Predictions for 2007

December 31, 2006

Alas, as 2006 ends and 2007 begins this is my first time in making predictions for the year ahead which aren’t at The Blog Herald in 5 years. Whether next years predictions will be here or at another blog of higher note is yet to be decided.

In making my annual predictions for the year ahead, I do so with a note of melancholy, for indeed in the last two weeks the art of futurism has been reduced to a competition for profit at another site. I don’t disparage those who entered the competition, as I don’t (legally) disparage the person who held the competition, but for me predicting the year ahead has never been a glib post of the moment for potential profit exercise, but one that entails some reasonable research, notes over several months, and some serious thought. But in leading on such a note, the competition itself is actually reflective of the blogosphere ahead. You see, Gartner got it partially right. They were of course wrong in relation to applying their findings to the entire world, but they were right in terms of the English Speaking nations, and most likely Europe as well. Blogging in these countries has hit its peak. The year ahead sees a new marketplace.

The Mature Market

Students of marketing will immediately recognise that there are very different dynamics in a rapidly expanding marketplace, and one that is mature. The blogosphere in 2007, in Europe and the English Speaking Nations has hit that point. We have anecdotal evidence already. SixApart is pitching Vox at users who may have grown tired of blogging, both lapsed and existing bloggers on other services. AOL is said to be launching Blogsmith in an already saturated market. I of course use the phrase blogosphere collectively, but naturally amongst some of it’s more niche areas, video blogging, and perhaps podcasting to some extent, I still see growth to be had, but at several hundred million blogs there is little room now to further grow the blogging marketplace. I’d prefer not to use the word cut throat, because it’s a term more indicative of a pre Web 2.0 era, but expect to see more strident competition amongst blog providers, and blog networks as well.

Innovation

It’s sad to note that there has been no great innovation in the blogosphere since the successful uptake of WordPress some 2-3 years ago. Of course, WordPress’ success itself is a quirk of history, being in the right place at the right time, particularly as SixApart imposed fees on it’s user base. But where in the past, every year bought great innovation, from GreyMatter to MovableType to WordPress, and others in between, the last few years have been a barren wasteland of conformity and similarity. Whether 2007 will provide a great new innovation of blogging is, I suppose, best left to conjecture, but word that AOL may release Blogsmith in one form or another offers some hope. Surely, amongst the masses of VC funding and startups a company exists that will revolutionise blogging for us all once again.

Competition

Competition is good for the consumer, and as bloggers we are all consumers of blog platforms, blog advertising solutions, hosting plans, designers and other providers of blog widgets and related products. The question in 2007 is will the competition be sustainable as the returns move towards 0. Despite the many derogatory remarks some critics make about Web 2.0, free as a concept, no matter how foreign it is to traditional economics, is actually succeeding in some cases in the market place. I say some, because it’s by no means a universal given. In economics nothing is free, there is always an opportunity cost in any transaction. But on the same token I believe that the blogosphere will be somewhat insulated from the broader Web 2.0 marketplace. People talk of bubbles, I personally see froth. There is little doubt in my mind that we will see in 2007 the collapse of a reasonable number of Web 2.0 firms, indeed you can track them already at Techcrunch’s Deadpool. The economic dynamics in the blogosphere however are different. As a concept that has been around longer that Web 2.0, the blogosphere is already pretty mature in its means of creating a return on investment (ROI). Indeed, even now advertisers are still finding the benefit in advertising on blogs, and further they as well can see an ROI, where as ROI on many Web 2.0 sites are speculative at best.

In terms of blog providers, such as SixApart and Automattic, 2007 should see growth slowing, if not plateauing. Where as once they pursued new users, blog providers will now pursue existing bloggers, to the benefit of everyone. Price and product will be the two selling points, and expect the later to eventually be the core offer as prices come close to 0 any way.

In Blogging Networks, I’ve long said that there are too many. Although having said that, the cost of entry and ongoing trade is soo low that we are unlikely to see any correction along the lines of the VC funded, development and IP heavy Web 2.0 firms. As the blog resale market matures I’d expect to see more smaller firms on the market. The really interesting equation is the VC funded firms. It’s early days in the VC cycle in terms of their investments so we shouldn’t see any major crashes, but 2007 will be a make or break year in terms of whether large multi-blog networks will make it.

