Google enabled graffiti is coming to the web. What does this mean for your web based business? Photo by Clav

What is sidewiki?

Sidewiki is a service offered by Google that is included in their Google Toolbar product. It’s positioned as a service that enables users to “contribute helpful information on any web page. How side wiki works is insert a layer on top of the website where users can drop in comments.

It’s not graffiti though is it?

Graffiti is typically defined as any images, lettering that is scratched, painted, or marked in any manner on property; with the implication that it is property that is owned by another party.

What Google is doing is enabling all of its users to create digital graffiti that changes the way everyone with this service enabled experience on the website. This really isn’t that much different than spray painting the side of a building except that users have to opt-in to see it.

photo provided by lorelei

Business Implications

I would expect most any site that doesn’t derive its revenue/traffic from user based activities to be a little nervous. This includes anyone who has an eCommerce portal, any corporate websites, and bloggers.

While there are a lot of positives to enabling your audience to play a bigger role in advocating your product, unfortunately we’ve all seen internet flame wars. The scary thing here is its Google not the site owner that determines the relevance of comments, as well as if a comment should be taken down.

Steps businesses can take

First off shore up your branding, make sure you’re speaking to your core audience and building trust, and a bond that will put them on your side. By doing this you can eliminate a majority of the exposure to negative public commentary.

Enable your own controlled feedback loop, be innovative. It could be adding a comments section, or creating a direct pipeline between the audience and a site admin/public relations person. Having a brand presence in the form of an evangelist or community activist goes a long way towards taking charge of the discussion and keeping it on point.

In addition to these steps you can also join the side wiki fray.  You can find steps to do this here.

Conclusion

As a site owner myself, I find what Google is doing to be very intrusive, it’s not unexpected though as we’ve seen things like YouTube and or Google News aggregator which directly attacked the value a content owner held. Google pushes the envelope on ownership of content because their business model makes money off of free information.

I really wonder how far side wiki will go. Can Google insert advertising into it? If so we may see a time where bloggers and other advertising based websites may run into significant pain with their current business model as it bumps up against Google’s.

Recently on LinkedIn I answered a question of a fellow entrepreneur. His question had to do with going to a Venture Capitalist or a better established business to pitch an idea he had, but couldn’t implement on his own. His concern was on his ability to do so and protect his idea.

The Dilemma

When you’re the small start-up and you need money you’re put in a place where you don’t typically hold a lot of power. Potential investors will be completely invasive with their questioning and business reviews, at the end you’ll be lucky if they don’t know your business better than you do.

The problem this gentleman, and any small investor, faces then is how to maintain a position of strength in negotiations. VC and M&A activities are all about the big investor squeezing as much equity as he can out of the start-up.  The more of a business model and plan that is replicable the more equity a VC can extract.  This is counter the preference of the entrepreneur who really wants to make a deal (for as little equity), since they’ve deemed sacrificing a piece of the company a necessary process to accelerate growth or build in stability into the business.

Building in Value

Given the preferences and tactics of the buying parties in these transactions, we know its vital that a entrepreneur come in with the most attractive business plan possible. Knowing who your audience is, having achieved current run-rate business, and having a brand customers are aware of are just some of the things you can do to drive value into the bargaining table.

The element that is often over-looked and extremely valuable is Intellectual Property: the patents, copyrights, trademarks, and trade-secrets that the company holds. These intangible things represent the ability to lock in value by removing an area of the market from competitors.

By focusing the conversation onto IP, and by having a thorough understanding of IP the entrepreneur protects their value first by dictating a asset has value and asserting it most be measured into the asking price, and secondly by removing a possible exit strategy that sees the potential investor become a direct competitor.

Take-aways: Control the conversation and navigate into IP valuation. Assert and qualify the investments you’ve made in intellectual property. Explain to the potential investor how your IP makes this a unique product, one that doesn’t have many substitutes.

It’s hard not to get excited by a brand and service that people use every day. You can find anything on YouTube and more videos are uploaded all the time. I even heard a statistic that every second 5 new minutes of video are added.

But is this a great business?

First off come the realities of their business model:

• Content owners will protect their rights.
• Google cannot possibly hire enough IP lawyers or trained staff to keep up with the flood of submissions
• Unfortunately people want high quality content, which tends to be professional done
• The users of YouTube do not respect copyrights

These are some glaring issues so how did YouTube & Google decide to handle this? They hide behind the Digital Millennium Copyright Act. The safe-harbor provisions in the act were put in place to guard ISPs from litigation since they were providing the bandwidth but couldn’t (and shouldn’t) be policing Internet usage. Google is offering a service though, and additionally houses infringing content on their servers which is a step beyond what the provision was intended for.

With Google stretching this legislation to it’s limits, there is no room for error now. So when it comes to monetizing movies on YouTube there becomes a major issue: If its on your server and you make money off of it, you’re no longer simply providing the bandwidth you’re exploiting the content.

So the only way Google is going to be able to monetize is through the low production value videos, or doing deals with content holders who are already antagonized by how Google has treated copyright laws previously.

So yes YouTube is an amazing service, and yes there’s some potential for a breakout business, but boy are there some glaring weaknesses for Google.