What You Missed at the Web 2.0 Conference: Day 2

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I should mention that the subtitle of this Web 2.0 conference is "The Data Frame," or: "Data as a framing device to understand the state of the Web," thus the heavy emphasis in many talks on the use of data flowing from social networking.

How Do You Handle Social Networking for 118 Brands?

For the morning breakout session on Day 2 of the Web 2.0 Conference in San Francisco, I took on a talk by Eric Snowden and Carmen Sutter of Warner Brothers-Atlantic Records. Their session was titled, "Data-Driven Bottom-Line Results: Making Social Media Actionable – A Real-World Case Study." Their job at the music-publishing giant is to manage the social networking  of the company's music groups – 118 of them. With a staff of three.

To further illustrate the challenges, they talked about their work with hit musician Bruno Mars. They encourage him to tweet, and they've built fan pages on seven community sites from Facebook to MySpace and beyond, as well as a dedicated corporate destination site.

One challenge is branding: Ordinarily, a brand manager wants to tightly control the brand – trade dress, presentation, fonts, everything. That's not possible on third-party sites, since they have to fit within the requirements and limitations of those sites. They do what they can; the highly designed Bruno Mars "logo," at least, is prominent on all such sites.

One advantage of social networking is the opportunity for the artists to connect more closely to their fan base. An artist who could not walk down the street without being mobbed can talk to fans by Twitter or on Facebook.

The team tracks the heck out of their social-networking efforts, and use two analytical tools, Site Catalyst and SocialAnalytics, to understand how their efforts are affecting activity, friending, retweets and other sharing, and ROI. They combine the tools into one integrated reporting tool. However, they emphasized, they don't just treat their audiences as aggregates; it is important to drill down and identify distinct audience segments, and generate "actionable data." 

The object is to move people along the path from curious/interested, to fan, to committed enthusiast; from someone who just visits a site, to Friending/Liking/Following, to signing up for newsletters and alerts; and finally moving them on to the band's destination site, where they can monetize the relationship, mainly by selling them music. The big win is to identify the most valuable audience, “Superfans,” to understand, convert, and retain them. Superfans get special access, such as the ability to communicate directly with the musicians, VIP access at concerts and meet-and-greets, and first access to new releases and videos.

Some of the gimmicks – uh, social tie-ins – are clever: For a Bruno Mars national tour, they posted a lyric tied to each city on the tour, and invited fans in each city to send Instagram photos of something in their city to illustrate that lyric, with winning fans in each city getting posted to the Bruno Mars site and getting rewards. The campaign was hugely viral, they said. And of course helped further develop and identify evolving superfans.

Snowden and Sutter gave some stats on wins from social media, such as huge Tweet spikes during Mars' Video Music Awards  tribute to Amy Winehouse, and bumps in song and album sales. More interesting were their remarks on the challenges of working with bands to get them to do their part – tweeting, posting to Facebook, linking to sales pages – consistently. As they pointed out, the brand managers for Dr. Pepper don't have to worry about a moody Dr. Pepper waking up hung over, forgetting a promise to tweet about something, forgetting to include the link, or mistyping the link!

One win was giving the analytical reporting tool to the site designers so they could see immediately how changes to the various sites affect the performance of that site. Unfortunately, most of the bands aren't interested in using such tools themselves....

In their concluding remarks, Snowden and Sutter pointed out that one big change in the music industry is that it is no longer a B-to-B business, selling albums to a retail outlet or a jobber; increasingly, it's a B-to-C direct-to-consumer business.

Plenary: Michael Dell has nothing to say about Social Media

The main session in the ballroom started with San Francisco Mayor (and candidate) Ed Lee stopped by to say Hi, welcome, we love tech, we love business. He got polite applause, but most of the attendees don't live within the limits of the city and county of San Francisco.

The anchor tenant of this session was Michael Dell, founder and CEO-again of Dell Computers. He talked about how Dell's business model has shifted over the years and now is 40% services by revenue rather than just server boxes. He declined to rise to the bait of talking about his chief rival, HP -- whose new chief, Meg Whitman, had declined an invitation to the show.

In the end, Dell had nothing to say about his company's use (or nonuse) of social media in its business, other than that he himself posts to Twitter regularly (and that it's nerve-wracking to his PR people).

Bill Gross Announces New Biz, “Chime-In”

Serial entrepreneur Bill Gross, of Idealab announced his new launch, Chime.In. Described as “the first ‘Interest network,’” the site lets customers connect with others on the basis of their interests, and monetize their personal (or corporate) Web pages.

