when I was at b5media. We had a ton of scaling problems with PHP and we were running fully clustered Apache servers (25 deep, if I recall), sharded MySQL across 6ish database servers, and we had massive I/O bottlenecks. We ran eAccelerator and Memcached and had squid-based load balancing and damn if Grey’s Anatomy or the Oscar’s didn’t pin our entire network on more than one occasion. What could have happened with an alternate to opcode caching. What could have happened if I had resources to put on developing C++ binaries of our frequently used PHP libraries.

I’ll tell you. It would have rocked. We were already committed to PHP. We were already committed to WordPress. And when the company started, we were all volunteer resources. There was no assumption that our idea had legs or I think everyone on the team would have quit our jobs immediately and put everything into building that company. It took a year to get there.

This is, for better or for worse, the way companies get started in the real world.

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