The latest from TechCrunch
- Flash in the Pan
- OMG/JK: Insert Pun About Storms In The Cloud Here
- Intuit's GoPayment Cuts Transaction Fees, Pricing Now More In Line With Square
- Internet Entrepreneurs Are Like Professional Athletes, They Peak Around 25
- The Future of Advertising Will Be Integrated
| Flash in the Pan | Top |
| The news from NBC/Universal/Comcast is that the cable giant has finally made deals with both ABC and Fox to carry selected shows on their on-demand service. This is big news for the iPad set, because all four major broadcast networks are now available in a single service, on the iPad, without Flash. Across town we hear talk of hardware acceleration linking up with Android to make Flash finally usable on every other device. This would be a good thing for Flash fans, who can make the argument that more devices will work with Flash than won’t. But in the new world of network broadcasting, the show’s over for Flash. Nobody cares what makes the picture dance on the screen, just that it does. Instead, we care whether it streams or it doesn’t. Live streaming may seem to be about Ustream v. YouTube, about watching the Wedding or GaGa or whatever trending stream is hitting your push notification buffer. But it’s also about your own personal broadcast stream, formerly known as the telephone. Video calls are finally here, and the broadcasters who dithering too long about iPad streaming will be in the same kind of trouble Microsoft is in with Windows. The same way that we don’t care about Flash, we don’t care about the distinction between streaming phone calls and on-demand shows. One is about some idiot wasting your time, and the other… Same thing. The same dynamics that Comcast has finally ratified are moving into the phone call. Cable subs are up for those who support iPad access, down for those who don’t. Time Warner and Cablevision softened up the studios, and Comcast came in and closed. Similarly, FaceTime softened up the carriers by introducing a service that obliterated the need for international plans. Those of us who switched to Verizon are out of luck until iPhone 5 anyway for a global phone, so the calculation on a trip to Europe is to get a throwaway phone for the trip from the airport to the hotel and WiFi. And before you say that FaceTime doesn’t work over 3G, Skype video does. The next time you Update All on your iPhone, you’ll see what I mean. On this week’s Gillmor Gang, Danny Sullivan suggests it’s an extra download and besides people don’t want to have to put on makeup to answer the phone (I’m paraphrasing, or just trying to embarrass Danny gratuitously, or maybe myself for carrying blush at all times.) Twitter is an extra download for now, but the second they jump on video calls using their directory this will be a feature not a hassle. When the smaller market of international travelers becomes enamored of video calls, we see another Netflix-style hockey stick. WiFi becomes a differentiator for choice of hotel and event venues, for coffee shops and restaurants, for sporting events and rock concerts. All of a sudden your phone and tablet becomes your portal to personal and professional incoming pings, a push notification router filtered by your business and location rules. How long did it take for Comcast to make this deal? Time Warner released its iPad software less than two months ago, were sued by Comedy Central a week later, and were fast followed by Cablevision as though to say, no we really mean this, 10 days after that. It became clear in a New York minute that people wanted more stuff for their new iPad 2′s, and oh wait, iPad 2′s have a camera. Then ABC, the last of the original big three, capitulates to Comcast, and oh, wait, that’s Steve Jobs’ network. Why would Jobs want to play the Disney card now, except for the fact that iPad 2 sales are going to skyrocket once the pipeline recovers from not being able to make them fast enough. You only have to experience a Skype video call once to want FaceTime to work over 3G, and Skype is softening up the carriers just as they move off flat rate to a profit center for streaming. You may not have been paying attention to the 5 gig limit before now, but the Comcast on-demand steaming at home and Skype push notifications on the go will stoke demand, as it were. Apple already is making the case for a Comcast moment with the carriers by rudely interrupting Skype calls when a carrier call comes in. The Skype call is put on hold (at least on Verizon) and you have to cancel the push notification and decline the incoming call before returning to your video call. Perhaps Jobs is looking for some competition from AT&T to differentiate from Verizon as they have done with simultaneous call and data. Perhaps the lure of selling a higher priced video cap will close the deal. Android has a real problem here that Google is attempting to fix by offering on-demand video over YouTube. Android’s video service is just now making its way into some builds, but the combination of pro and amateur streaming video offered by Apple will be hard to overcome. Not that it needs to be, because compatibility between the two major platforms will come at the cost of paving over Flash permanently. | |
| OMG/JK: Insert Pun About Storms In The Cloud Here | Top |