What's most interesting about this, to me, is that you will be able to follow people on some of their interests and not others. Gross’ example: You can follow Robert Scoble in his tech interests, and not follow his personal posts. That’s an interesting attempt at a solution to a problem identified by yesterday's Chris Poole: That we have several facets to our identities and we don't want to share all with everyone.

The site launched this morning at chime.in.

Individuals (and companies) can create Web pages in the site, and keep any revenues they might generate from advertising on their pages – not sharing, but keeping it all.

It will be interesting to see if people flock to the site for their personal pages, their personal-brand pages, their entrepreneurial business pages, their small businesses, and the corporate brand pages, abandoning Facebook and Yahoo pages. Web entrepreneurs seem like the most likely early adopters, dreaming of keeping all the revenues they dream of generating....

(Product announcements, by the way, are the other red meat for conferences and trade shows, who can brag about it and try to get future, even more important, vendors to announce at future shows. This is not cynicism, just good business. And in this case, directly relevant to the conference theme and arguably of interest to the attendees.)

Strange Hires That Work

Aileen Lee of the venture-capital firm Kleiner Perkins Caulfield Byers talked briefly – in one of this conferences best ideas, namely, very short speeches, in this case five minutes – on "Moneyball for the Investor," which in this case means nontraditional hires who emphasize the data side to find insights and innovations. Reid Hoffman hired at LinkedIn DJ Patil, an assistant professor at the University of Maryland whose field was nonlinear chaos theory of physical events. He built a department of 200 engineers and designers; one of their creations was the "People You May Know" feature, which strongly drives involvement and networking among members. Zynga, at 400 employees (it's now 3000 or so), hired Ken Rudin, who has no gaming-industry background – he came from Siebel and SalesForce.com – as VP of data analytics and platform technologies. Lee's own startup funding, RenttheRunway.com, which sells dresses, hired Vijay Subramaman to look at the data and find patterns in which dresses are most popular among which women buyers in which seasons and for which events; he uncovered more and more interesting data than they ever expected.

Beware: Loose Data Sinks Ships

Dr. Ann Cavoukian, Information and Privacy Commissioner for Ontario, and David Vladeck, of the FTC Bureau of Consumer Protection, spoke about the risks to corporations represented by too much personally identifiable consumer information (PII) floating around with too little regard for protection. These two powerful government bureaucrats took the reasonableness approach, encouraging companies to be proactive with their data privacy and controls (Dr. Cavoukian, using the slogan "PbD, or Privacy By Design) and hoping they would never have to come calling on any member of this audience in a professional capacity (Vladeck).

(Interesting names: Kevorkian and Vlad the Data Impaler....? Neeeever mind.)

Their key point, emphasized several times, was that customer data can be very dangerous for the corporate body's health. If that data gets out – and data breaches are far too common – the legal liabilities, which are increasing, can be serious.

One audience member pointed out the very real problem for startups that, not knowing what future evolutions may make valuable, companies typically want to gather as much information about their customers as they possibly can, because some of it may become useful in the future – and it's easier to collect it from the start than to try to back up and fill it in later.

But Dr. Cavoukian was emphatic: Do not gather and retain any PII beyond what you have a here-and-now need, and are able to disclose your use fully to your customers. You can't just say in your privacy policy "...and for any future use we may develop." That won't protect you. She also pointed out that retaining data long after you have use for it is a bad idea.

She says her office tests mobile apps aimed at children and sometimes find apps that indiscriminately pull down geo data, e-mail addresses, and other "data unrelated to functionality," without explicit parental permission: a violation of the law. Even big companies, they find, hold sensitive data like Social Security numbers without taking adequate steps to comply with security standards. Security should be foremost in your minds, not an afterthought, she said. Information you don't collect can't come back to bite you.

She is encouraging companies to engage in Privacy by Design, or PbD, where privacy is designed in from the very start, not handled as an afterthought, when it's harder to retrofit; such design-in can be less expensive than the regulatory burden of after-the-fact compliance. She encouraged attendees to visit her site, where they will find lots of info on how to design-in your privacy protection – especially useful for new firms that lack legal resources and have to figure it out themselves. For the U.S., http://ftc.gov has similar resources of value to startups in this regard.

The key is to reduce as much as possible data linked to PII. They bottom line: Don't collect what you can't use now, sever PII from other data, then encrypt and protect it.

Foursquare: Evolving Towards Groupon

Foursquare founder Dennis Crowly came on to explain their new feature, called Radar, that adds location-based couponing – with a twist. When you go to a store, you don't have to open your phone and fire up the app to see if the store has any special offers for you. Once you load Radar, as long as your phone is on, it checks your location against relevant nearby offers, and alerts you to them as you enter the store.

