Can Google get smart without the free-with-advertising model?

I love thinking forward, and being an ENTJ, can imagine all sorts of possibilities that others not only do not see, but when presented with them, say, "Hogwash!" Nonetheless, I have for better and for worse been an early adopter, in the vanguard, ahead of my time (choose your phraseology) most of my life.

So I was very curious when I read this article by Don Reisinger of cnet: If it can't find a solution, Google should kill YouTube. Thanks to my colleague Heath Parks for pointing me to this post.

He was discussing this quote from Google CEO Eric Schmidt, gave to Ken Auletta and posted in the New Yorker, discussing the struggle Google is having making money off their $1.65B purchase of YouTube.

The goal for YouTube is to build a tremendous community....In the case of YouTube we might be wrong. We have enough leverage that we have the leverage of time. We can invest for scale and not have to make money right now, he said. Hopefully our system and judgment is good enough if something is not going to pay out, we can change it.

Let's forget those temporary accounting tricks that indicated Google actually made money off the expenditure (October 6, 2006) because the price was offset by an increase in the stock price theoretically resulting from the purchase. (October 2, 2006: $420.50. October 16, 2006: $459.67.) Lemmings do not a sustainable model make, though they can drive up a stock price.

What matters is can Google continue to make money, and if it can't how does it reconcile what it owes its shareholders vs. what the marketplace of millions is demanding?

Schmidt goes on to say:

There is a tremendous amount of use of social networks...the traffic is phenomenal...and there will be advertising products in that context...it's taken longer for the industry to find those devices but they are clearly there....Our primary success was in the direct marketing piece that is quite measurable and tactical. The mobile case is just an extension of that. As mobile devices get more powerful you can do click to play ads. Mobile devices will be able to do powerful narratives...cameras, GPS...it will tell you need new pants.

It remains to be seen how much advertising in how many places people will be willing to tolerate for free content. Movie theaters added it, and attendance continues to decline year after year though video rentals and ticket price increases are keeping that industry afloat.

Many professional early adopters blog regularly about people's willingness to pay for ad-free and premium services. But there's a catch right - because it is the smarter richer people (who would pay) that advertisers generally want to reach, so there is a built-in catch 22 for startups who are creating their business models. There may not be enough paying customers whereas advertisers still seem willing to spend. Read the comments on this post to see the skepticism people hold for how many would actually signup to pay. As a result, companies (like Twitter) appear to be dragging their feet on implementing for-fee channels. We don't get much chance to either test this or build this over time.

Right now there is fascination and wonder in having these wide open spaces where anything goes and anyone can show up. Advertising per se certainly is facing as large a challenge as Detroit's auto industry. It's tough to see the gates unlocked and people running all over the field; making cars in Japan, Germany, and now India that are good enough or better than most. To see people telling each other what to buy and where to buy it instead of being captives of marketplace manipulation.

Schmidt says, Frankly, the free service model with free advertising is still the best model. Do you agree? I think younger people are seeing through advertising and we have a revolt of some sort in the making. They may be wiring their brains to ignore it more than ever, while others may be forming a basis for radical rejection of the manipulation of advertising, along the lines of the 60's radical rejection of the Vietnam War.

Check out this 10th Grade Project on Persuasion or Manipulation: Thinking About Advertising

Would not Google be a great company (who has the brains and the cash) to start building some innovative business models that allow people to pay for improved user experience? Might the early adopters then be able to help shape a new economy? Might we actually develop beyond the lowest common denominators of free, advertising-sponsored and advertising-despised models of transacting with each other?

Calling all forward thinkers to weigh in on this with me.

Six Reasons Why Pre-Roll Ads Are a Bad Idea

One of the little things in life that media consumers love to complain about and advertisers love to insist on, is adding pre-roll ads before showing the main content. So for example you go to a web site to watch a news clip, but first, you have to sit through an ad. You cannot fast-forward or skip it. (Original drawing by Marc Johns. Please visit him here.)

Think of it like this. When you are hungry, you go into the kitchen to eat. You don't want someone to stop and make you find out why you should be driving a BMW. You just want food. But once you've eaten? Heck yeah, you just might like to take a moment to learn how you can get into a beamer.

I think pre-roll is a bad idea (VC Fred Wilson agrees) while post-roll can actually be a good idea. Here are my 6 reasons why.

1. People come to a web page because they want to see the content. Not the ads. People are demonstrating over and over again they do not like interruption marketing. Be polite and let them have what they took the trouble to come and get. After all, even the airlines often say, Thank you for flying XYZ Airlines. We realize you have a choice when you travel.
2. If you put a pre-roll ad in, BOTH the advertiser and the content producer aka web page owner will LOSE VISITORS. This is counter-productive to both of your goals. Why would you want to do that?
3. If you let people view what they came for, they will be (at least temporarily) sated. They are now looking for something to give their attention to next. They are in an open, receptive state of mind. Your post-roll ad is actually in the one-up position.
4. The technology lets a user click away with almost no effort. They see a pre-roll? They leave. The inverse actually works to your favor. If they are sated, they have to actually do something not to stay. People are lazy and would rather do less than more. They are far more likely to stay and catch your post-roll ad, while your pre-roll ad will just make them mad.
5. If your ads are integrated into the content, meaning you have taken the time to develop an actual relationship with the content creator, w00T! Then your ads might actually be useful and more appealing -> at the end, when that relationships makes sense. Not at the beginning, when it is perceived as an interruption. (With the possible exception of something like, "Watch for three clues in this episode to help you win a free trip to Hawaii!" type of advertiser integrations.
6. Pre-roll ads make advertisers look timorous. If your product or service or ad is so poor that you think people will only watch if forced? If so, then back to the drawing board.

If you want to own the entire show, which means create the content, do the production, manage the technology, build the community...then you've earned the right to have a pre-roll ad! Presumably at that point, people are coming at least in part because they want to know more about you.

Until then, advertisers please stop insisting on placing your ads as pre-roll spots in other people's content. It's unbecoming, it's impolite, and most of all, it's ineffective.

Are comments moderated on HillaryClinton.com?

Apparently the answer is "YES."

I heard a speech from her last night asking people to come to her web site and share our thoughts. I did just that on this post, in a very clean and respectful way. My message was asking her to gracefully concede, acknowledging that she fought a good race but nonetheless has lost, albeit by a very small margin. I even twittered it, so others could share their feedback. (This was 12 hours ago.)

My comment is not available in the over 1100 comments, and if you read thru them, there IS NOT A SINGLE NEGATIVE COMMENT. How can this be?

HillaryClinton.com is new media at its worst. Giving people a chance to register and comment, and then doing massive and one-sided filtering of comments to convey a massively inaccurate record of the facts.

Hillary was a candidate for the last century. Yes, a lot of people are more comfortable back there, but the times, they are a changin'. For the better, in my opinion, despite all the messiness of the change.

Moderating comments (e.g. for profanity) is standard practice on some websites, like the Huffington Post. But they show you the number of total comments and the the number in the moderation queue. They even proved an easy-to-find FAQ on their comment policy.