| We’re back for a new episode of OMG/JK (in HD!). This week the news has been all about private data — Google and Apple have been accused of tracking your every move (they aren’t), and Sony has revealed that 77 million user accounts were compromised (this, unfortunately, is true). Tune in to find out where things stand now, and where to get the best deal on your tinfoil hat. Here are some recent articles that are relevant to this week’s episode. Amazon EC2 goes down, taking with it Reddit, Foursquare and Quora Apple Responds To Location Tracking Kerfuffle, Says It's Innocent, Blames Bugs Google Responds To Smartphone Location Tracking Uproar, Says Android Is Opt-In Lost In The iPhone Location FUD Disaster: Playstation Network User Data Compromised, Names, Addresses, Maybe Credit Cards Subscribe to us on iTunes! | |
| Intuit's GoPayment Cuts Transaction Fees, Pricing Now More In Line With Square | Top |
| Inuit’s GoPayment reader, which competes directly with Square, is about to become more attractive to small businesses today. The company has made the decision dropped the transaction fee ($0.15 per transaction) for both new and existing customers for Visa, MasterCard and Discover cards, both swiped and key-entered as well as qualified and non-qualified transactions. The move will go into effect on Monday. Launched two years ago, GoPayment offers a complimentary app and credit card reader to allow small businesses to conduct charges via their smartphones. GoPayment is available for iOS, Android and Blackberry phones. So now, businesses using the mobile payments reader will only pay a flat 2.7 percent fee of a transaction for any swiped cards. Intuit will charge 3.7 percent for both key entered and non-qualified transactions. This is surely a competitive move against Square, which also dropped its transaction fee (which was $0.15) recently in favor of a flat $2.75 percent fee for all transactions. One important fact to note—Intuit will still charge the transaction fee for transactions using American Express but this is something the company is working on negotiating. Square does not charge a fees for transactions on Visa, MasterCard, Discover and American Express. For higher credit card processing volume (recommended for more than a $1,000 per month), Intuit is continuing to charge a $12.95 monthly fee but has dropped the set transaction charge of $0.30. The per transaction percentage remains at 1.7 percent for cards swiped; and 2.7 percent for key entered. Mobile payments is a competitive space and it’s hard not to notice some of the attention Square has been getting from both Visa and Apple . Because of this, companies like Intuit have to up the ante to remain competitive and attract businesses. For example, Intuit recently extended the offer of a free version of its GoPayment reader indefinitely. Square’s readers have been free for some time now. Chris Hylen, VP and general manager of Intuit Payment Solutions said this explaining this change in pricing: We started simplifying GoPayment pricing back in January when we eliminated the monthly fee. Now we're removing transaction fees. As we continue to evaluate the market and talk with customers, we believe that making our pricing even more affordable is the best way to give more people an easy way to process credit cards on their mobile devices. While Square is growing fast, as more and more businesses are looking for innovative, inexpensive and painless ways to accept credit cards, Intuit’s reader does offer a compelling product. The company reports that it has seen a nearly 700% increase in the number of people signing up for GoPayment each week compared to the beginning of the year (driven in large part its free swiper offering). Intuit declined to reveal exactly how many users are signing up per day vs. a year ago. And GoPayment users are processing in excess of $15 million a week using GoPayment and related services. These services also include payments from the Web and through QuickBooks using a GoPayment merchant account, so it’s unclear how much of that $15 million is coming through the readers themselves. Intuit says GoPayment users have processed more than $3 million in a single day over the past month as well. For basis of comparison, Square just revealed that it is processing $2 million in transactions per day and $66 million for the first quarter, but COO Keith Rabois says forecasts that this number will triple in Q2. The other competitor in the space, VeriFone, has yet to eliminate the set transaction fees ($0.17) associated with its payment product. But with pressure from both Square and Intuit, that may change soon. CrunchBase Information Intuit Information provided by CrunchBase | |
| Internet Entrepreneurs Are Like Professional Athletes, They Peak Around 25 | Top |
| “Consumer Internet entrepreneurs are like pro basketball players,” a venture capitalist told me recently while discussing the prospects for a thirty-something founder, “They peak at 25, by 30 they’re usually done.” Why? Because young entrepreneurs are more creative and imaginative, and are willing put 100% of their lives into their startups, he said. “It’s not a guess, this is a data driven observation,” says the VC. He had a number of caveats. First, this only applies to consumer Internet entrepreneurs. Enterprise and hardware startups tend to do better with older founders, where experience (and direct sales experience) matter a lot. And there are plenty of founders that, like Michael Jordan, can peak way beyond 25 (and the peak basketball age is really probably at least a 27). “Those tend to be the repeat success