Supernatural Agency: Online business tales

May 30

The beginning of the end for affiliate marketing?

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We’ve had three major brands for whom we are affiliates end their relationships with us because we are located in NY State. Never mind the fact that our servers are somewhere on the West Coast and that these retailers have no brick and mortar presence in NY. Our totally dysfunctional and short-sighted state government decided that out of state e-commerce companies selling on the web in NY should pay our insane (8.5%) sales tax even though the law for mail order companies states that they don’t have to charge the tax as long as they have no physical presence in the state.

Apparently a website that does not even sell the products and does not physicaly exist here is now a cause for ordering merchants to pay sales tax. So, what about the millions of paper mail order catalogs sent into our mailboxes from out of state companies- aren’t they a physical presence? And since when are online media that advertise services on a commission basis (very common in print, radio and broadcast) a cause for claiming a physical presence?

I do not think this will hold up in the courts as it is a poorly though-out law filled with loopholes. In the meantime don’t plan on building an affiliate marketing business in NY.

Update: Two more merchants have sent notices specifically detailing that the NY law was the reason they were removing us, hopefully temporarily (as they said). Interestingly, Linkshare followed with a generic notice saying we had been removed for unstated reasons- I think they’re worried about losing a lot of other merchants if they get wind of this.

So, if Google has PayPerAction (PPA) programs in which they get paid when a conversion takes place should they be paying taxes? They have a big physical presence in NY.

This is the lid coming off a big can of worms…

May 01

When the ad loads but the content doesn’t

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You’ve got a problem.

I go to the Washington Post daily but lately I’ve been skipping it. One of my favorite blogs is VC Fred Wilson’s A VC but until recently I had stopped reading it regularly. Why? Because the ads and widgets on these sites would load but clog things up so much that the actual content I was there for wouldn’t load.

Fred recently removed most of his widgets (he loves them because they are from companies he invests in- I think if I were him this would raise a red flag) because he was getting slow-loading complaints from his readers. The site now loads fine. The Post isn’t doing so well. This morning I attempted to get to a page I read daily but all that loaded was an animated banner ad which irritatingly kept animating while the site stayed empty with 49 of 50 items downloaded. I guess the 50th item was the actual news.

This makes me wonder how often site owners test loading times, including ads, in conditions similar to an average user. Some sites, like Engadget, load really fast even with a plethora of ads. I suspect this is because they, being techies, actually care about loading times and require their ad servers to achieve certain levels of performance.

The big problem here is obvious. It looks like ads are more important to publishers than the user-experience. That insults me and keeps me away, especially because it looks like they just don’t care or are not paying attention. As a publisher my concerns are acquiring and keeping loyal readers, i.e. traffic. We won’t serve up irrelevant ads or ads that are intrusive including pop-ups, intermediary pages, ads with audio on by default or ads with so much animation they clog up the pipes. I don’t want to lose one loyal visitor because of these things because repeat traffic is where you make the money.

Washington Post…hello? Are you paying attention? It doesn’t look like it.

BTW, the NYTimes.com does not have this issue so it is not a universal problem.

Feb 02

The Borg eats the ‘Hoo: My view on the Microsoft/Yahoo takeover

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I don’t think Google is shaking in their pants today now that the dust is settling on the Microsoft/Yahoo announcement. Only Microsoft would think that gluing together two crappy search engines would create a slick competitor to the ‘leader’ as Steven Ballmer elliptically refers to the Goog.

Microsoft has been struggling in the past five years to break out of its two product monopoly (Windows and Office), struggling with no apparent vision other than to keep pumping out unneeded upgrades of bloated desktop software. Their search division is the only part of the company that loses money and that’s because no one uses it- I’m not even sure what it’s called these days…MSLive? I’d guess their market share is almost entirely based on it being the default search tool in IE and Windows.

As for Yahoo, their search started as little more than a massive user-created directory and the problem with directories is that they must be manually maintained to stay up to date and they don’t scale. They moved to an algorithm but the move came late. The algorithm model that Google uses is constantly being fine-tuned to accomodate changes in technology, to fight abuse and, most important, to refine the relevance of the results. You cannot buy the time needed to catch up to them.

Now, $44 billion later (assuming the hostile takeover is successful) we have Microsoft attempting to swallow something bigger than its head. I don’t see any real integration potential- it is likely one engine will be killed off and the remains branded as some awful MS Live thingy. That $44 bill is a big chunk of Microsoft’s war chest and using it up brings Microsoft and Google much closer to financial parity (not to leave out Apple with its $18.5 billion cash hoard and rapidly encroaching operating system market share) because I don’t believe the combined new business will add up to anything near the sum of the parts as far as the markets are concerned- we might even see the majority of that market cap disappear.

Google, on the other hand, is criticized for making 99.9% of its revenues from search advertising. You can look at this two ways: Either they are a one trick pony in which case they are a very good one trick pony, so exceedingly good that you’d have to be crazy to challenge them, or they are simply building another business on the sidelines that hasn’t broken out yet. That business is online applications and hosted data storage. I come down on the latter POV.

I’m one of the ten people in the world who use Google Apps. I use Docs all the time now for writing because it is a nice simple editor and I can share my work with my business partner regardless of where we are or what machines we have access to. I also use Gmail and their Calendar and iGoogle. While I have no idea how Google plans to monetize their applications (advertising won’t work- Gmail generates practically no ad revenue for example), I do think that what they are doing is becoming the default location for doing business on the web. This an end-run around Microsoft’s core business. As it is these days I only use Word as a desktop backup for my Google Docs- and any text editor could serve that function.

We’re in a paradigm shift here. With broadband and rising energy costs businesses are going to be run from decentralized locations- home, satellite offices, video conference suites, etc. Online applications are perfectly suited to this model. The MS-Yahoo pairing doesn’t address this fundamental change at all.

There is a feeling of desperation in this move- when will someone realize that Ballmer is not a strategic leader?

Jan 21

Domain Silliness: Sailboater.net

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The Afternic blog describes sailboater.net as a ‘great’ domain about to expire. This is pure silliness and one of the reasons that some recent auctions have fared poorly (and, conversely, why some have done very well).

First, it’s a dot net. Nuff said.

Second, let’s think this through:

‘Sailboater’ is not a phrase anyone in the real world ever uses. They describe themselves as ’sailors’. If you used the word ’sailboater’ in their world you’d at least get looked at very strangely, at worst you’d get laughed off the dock.
So if you park or develop this domain you’re extremely unlikely to get any traffic from those you want traffic from: wealthy sailors and boat-owners who spend boodles on boat stuff.
Sailboater is not a keyword that is likely to get used- so forget type-in traffic.

The point here is that domains that are not marketable or are just plain stupid aren’t going to command the big bucks or generate real revenue. You’re far better off owning a good dot com, keyword domain that is likely to attract valuable traffic as opposed to stupid traffic. That’s why sailor.com would be worth huge money compared to something that makes no sense in the real world like sailboater.net.

Supernatural Agency: Online business tales

The beginning of the end for affiliate marketing?

When the ad loads but the content doesn’t

The Borg eats the ‘Hoo: My view on the Microsoft/Yahoo takeover

Domain Silliness: Sailboater.net

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