Barney Pell's Weblog

Media

Kara: We need to understand how hits are going to be made now. Steve Jobs talked about podcasting. Mel talked about eliminating network news, which used to have most of the audience. with the long tail, things are much more dispersed, how do you to it?

Barry: Just like anything, you have an idea you think is good, put it on tape. distribution will help segment audiences. the basics never change. in the blog session, it comes down to if you have a voice and its a good voice, somebody, two or a million people, will pick it up. Talent outs, and the opposite happens too. It's not a phenomena that will fundamentally change things.

Kara: Spielberg had to go through a number of gates.

Barry: Gates are good, discipline is good. A good editorial process is fundamental to the talent. It's easy to make a film that is 9 hours long, push a button and it goes out. But a good organization sifting ideas has the job to separate and bring it along to development, pass through gates, which means things don't get through, and that's a good thing. We're all often better served by that. Widening pipes is also great, but don't take editorship away.

Kara: Not as many influencers?

Barry: Still in mass communication, of course there are. In major studio form the editorial has become a marketing business, hit tent poles. That demand usually makes for bad films. That's why we have such crappy films as it's so geared toward marketing, back end running front end, residual values. but then you get surprises, where Universal spends $200M on truly unwatchable "Ven Helsing", then spends 1/4 that on "Meet the Fokkers", which is a giant smash. Editorship will never go away. It gets waylaid, but then others take over.

Ask Jeeves, Search and Ecommerce

Kara: why did you purchase Ask Jeeves?

Barry: We were initially very defensive about search as worried it could disintermediate our commerce intermediary sites. e.g. in travel search, people can just search for the best fare and there goes the biz model for Expedia (in some people's minds). In the end, we decided brands, so long as they kept being of service, will stand, we aren't going to get taken out. Our worry was that Search would come along, and all of them would go into our vertical businesses (Kayak or Yahoo would come into travel, compete with Match.com). Time has made us believe more that meta-search won't destroy our travel business. What would destroy it is if we screw up our service, don't take care of customers.

Then we switched. Everlasting life is probably going to begin with a search box. We said no to the $20B that Time Warner was asking for AOL, and there was only Ask. AOL has a fantastic audience, maybe eroding but not in toto. They have loyal consumers. We thought there were many things that could be done.

What convinced us about Ask was we liked the search features better than the competition. You ask "weather in Capri". On Google you have to go to weather underground, etc. In ask jeeves, a result comes up right away with the weather in Capri. You can ask thousands of questions, put in a query and get results right away.

They also have binoculars, instead of opening search results and finding it isn't what you want, which is true of most search, you can just highlight the binoculars and up comes a thumbnail preview of the website. Also it's contextual search, not algorithmic. Just to have something that is most popular may not be relevant to you. What's relevant is to discern the context of what you're interested in. Instead of search results in the right side of Google, if you type in your name on the right side of "your name" will be history, biography, other people you're associated with. So you can quickly use context to drive you.

So we realized the Ask Jeeves problem wasn't its lack of quality. it was as a standalone company they couldn't market. they couldn't punch an inch out of their quarterly stock numbers. With 45M unique users on our side of the table, we can also help get them people to look in and see if they like the search, plus good marketing. We asked 1 question: with market share for search being Google 30%, Yahoo 30%, Microsoft 17%, AOL 6%. jeeves 1%. Could we move it to the left and gain share? The area is growing in any case.

Kara: how does it relate to your other businesses?

Barry: search is going to evolve. after you use it a while, much of the time you're unsatisfied.

Kara: There is more commerce being shoved in.

Barry: and it's not contextual. Citysearch has nice maps. "we invent nothing", "we exploit, "we recognize opportunity". After us being involved for 7 years, Citysearch broke even, which is some triumph. now it's a positive contributing business. But think of it this way: you want to find whatever you want to do locally. nobody has dealt with local information in a structured way like we have.

For a restaurant, it will give you ratings, all sorts of additional info that doesn't exist elsewhere. you can go from big macro to narrow searches with rich data in it. Citysearch will supply that. each of our services. I can't imagine we can't make the best travel site from global search. we think the evolution of search is to be contextual, get you closer to what serves you, what you want more quickly, easily, ergonomically.

we're the 2nd largest revenue source that Google has (behind AOL). they serve ads on asks until 2007. after that, we can build our own ad service business, or ask Microsoft, Overture, and Google if they want to ad serve to our traffic. it doesn't really matter.

Kara: what happens when you have more control over that relationship?

Barry: we already have control. we can do whatever we want. so long as it is ours. we think these are media businesses. they aren't winner take all, almost never, there will be multiple players. over time Yahoo and Google won't have this share of audience. we might not have it, but I love competing against larger players as a relatively new entrant. There is something I've got to say that people might want to look in on. I think it's a great fight.

Barry: all my experience has been you gain share from entrenched players by having a differentiated product. As much as we can, that's as much as Ask can do. Differentiation in a world that is pulling this. That box, whether for info, goods, services, video, everything you want to pull onto a screen, is the way people will want to do it.

Kara: large and growing commerce. Vs. Amazon, different facets. what's changed in last years about commerce on internet?

Barry: Retail goods was the laggard category, just now starting to take share. Its velocity is beginning to talk.

Kara: what areas of retail?

Barry: Big refrigerators are probably not first adoption. but it's part of hand-eye coordination, getting more familiar with it. Once you do it a few times, get into system of address, credit card, one stop shopping, which is so great for consumers, you do more things on them. Once you get rich video, which is coming soon, and home media center, and point and click, then it just soars.

Kara: What are we missing in the technology for this?