founders,” he said, “the rules don’t apply to them.” Peak age of startup founders is an endless debate. Vivek Wadhwa says his data shows that older entrepreneurs are more successful , for example. He argues that ageism is more about exploiting young people more than getting value for money. Other data suggests the opposite. Like this – last year Y Combinator said the average age of their founders is 26 . Of course they could have selection bias, but Y Combinator is one of the most data driven investors I’ve heard of. if older people did better, they’d be funding more of them. At Disrupt in New York in May we’ve got a very cool interview planned. SV Angel says they’ve analyzed deep demographic data for their 500+ investments over the last twelve years or so. It takes years to know how successful a startup will eventually be, so this is particularly valuable data. Will they agree that Internet startup founders should be looking to make a name for themselves before they hit 30, or give up? We’ll know in a few short weeks. | |
| The Future of Advertising Will Be Integrated | Top |
| Editor's Note: This is a guest post by Mark Suster ( @msuster ) a VC at GRP Partners . He blogs at BothSidesoftheTable . Banner Ads. They first started in 1994 and are therefore almost as old as the Web itself. They were very effective back then, with the original ad garnering a 78% click-through rate (CTR) ! I guess from there we had nowhere to go but down. Nowadays banner ads get on average 0.2% CTR meaning for every 1,000 ads that are served up only 2 people click on them. And as Jon Steinberg of Buzzfeed points out, the CTRs for social media banner ads are just 0.08% . Holy Shiitake ! Despite its creation more than 15 years ago, banner ads have been surprisingly resilient despite their lack of efficacy. In the IAB study that revealed the graph above, brand advertisers indicated that their number one objective in online advertising was “creating awareness” followed by “creating purchase intent” or “likelihood to recommend” the product. Yet these seem to be the least effective attributes of banner advertising. The fundamental problem with banner ads is a condition called “banner blindness” meaning that our eyes are really quickly trained to look at what is most relevant on the page – the content we want to see. Check out this chart from eye-tracking research conducted by the usability guru Jakob Nielsen published in this piece . It shows that our eyes are trained to focus on the text, not the ads. I’m sure it probably resonants with how most of you read the web. So I’ve spent the last few years checking out companies that are trying to solve for this problem. The global advertising market is estimated at around $475 billion / year with only 12% of this online and measurable. (some data sources have this estimate much higher.) We believe that the structural industry changes will continue to create big opportunities for technology firms that enable the changes in media consumption for television, radio, inbound calls, online & social media. We are investing heavily in these changes. One company that I previously wrote about trying to change this industry is, Solve Media , (I am not an investor) has created an interesting ad unit designed to drive up brand “engagement” and recall. The idea is that if I can serve you an ad for a function that you already need to perform on the web anyways – a captcha – with a brand message I can drive recall. And market research seems to confirm this. You’ll see a clear problem here. Traditional banner ads only drive 16% brand recall and almost ZERO message recall. So it’s hard to argue that brands shouldn’t worry about CTR rates when it doesn’t seem that banners are very effective for branded advertising or awareness either. It’s no big surprise that the overwhelming majority of online spend has therefore been “direct response” advertisements (trying to elicit an action) rather than branded advertising as pointed out in this good summary by Jeremy Liew . So people will spend money online to get you to sign up for credit cards or Netflix but not to change your laundry detergent. I decided to look up one branded company in the chocolate segment to get a sense for the magnitude of spend online. Hershey’s chocolates spends about $365 million in advertising per year. Just $460,000 of this is spend on online display ads (0.1% for those without a calculator handy). The reality is that advertising has got to become more integrated with content in order to drive efficacy. I know that any time ads are mentioned it makes the blood boil on any self respecting technologist the same way it did when HotWire ran their first ad in 1994 and the way it made Google’s blood boil when Overture launched the sponsored search category. Ask anybody if they like product placements in movies or TV and they’ll resoundingly tell you “no” but marketers know better, which is why the celebrity endorsement industry is a $50 billion industry. But even for the consumer reality sets in. Firstly, we care more about getting cheap or free high-quality media than we do about whether we see ads. Give people massive price increases on most media and they’ll abandon it. So how people behave and what they verbally say they stand for are often at odds. Integrated Advertising I believe that “integrated advertising” is one of the more effective types of advertising out there. You have to find a way to get your audience