Pajama Entrepreneur

Blyk has finally launched in the UK, with service coming to other European countries in 2008. I’ve been waiting for Blyk to begin its service because the model is totally different from that of other operators:

• only 16-24 year olds can get the service
• they get 43 minutes and 217 text messages free every month
• they agree to receive up to 6 messages per day from advertisers of their choice

Read more on Muniwireless.

This is a much more acceptable way of advertising that Pudding Media.

I don’t know whether to call Pudding Media the most loathesome business model in the world or the most cynical, or both. Pudding Media is the latest company to take advantage of the “free services in exchange for ads” business model. We’ve seen free Wi-Fi in exchange for viewing ads (MetroFi) and free mobile phone service supported by ads (Blyk).

Now comes Pudding Media, founded by two guys who used to do intelligence work for the military. You can see where they got their ideas. This is the ultimate monetization of phone surveillance or snooping. They have a web-based phone service that lets you call any phone number for free (in the US for now), but they (or rather their software) listen in on your conversations and display ads on your browser.

Here’s what the NY Times says:

. . . Pudding Media is eavesdropping on phone calls in order to display ads on the screen that are related to the conversation. Voice recognition software monitors the calls, selects ads based on what it hears and pushes the ads to the subscriber’s computer screen while he or she is still talking . . . The company’s model, of course, raises questions about the line between target advertising and violation of privacy. Consumer-brand companies are increasingly trying to use data about people to deliver different ads to them based on their demographics and behavior online. Pudding Media executives said that scanning the words used in phone calls was not substantially different from what Google does with e-mail. Still, even some advertising executives were wary of the concept.

You might think it’s not different from Gmail, Google’s free web-based mail service that delivers ads on the side. But I think it is. There’s something very intimate about phone calls and I would be completely freaked out if strangers, even if it were a software bot, were listening in on mine. Of course Pudding’s founders don’t think so, having been in the military intelligence business. Does it help them to have the former chief privacy officer of Microsoft on their advisory board? It depends on whether you think Microsoft is a friend or foe of privacy.

I think most people will be freaked out by the idea even though Pudding says they don’t record your conversations.

Where it might work well: the sex chat industry

But I can see where it would be quite popular: in the sex chat industry. The caller dials a number via Pudding’s web-based service, sees ads on the side while he or she is chatting — although I think this destroys the pay-per-chat business model of sex chat businesses unless they offer this free version to their customers in exchange for seeing ads on a web browser (and the ads actually make up the lose in revenue).

Ninety-two percent of young people surveyed by Dutch research firm, Qruis, between the ages of 6 and 29 say they don’t want to see ads on their mobile phones. Only 11 and 13 percent of those surveyed gave a positive or neutral reaction to ads on chat and game sites. Ads on websites and in emails received a positive/neutral rating among 13 and 15 percent, respectively. Funny enough, 33 and 41 percent of young people consider ads in traditional media, TV and newspapers, not to be irritating.

Qrius believes that young people consider their mobile phones and chat programs to be private domains where advertisers are not welcome. I think there’s a simpler reason: they’re used to seeing ads in newspaper and on TV.Qrius will present the results of its annual survey next week.

I have not seen Qrius’s report and don’t know what kind of advertising young people find objectionable. Still, I wonder how Blyk, the first free, ad-supported mobile operator, will do when it launches in the UK in a few weeks. Those who plan to monetize their sites (gaming, video, chat, etc.) may be turning off their audience by inserting annoying ads.

Om Malik, founder of GigaOm (a blog that should be on your news reader), talks about his days at Business 2.0 which is in danger of being shut down by parent company, Time Inc.:

It still doesn’t take away from the fact that I did some of my best work for Business 2.0, working hard, not because those Time Warner options were going to make me rich, but because I believed in the magazine. What a fool as I was – in the end it was a business, managed and remotely from a glass cocooned Manhattan tower – where they don’t know a thing about passionate readers, or communities or the fact that their world is no longer theirs. I hope, I never forget this lesson, as I build my little company.

I built Muniwireless from the ground up, starting it out as a blog and turning it into a media company with the help of partners. I did not start blogging about citywide Wi-Fi to make money. At the time I started it, I wanted to solve a problem: how to aggregate all the information about muni Wi-Fi projects in one place so that cities, vendors, service providers and journalists could easily find it. That’s it. It was a passion and still is. I am opinionated because I want ubiquitous wireless broadband that’s fast, cheap and good. For everyone not just people who can afford $80 per month subscriptions.

Large media companies seem to be controlled by machines crunching numbers. It’s never about the audience, never about a passion to bring something valuable to people. It’s about those numbers. Never mind if they print garbage including stories about celebrities, as long as they can run endless numbers of ads around them. If their publications fail, good riddance.