To me, this looks sort of like a Groupon-on-the-fly. Crowly said this will help create value for people who are or are becoming less interested in the traditional (traditional!) game feature of Foursquare. He characterized Facebook as "helping people connect with people and places online" while Foursquare is "helping people connect with people and places offline."

VC: Cloud/Mobile is Biggest Platform Shift Since PC

Investor Ben Horowitz of Andreesen/Horowitz talked about how the VC industry is evolving, but more interesting was his assertion that the platform shift to cloud and mobile represents the biggest platform shift since the introduction of the PC 35 years ago. Everything on the back end is changing, the network is changing, databases, every application is being rewritten, how everything works is changing. Microsoft's lock on the platform is broken, which is of course a stunningly change.

When asked, he called Facebook the best-run company in tech. He said when you're hired at Facebook, they give you the equivalent of a one-title demotion – to ensure that you are joining Facebook for the right reasons, and not just for a promotion.

He also reminded us that when Steve Jobs took over Apple the second time, Apple was three weeks away from bankruptcy. Horowitz and many others thought Apple was doomed. (John Battelle remarked at another point in the day that when he was running Wired, the magazine published a cover story showing the Apple logo with a crown of thorns, and the word "Pray.") Jobs did more than turn the company around; Apple today is the most valuable firm in the world, in capitalization.

Angry Birds: Building the Next-Gen Media Company?

After lunch, Ben Stalbow of Rovio Entertainment talked about how they are working to push the success of Angry Birds beyond must a simplistic mobile game, by coming out with updates constantly, such as a Halloween-themed update, a version targeted to the Chinese market for its Moon festival that included a comic book and Angry-Birds-decorated mooncakes, another custom version to support a new movie "Rio," Angry Birds stuffed toys (he and John Battelle tossed a dozen of them into the audience, to its delight) and, I swear I am not making this up, an Angry Birds cookbook – which he characterized as a good family activity. Their video promotions for their new products are leading them to buy an animation studio so they can come out with Angry Birds videos.

This whole furious brand extension Stalbow said was in pursuit of the firm's theme: "Surprise the Fans!"

He didn't say anything in particular about social media, data as a competitive advantage, or mobility (other than tossing stuffed dolls into the audience).

Paying Up

John Partridge, President of Visa, and Dan Schulman, Group President for Enterprise Growth at American Express, spoke in depth about their credit-card companies' efforts to shift into the online payments space, partnering and competing with PayPal. They said this space is a huge growth opportunity for both of them. But they agreed that it's a challenging shift for the two firms from their traditional way of doing business – acquiring companies to add to their capabilities, opening up some of their services to third parties, "exercising new muscles,"—and it's been hard work internally.

Speaking of data, both emphasized that a competitive advantage they have over new players in their space is their enormous data sets and analytical tools, build up over time, about transactions, which is critical to fraud detection, an issue of great importance to merchants. (Visa's Partridge said that in the course of due diligence on an acquisition of a hot new player in the market, they figured out that a lot of its early success came from "flying under the radar" and simply not worrying about fraud management.)

When asked how they will handle the considerable hostility that has built up towards them among merchants over the years because of their high fees (recently reduced and capped by Congressional fiat), they blathered about having talks with the merchants about creating value by providing more information on the customer so they can, for example, offer coupons (?), and hope to move the conversation away from the costs of Interchange (what merchants are charged when a customer uses a credit card),

Mary Meeker, Internet Trends Superstar

Former Wall Street research analyst Mary Meeker, who became famous during the Internet boom of the 1990s, and now with VC firm Kleiner Perkins, gave her annual high-speed presentation on internet trends – to cheers from her many fans in the audience. "I have tons of dense slides here, but you are smart," she said as she launched into her fast-paced slideshow, impossible to summarize here. Better you should go to her posted slideshow and see for yourself what she tried to cover in only 15 minutes.

Some highlights, from notes I was scribbling as fast as I could:

• Next Big Thing: Online Audio! "'Record' is the new QWERTY."
• Mobile Commerce: We Have Liftoff!
• Magazine paradigm radically shifted: She visits four or five days a week the online magazine One Kings Lane (slogan: "A Treasure Hunt Every Day") which is a magazine/catalog where everything you see you can click on and buy – with your mobile phone.
• Local commerce has been rejuvenated by mobile (see e.g. Groupon and Living Social, not to mention Open Table, Square, Yelp, Foursquare, and Gowalla).
• Smart phones and tablets now outsell PCs. Windows installs on Internet-accessible systems dropped below 50% this year.
• "The pace of innovation in the Silicon Valley right now may be unprecedented."
• "Intensity / focus / leadership of USA-based companies (Apple / Google / Amazon.com / Facebook) may be unprecedented."
• "Combination of technology improvements and elegant design may be unprecedented."
• The mega-trend of the 21st century is "empowerment of people via connected mobile devices."
• Lots of uncertainty in the U.S. economy.
• Biggest problem for the U.S. is continued growth in government spending and continued decline in government revenues. (When asked, she said the government definitely needs to cut its spending.)