Barry: I was just in Venice, the city that's sinking, has better connectivity than NYC. The home media center is the most critical piece of equipment that every home wants to have. it will distribute all these feeds to whatever size screen you want. primarily in the house. and through that system, a little red execute button, to say "i want that" and it's there today or tomorrow, all that infrastructure is there today.

Kara: Mobility?

Barry: Wireless will of course develop. But I think people won't go buy a dress or a cow while they're moving. I think this will be more likely a home experience for what is appropriately those kinds of goods and services. Now if you're walking down the street and want a quick pizza, that will be wireless. Whatever you want while you're moving.

Kara: Of your many businesses, which are growing?

Barry: All our businesses are growing. Last year they said travel was going to be destroyed, but demand is up in high 20% year over year. even thought it's a penetrated category, it's still only in the low 20%'s in terms of adoption. leisure travel and increasingly corporate.

Ebay's challenge - their only challenge -- is sustained growth. At a certain point it must flatten.

Amazon is fantastic. For books, the number of people whose habits have completely changed is incredible. these changes are evolutionary changes. we talk about them now. pretty soon, just like search from the sky satellite which captures people's attention. But after you've seen your house, and the building vertically which looks like a toothpick, I say what am I going to use this for now? It doesn't look so good top down. or even the slightly horizontal... I think you use maps to get places. local maps for people who live in cities are generally mostly a waste of time as you tend to know where a given restaurant is if you live in LA. You know where the whopper is sold. If you're traveling, if it's complicated, it has utility, but it's no big deal.

Real estate is a big deal, a huge market sector, where historical structure of the business, with realtors (>1M realtors in US?), national association of realtors, and system has commission structure, maybe dropped only a little as prices have gone up. we're not out to get rid of realtors, but in fact there's never been a process that comes in and says there is another way to do this that actually gives you the info you need. a huge fraction of people who buy houses first do research on the internet. But Dept of Justice said they would allow new competition to do this. At the moment, realestate.com is playing a leading role in doing this. Over time I think the dynamics of the business will be impacted by that.

Kara: What about Rentals? Craigslist pulled 10s of millions of $$ from SF Chronicle.

Barry: It's a better service, but it's hardly dynamic. We'll start marketing realestate.com in the fall. The interface saves time and money, it's more efficient.

Entertainment

Kara: Hollywood. A couple years ago you were upset about what FCC was doing with media ownership. More info out there now, what do you see for big traditional media companies?

Barry: They're finding out there are issues of mass, understanding, and efficiency. There looks to be a period. the only vertically integrated company that has a strategy is Newscorp: global, use various forms of distribution, all of which are integrated. because it's a dictatorship and lead by someone with a true, deep, broad understanding. The other companies had a strategy of buying what was possible. They'd add pieces on without, in most cases, ever really integrating them or having a strategy for this. NBC Universal might get a strategy under GE leadership. It's domestic, so it doesn't come close to Newscorp, but its idea of taking and really using all their services in relation to each other is really savvy. Unless you do that there is no reason to own these disparate assets. It's in one house, but where nobody eats or talks together and nothing much happens.

Kara: would you ever go back to entertainment?

Barry: Absolutely. Now is a perfect time. There is no independence left after all this consolidation. The only one left of real size is Warner Burnett (??). We will be distribution agnostic from now forever: everything is going to be digital. Being distribution agnostic, if you've got the goods and want to put the capital together against production assets, is terrific.

We're entering the age where distribution is unlikely to be the toll-bridge. Once it's not dear, the power of a good idea or story well told and enough money to tell people about it (and you don't even need money to tell people about it as the most viral system in the world is sitting there), there is tons of value there.

Q&A

Question: Jimi Gutterman, Forester. 6 years ago Esther Dyson asked if you loved your customers and you said I don't think in those terms. Barry: I do now. HSM entire campus is literally bannered with "love the customer" as the central rallying cry of the business.

Question: Value of aerial photos on Google. InfoUSA is taking ground level view of every business in USA. Do you see value in that kind of photo?

Barry: Sure, there is some value in satellite photos. Storefront is nice to see, if you have a burning desire to see shoe store front before you go in it, it has some utility. These things aren't thought through from the perspective of people actually want to use. They're gadgets. I'd rather know in Citysearch for cleaning stores what thousands of people rated that instead of the next cleaning store, and whether it was .4 miles closer to where I was, then I would a map telling me whatever.

Question: How will distribution change newspaper industry for publishers?

Barry: I'm on the board of Washington Post, and I support everything Don Graham says. I wouldn't accept the idea of declining subcriptions, I would fight like hell to increase it. There are small cases where that's doable. Starting with the print product, there is still possible growth. But there is enormous growth of info delivered electronically. Those papers that have print side being spare with what will go on the website in order to protect their own local hegemony or print product is crazy. You have to make that web product fantastic, keep investing and put stuff in it. Because there is no question that if you have a good print product, there is a web version of it that is going to be able to have your total readership and your total brand grow and you're going to get paid for it one way or another, whether by subcriptions, micro-payment, or ads.

Kara: which of those 3 payment mechanisms do you prefer?

Barry: We're in early days. various forms of direct selling, which is what internet is by definition. this long arc from ad as we thought it was to direct selling is the way most editorial product is going to get paid, rather than subscription models.

Question: Ask acquired Excite Europe last week. is Excite brand going to be the name for search?

Barry: no. excite is a pure portal. it didn't get much attention because it had to tow the quarterly dollar mark. it will stand on its own as excite, doesn't have a lot of consumers now, but I think it can in various ways. it will not be our search. our engine will either be called ask jeeves or some form of those two words with maybe one word missing.

Kara: Is any tech product exciting to you this year?

Barry: Motorola razor. It's really thin, and works for me. I have thrown more cell-phones at the wall but I like that product.