to actually “engage” with the content in the way that Solve Media is doing, in the way that in-game advertising works for video games or the way that celebrity endorsements work. It’s why I still believe passionate in companies like Adly (I’m an investor) who have created ways for celebrities to integrate endorsements “in stream” in a Twitter feed. Yes. Oh, sacred cow. In the stream. Integrated with where our eyes & attention are. I advocated strongly for this 18 months ago and my belief system is as ardent as it was back then. If you’re interested here is my case . But the simple facts are: Our attention is all in the stream. As evidenced by the eye-tracking studies – they will remain in the stream. We know that celebrity endorsement works. It has for decades. Celebrities care about their personal brands so will naturally rebuff requests to sponsor inauthentic products. The beauty of social media is that consumers can vote with their “unfollow button” so it has a natural self-correcting mechanism. If you get economic value out of having followers you don’t want to lose them over one ad. Sure, there needs to be ad disclosure. And naturally we have built in quality controls like: frequency capping, automated measurement so we can pull ads that people respond poorly to, A/B testing tools, data analysis to tell celebrities & brands which products will resonate, etc. But I can tell you as my firm invested in Overture who created the category of pay-per-search that Google perfected – our company underwent three years of ridicule in Silicon Valley until people looked at the performance data and realized that efficacy matters. The technology blogs will be aflutter with continued criticisms of in-stream ads while mainstream consumers continue to click on links provided by the celebrities they respect and will buy products accordingly. We already have the data that proves it. In Image Ads Another areas that I’ve been really focused on over the past 2 years is “in-image ads” as another form of integrated media. When you think about the eye-tracking we know that people care about the story and the images. And it is already an accepted fact that in many cases the ads & images are blended as any lady who reads Cosmo or Vogue will tell you. The big splashy image ads is part of their reading experience. So we put our money where our mouth was an invested in the largest in-image advertiser on the web, GumGum , whose network now reached over 100 million monthly uniques with 3 billion ad-compliant images, delivering an average CTR of 0.4% (2x industry average for banners). The eyes are in the image. We believe this is why Google Ventures invested in Pixazza . As you can see from this image, the ad is unobtrusive and potentially valuable to the reader. The ad unit is served up based on algorithms that determine what is actually in the image and also for whether an ad placement would impair the image. We could even target ads better based on who the end consumer was. What else is out there in the field of integrated advertising? Vibrant Media & Kontera have both built large and fast-growing businesses around text-based advertising and there are new entrants doing it in new ways like SkimLinks . Vibrant has a reach of 250 million uniques, making in the 12th largest ad-focused property online and has 3rd-party verified studies suggesting up to 50% increase in brand lift following their in-text ads (I’m not an investor in any of these companies). Text is shown to deliver higher CTRs than banners. Text is what we’re reading. It’s integrated. There is a whole industry being spawned in the Internet video world and especially in the integration of devices (second screen TVs) and the TV experience. Some of the interactive experiences I’ve seen in recent demos are simply mind boggling and are starting to form new opinions in my head about how we will consume big screen TV in the future (I’ll save that for a future post). The games industry has massively changed over the past several years to more of an integrated advertising / purchasing media with the growth of virtual goods and ads. An obvious example of integrated media would be the new Rio Angry Birds version. It’s actually very cool. There are increasingly incentivized offers to get more powerful swords & shields in battle games. This has proved far more effective than small crappy banners at the bottom of each screen. There will always be a tension between advertising wanting to reach audiences through whatever means they can to capture their attention and help them discover new products and consumers who claim a strong preference for ad-free products. Yet the other tension between ad-free products that cost more versus ad-supported models have a clear winner: ads. On products where I’ve seen data the “ad free” versions have converted at 4-6% of the user base at maximum. So the future of helping make the ad industry more measurable (and more online) I believe will be one of helping make ads both authentic & integrated. Trying to relegate ads to the least intrusive real estate of our computers is missing the point. Advertisers pay for efficacy. If not, we’d be telling advertisers to just leave all of their branded advertising spend on traditional television in the future. And to stick with their old adage, “Half the money I spend on advertising is wasted. The problem is, I don’t know which half.” | |
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