Groupon's model: Irrational, but it works
Why Topix CEO Chris Tolles thinks Groupon will succeed despite the quirkiness of its business model
Read more...For those who haven't been paying attention, the iPad is spawning a flurry of new industries--most notably, the iMag. Zite, a magazine that aggregates content based on user preferences (which are culled from Twitter and other social networking sites), launched last week, and today, rival Twitter-based social iMag Broadfeed debuted. And then of course, there's Flipboard and Pulse, and every other iMag out there. But the iPad alone didn't ignite this frenzy of curated and personalized content. Several stand alone websites attempted to get into the space, including Meehive and iCurrent. Recently, the New York Times launched News.me and the Washington Post is gearing up for the debut of its new personalized content aggregator, Trove.
But all of these examples point to more than just a rising trend in personalized reading material; they're signaling a sea change in how people are seeking out and receiving information. This goes beyond content to fundamentally call search into question
In the last several weeks, more than one search-related controversy has cropped up to remind us that Google is our all-knowing, all-loving, benevolent Father whose children are always trying to game him while he's napping. There was the recent JC Penney scandal, in which the popular suburban-mall retailer was found to have back-linked to some 2,000 different websites that had nothing to do with JC Penney in order to boost its Google search ranking to number one for every goods-related search imaginable.
But JC Penney was by no means the only one doing this. Overstock.com also recently came under fire for offering bargains to users from academic institutions who linked to the site, thereby boosting their Google search ranking. The logic: Google's algorithm ranks sites with original content and research higher than other sites--and sites that end in ".edu" are typically found to have more original content than others.
Papa Google responded with tough love: no more gaming. The search algorithm was tweaked to crack down on those trying to cheat the system, as well as those trying to bend the rules by creating low-quality articles around popular Google keywords to get higher clicks and thus generate more ad revenue.
But the problem isn't a too-easily-hoodwinked algorithm. The problem lies in the basic concept of one central authority that tells users what they like.
Breaking it down, Google became the top search dog in the late '90s by having the most efficient algorithm. That algorithm was designed to retrieve the most relevant search results for your query--results that had original content and research.
But the Internet has outgrown the nuclear setup. It no longer needs a watchful father telling us what we like and don't like.
"It used to be that backlinked sites had some kind of authority. It was some kind of a signal that there was value in what you were doing," said Saad Khan, partner at CMEA Capital, in a recent phone chat. "The world is changing in such a way that authority on the web is being expressed in a new way: people are the new authority."
Khan explained what he calls "like-rank": the idea that authority comes from people through expressions like retweets, likes, and other social signals
"I actually think the whole way we navigate the Web and see authority on the Web is going to be fundamentally altered," he added.
This, Khan believes, is why pretty soon, the concept of an algorithmically determined "page rank" will be meaningless. Relevance will not be determined by one organization, but by the legions of voices on the Web.
But what about quality? Truth be told, Google's algorithm does force publishers to work harder to create high-quality, competitive websites. If there's no algorithm to automate the process of weeding out the bad eggs, how will we account for quality?
"At the end of the day, the best content rises to the top," said Khan. "People have figured out how to game the old search channels. It's harder to game the social graph. The Web gives everybody a megaphone, but if I give someone whose got a crappy message a megaphone, he might yell but no one will pay attention."
Image source: contactsea.com
Why Topix CEO Chris Tolles thinks Groupon will succeed despite the quirkiness of its business model
Read more...Are sky-high valuations pointing to a bubble or a new era for Web companies?
Read more...Given the company's losses, is such a sky-high valuation realistic?
Read more...Joined Vator on