The Perez Hilton Case

It’s some what of a worry that I’ve read next to nothing amongst the A-List blogs and bloggers about the Perez Hilton Case. This is probably because they won’t be directly affected by the outcome, given that they are mostly blogs of direct opinion or exclusive news, but for the rest of the blogosphere the Perez Hilton case will be the single most important legal case of the year. Why? well it goes to the concept of Fair Use under US law. Sure you could argue that for bloggers outside the US it makes no difference, but there are two points to remember, first is that the US actually has the most liberal Fair Use laws in the English speaking world, secondly, the US isn’t afraid of arresting people or extraditing people who break their laws, even if they don’t live in the US (look at some of the hacker and gambling cases for example). At stake is perhaps the entire future of fan and celebrity blogs and blogging. If successful, using celebrity photos from other sites on blogs could essentially become a crime in the United States. If it fails, the case law would give a virtual green light to bloggers to use as they please in terms of photography from other sites.

I’m reluctant to give a prediction for the case, but my gut feeling tells me he will lose, but only on the grounds that he primarily profited from his use of 3rd party material, indeed the fact that it was primarily the content on his blog. The net effect would not result in any case law as such that would affect the average blogger, but emboldend by the win those taking action against Perez could sue others, those who don’t republish content to such an extent, and only then will reasonable case law be established.

SixApart

I wouldn’t be doing a list of predictions in any year without including a special point for SixApart. In the past I have predicted that SixApart would be sold, and in the year passed I predicted it would not be, only because I was wrong in the years preceding. SixApart is an interesting case, because it first found funding very early on in the Web 2.0 funding cycle. I don’t have my facts and figures at hand, but I’d suggest that SixApart first obtained funding some 3 years or so ago, and since has received 2 additional rounds of funding. Naturally I’m not a party to the deals so I know nothing of the percentages taken, or the amounts pumped in. What I do know, based on a rather wise chap who knows about these things told me, is that VC firms usually look for an out no later than Year 5. The first round investors in SixApart must be (or perhaps just about) in Year 4. At this stage they will be looking for an out in the 12 to 24 months ahead. The question then becomes what exactly is the out? Of course without knowing the percentage it’s hard to estimate the influence, but some time over the next 1-2 years, we have to see movement at SixApart. If it’s a Google style acquisition, who will it be? Google isn’t a naturally suitor, given it’s already got it blogging play with Blogger. Yahoo! is an off chance. Microsoft a zero. Which leaves another private firm, or an IPO. SixApart has broken a lot of Web 2.0 rules along the way, and yet they seem to continue to go well, so an old fashioned IPO isn’t impossible. I’d look at buying. More likely though as we see a maturity in the overall investment market is private equity, bond/ pension fund people or super funds people (in Australian terms). It’s a fairly new concept in Australia, coming to the fore in the last 12 months (anyone say Macquarie Bank and friends), but it’s been a trend for longer in the States. There is only so many old world assets these sorts of funds can buy before they have no choice but to consider investing in new media. SixApart would be a good buy, depending on the price.

God Speed

To all, a valiant and successful New Year. 2006 has had it’s highs, and deep lows for me, but I’m positive that 2007 will be better. Ignore all songs by the hippie Sandi Thom about the 60’s being better, after all she could only get a gig via MySpace. This decade is ours, and ours for the taking. At no time past has the common man had a better opportunity to succeed. The path of the blogosphere is there before you.

Duncan.

 

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7 responses to Predictions for 2007

  1. Terrific post, Duncan … and you can spell, if you try. 🙂

  2. Some good thoughts there Duncan. I think sometimes a lack of innovation (or a slow down in it) is a sign that we’re in a mature phase – everything that can be has been thrown up, now it’s a let the dust settle, and wait and see period.

    All the best in 2007.

  3. Thanks for these thoughts, Duncan, and especially for your example of putting so much thought into what you say online.

  4. Great thoughts on what may be for 2007!

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