I am shocked to read that Business 2.0 is having trouble getting advertising and that its parent, Time Inc. may have to stop the publication. I say shocked because we are in a booming tech market after all. Or are we? Conventional wisdom says that when an industry is booming, companies are spending a lot on advertising.

So I have two questions: (1) is tech really back? (2) has advertising shifted to media other than print?

Tech is back (or not)

Signs that tech is back: hard to find programmers and other tech-related personnel, wages going up, my friends are busy again, no more hanging out in the health club and cafe in the middle of the day, piles of work. But companies are not throwing around advertising money as they have in the past, especially to print. I don’t see fat Vogue-like tech magazines landing with a thud on my doorstep.

So where are they advertising - online? And if magazines like Business 2.0 can’t do well in a booming market (assuming it is booming), then what will happen during the downturn?

UPDATE: I thought about this more today. Back during the dotcom boom, companies that had no business advertising to a wide (consumer) audience placed ads to make themselves look hot — not to potential customers, but to the stock market (investors, analysts). The ads were not targeted towards their customers (other businesses). So they placed ads in magazines like Business 2.0, which are not trade publications. Today these companies in the B2B space watch their ad spending; they focus on lead generation, not polishing up with PR image for the Street because today, there is no booming IPO market and valuations of tech companies are not going crazy as they did in 1999.

Here’s an article in Wired about Michael Arrington’s rise from blogger to mini-media empire. When he started Techcrunch, he had no idea it would turn out to be one of the most influential technology blogs. Unlike boring tech websites run by large media companies, Techcrunch has personality (like its founder) and passion. It’s not written by a machine. There’s a strong voice behind it. Michael does not make apologies about who he is and how he writes. There are a lot of people who don’t like him and what he’s done, but he goes on anyway.

The flipside of success: saying no to advertisers

I also started my blog, Muniwireless.com, without thinking that it would turn into an operation with conferences, seminars and a quarterly magazine. But it did after 2 years of blogging.

The challenge for me (and I suspect every blogger who succeeds in creating a small media enterprise) is this: how do you keep writing passionately without offending your big advertisers? The answer is you can’t. At some point, something you write will piss them off, they’ll threaten to stop advertising and sponsoring your events. What I learned is that you just need to keep writing with passion and serving your readers.

If you start tempering your opinions and writing things to please the advertisers, you won’t have a audience much longer and your advertisers will flee, too. Besides, the tech business is volatile. One of the advertisers on Muniwireless decided to advertise less after a story I had written pissed them off. It was a convenient excuse; their business was not going well. I remember being very upset about their decision, but looking back now, I should have just told them to jump off a cliff. I had to be more diplomatic because Muniwireless was not just about me. There are other people working in the company.

That’s another challenge. When there are others working in your organization, you can’t throw as many temper tantrums as you used to, although if Muniwireless were still a one-person operation, I would have banished that particular advertiser to my 9th Circle of Hell.

At the DLD conference in Munich last January 2007, I spoke to the CEO of a media company about my experiences with advertisers and he said: “The most powerful word in this business is NO. No, I won’t shut up because you want me to. No, I won’t retract my post because I think I’m right.”

The New York Times has an article called Can Blogs Become a Big Source of Jobs which talks about bloggers who get paid to write articles on global blog networks such as b5media (based in Toronto) and those who use blogs to get more business. Consultants and entrepreneurs can attract new business using blogs. Indeed, startups today have blogs to communicate with their users.

The NYT article has not hit on anything new. Many people are already familiar with WeblogsInc (which Jason Calacanis sold to AOL for $25 million) and the fact that they pay bloggers to write about particular subjects. Weblogsinc is an aggregation of blogs on topics ranging from automobiles to gadgets. I am a long-time reader of Engadget and the guy who writes it, Pete Rojas, is well-known in tech circles.

B5media is similar to WeblogsInc because they cover a wide range of topics and run ads across them. The bloggers get a bonus based upon the number of people who read their articles.

While being paid by someone to write a blog is a way to make money from blogging, I did things differently with Muniwireless.com. I set up my own blog and in the beginning, got advertisers for the site myself. Two years ago, I partnered with Microcast Communications to take Muniwireless.com to the next level: conferences, seminars, webinars and a magazine. I went beyond just blogging and with partners, created a small media company.

In all the articles I have read about the business of blogging or bloggers making a living, they never talk about this option. It’s a viable one.

Read my series on how to turn your blog into a media company.

The path I have chosen is not for everyone. It takes a lot of time to set up a blog and maintain it, especially if you host it yourself. Most bloggers go with Blogger.com, Wordpress.com or Typepad. Getting advertising is also not for everyone. It’s time consuming and most people don’t even know where to start. Signing up with a blog network such as B5Media or Weblogsinc may be the best way to make a living through blogging.