Darth Data: The Dark Side of Data and the NSA/ThinThread

Thomas Drake of Knowpari Systems scared us all by reciting the tale of his past work at the National Security Agency, where, he said, the government's attempts at crunching data to find security threats is poorly done, wasteful, ineffective, dangerous to the citizenry, and violates the Constitution. Further depressing us, he told of a system he had pioneered at low cost called ThinThread that worked far more effectively but was shut down in favor of another system that cost 100 times as much and didn't work as well. Great.

And More Speakers

• Matthew Mengerink of eBay explained how the company’s new X.Commerce "open commerce operating system" makes it simple for small shops to implement rich ecommerce fast.
• Jack Tretton of Sony Computer Entertainment of America did a demo of the new Playstation Vita handheld console with lots of nifty features, which will be available in the coming months. The connection to our theme is that players can store in the cloud all their data from the games they are playing and pause the game on a Vita and pick up with another Playstation system just where they left off.
• Ken Goldberg of UC Berkeley and Hybrid Wisdom Labs announced their Collaborative Discovery Engine, a product to allow brainstorming at scale – to research a large number of customer opinions or reactions and rapidly filter, visualize, and display results in a way never before possible. "It scales to support thousands of participants without sacrificing speed in finding the best solutions," he said. The product is the result of a decade's research in robotics and social media at UC Berkeley.
• Tim Westergren, founder of Pandora, told us that at 37 million users, the music-delivery firm has finally reached scale sufficient to attract not only national advertisers but also local advertisers, which is the meat-and-potatoes of the radio market. He said Pandora represents a tectonic shift from broadcast radio to what he called "personal radio."

Westergren considers Pandora a radio station. One important factor it addresses is that where broadcast radio stations pay a licensing fee that goes to music publishers, with the artists getting little or none of it, Pandora pays royalties to the artists as well as the producers. Pandora also is not required to contract with each individual music-publishing company, by Federal law. Pandora shifted to the iPhone in 2007 and doubled its growth rate almost overnight. This shift lifted Pandora out of the ghetto of being "just a computer radio" to being anytime/anywhere radio.

Steve Ballmer Dances

Winding up Day 2 was Steve Ballmer, head of Microsoft, interviewed by John Battelle. Battelle challenged Ballmer: “Has Microsoft decided to punt on social?" Ballmer danced around it by claiming that XBox 360 Live is social, because of its online component; “different, but social,” he said. He also pointed to recent acquisition, Internet phone service Skype, as a sort-of variety of social.

Battelle asked him if he was now glad Microsoft hadn't succeeded in buying Yahoo for $44 billion last year – in view of the collapse of its stock price since then. Ballmer agreed that sometimes you just get lucky.

Battelle asked him where Microsoft stood on the Cloud. "All in, baby!" was Ballmer's reply. He said apps in the cloud is still bleeding edge, but Microsoft with its cloud Office product is selling well to corporations and government, and, he claimed, beating Google regularly.

Why Are These Guys On Stage, Anyway?

Some of us were talking at lunchtime about the peculiarity of Big Names at these conferences who seemed to have little to do with the theme of the conference. The Monday event ended with U.S. Senator Ron Wyden of Oregon, who has a lot to say about how entrepreneurs are vital to job growth in our economy, but didn't talk about Web 2.0 or social media except indirectly. Tuesday's closing star was Steve Ballmer, head of Microsoft – who conceded that Microsoft is not yet a player in social media, though he gamely tried to spin the XBox 360's online service as a kind of social network, and even newly purchased Skype as qualifying because it enables communications.

We concluded that these heavy hitters of low relevance appear at shows like this for reasons having to do with the marketing of the conference or trade show. If your event can get Steve Ballmer and a senator, then it's easier to persuade some newly hot figure in your industry to agree to show up at your next show. Steve Ballmer and Michael Dell were at our show, thus it must be legitimate. Unfortunately, these fine corporate figures turn out to be empty suits when it comes to having anything to cogent to say about the topic at the top of the daily handouts: "Web 2.0." Oh well; one can always check e-mail while waiting for the conference to get back on track.

Don't miss Wednesday's day at the show! Watch the Web 2.0 Summit Livestream October 17-19 beginning at 9:00 AM Pacific Time, sponsored by HP Input/Output.