VentureBeat

Jonathan Christensen opened the eComm (emerging communications) conference at the Computer History Museum in Mountain View, Calif., with the prediction that free Internet calling will make its way to mobile handsets and complete the revolution that began with computer calling.

“To me, this is the most interesting time for us,” said Christensen, general manager of audio and video at eBay’s Skype division. “The phone is dead.”
He didn’t, however, give an exact time for the death of the cell phone as we know it. What he calls the “mobile mess” stands in the way. That includes the problems related to the scarcity of wireless spectrum, which enables the creation of walled gardens, closed networks, and how wireless carriers lock consumers into their own phones. That’s going to change with mobile VOIP, he said.

Christensen walked through the evolution of voice-over-Internet-protocol (VOIP) and how it evolved into the runaway success of Skype, the free communications service that now has 276 million users. About 30 million registered users signed up in the fourth quarter of 2007.

Now incumbent phone companies are coming in to offer the same service and features, which serves only to accelerate the shift away from landlines, he said. Even Christensen’s own mother has gotten rid of her landline and is now relying on a mobile phone.

“This is another foot in the grave,” he said. “A new game is afoot.”

Not for his mom. For phones as we know them. Now Skype is rolling out into a variety of cordless phones, the Sony PlayStation Portable handheld gaming system, the Nokia N800 Internet tablet and a lot of other devices. And Skype itself is profitable, he said.

“We’ve entered the ear of rich PC-based Internet communications,” he said. “We have real-time video, data presence, text, wide-band audio, smart endpoints, an open platform and application innovation.”

But to make the conquest complete, VOIP has to open up the cell phone networks. Christensen said that he couldn’t disclose ongoing Skype projects on this front but he is excited about what’s coming. He noted that eBay’s priorities are focused more on enabling Skype to grow than to integrate Skype with eBay’s own services.

He believes that flat-rate pricing, the auction of the 700 megahertz wireless spectrum, and other events are opening up the mobile platform. It will be interesting to see how long it all takes to deliver us to the promised land. I’ll publish more in the next couple of days from the conference.

Web 2.0 Summit, co-hosted by O’Reilly Media and CMP, kicks off this Wednesday at San Francisco’s Palace Hotel. A who’s who list of Web 2.0 digerati will converge for three days of deal making, partying and more deal making.

If you didn’t have the budget to nab one of the $3,595 tickets for the event, fret not - VentureBeat reporters will be on hand to bring you frontline dispatches.

In preparation for the event, here’s a quick preview of what’s expected during the week, which includes some product launches by MadeIt, Userplane, Radar and Nokia.

Facebook’s Mark Zuckerberg, Google’s Marissa Mayer and Microsoft’s Steve Ballmer will all be speaking — and ears will be perked for the latest on reported acquisition talks between Microsoft and Facebook, and Google’s response to this.

EBay’s Meg Whitman will be speaking Thursday, right before her company’s Q3 earnings announcement the same day. Friday’s Wall Street Journal had an article about eBay’s struggle to juice its slowing growth rates. We also hope the moderator asks her questions about the departure of Skype founder Niklas Zennstrom, and about eBay’s associated $900 million write down. Speaking of Mr. Zennstrom, the Skype founder curiously disappeared from Web 2.0 Summit’s list of speakers sometime over the last few days. As recently as last Wednesday according to the Google cache, Zennstrom was listed as a speaker at the conference, where he was to participate in a session entitled, “Show Me.” Oops. Today, all references to Zennstrom are removed from O’Reilly’s conference agenda.

Wednesday evening, MySpace will host a dinner with News Corporation CEO Rupert Murdock and MySpace CEO Chris DeWolfe. We hope he speaks about his pending acquisition of the Wall Street Journal, and how he sees his new media properties meshing with his old media properties.

Several companies are expected to show off their latest Web 2.0 wares.

Thursday night, at a party promoted here, MadeIt.com, a new Web 2.0 online invitations site, will make its public beta debut. MadeIt.com plans to take on market leader Evite.com by adding social networking features to “keep the party going” after the party’s over, such as online photo sharing, video sharing, slideshows, story sharing, message boards and widgets. The company was founded by CEO Stephen Weir and his advisor, Jonny Hendriksen. Weir tells VentureBeat the company has been self-funded to date with about $80,000 in capital. The company is looking to do a seed round of up to $300,000 in the next three months to get to proof of concept stage, at which point it may seek a Series A. However, it enters a very crowded sector, filled with the likes of Socializr, Renkoo, Skobee, MingleNow and the related events sites such as Going.com.

On Wednesday morning at an invitation-only breakfast, cell phone maker Nokia says it will introduce a new N series handheld computer that promises to marry the mobility of a multimedia device with the Internet (yes, this is frustratingly vague, but we don’t know anything else). Other handheld computers in N Series family combine many of the features of an Apple iPhone - such as Internet browsing, photos, videos, games and maps, without the phone part.

Userplane, which provides hosted communications applications such as chat, messaging and voice recording for online communities, plans to announce Userplane Feeds, a collection of free APIs so that developers can build the applications into their own sites.

On Friday, Radar Networks’ CEO Nova Spivack, who in a previous life founded EarthWeb, will unveil and name the company’s first Semantic Web application, most likely an online personal data organizer, according to a July feature in the recently shuttered Business 2.0 magazine. The San Francisco company, which is backed by Paul Allen’s Vulcan Capital, Leapfrog Ventures and angel investors, has been in stealth for a few years, yet has been been aggressively promoting its business, technology and ideas for the Semantic Web for quite a while (this is one of those “pseudo stealth” companies, promoting itself in public relations pitches to media outlets, even as it feigns secrecy). Friday’s anticipated announcement will also mark the start of the private beta for the not-so-secret service. In addition to naming its first product, the company says it will announce a strategic partnership. Stay tuned for later this week when VentureBeat’s Chris Morrison reports on Radar Networks’ product launch and tells us if the company’s first Semantic Web application is ready for prime time.

We’ve noticed a couple passes listed for sale on Craigslist here and here, or you can always crash the conference and join the unofficial Web 2.0 Summit LobbyCon unconference in the lobby of the Palace hotel.

Mark Coker is a contributing writer for VentureBeat. He’s founder of Dovetail Public Relations, a Silicon Valley technology marketing firm. He has no clients among the companies mentioned in the story, nor among their competitors. More on Mark at http://www.linkedin.com/in/markcoker

EBay, in a surprisingly defensive move, has yanked all of its advertising from Google’s network (a story that has been widely covered).

The action came after Google planned a fun party — with free drinks, food and massages — to pitch its online payment service, Google Checkout in Boston during eBay’s user conference there.

This was a direct attack on eBay’s PayPal service, and surprisingly aggressive given Google chief executive Eric Schmidt’s insistence that Google Checkout wasn’t a competitor to PayPal. It also comes after years of tension between the two companies: Four years ago, Google emerged as a threat — luring merchants away from eBay to have them advertise their wares via Google’s Adwords.

Google abruptly canceled the party yesterday, but only after eBay had made the advertising decision. EBay will be using the money to spend for advertising on Microsoft and Yahoo. This is the sharpest break between eBay and Google yet, and it’s not likely to get better: Google is too much of a threat. Its rare to have such visible cold wars in the valley, the latest being Peoplesoft vs. Oracle.

Everyone seems to be chapping Yahoo’s hide these days, including even Yahoo itself — or at least one very audible Jerry Maguire over there. However while many large companies could benefit from more focus and cost-cutting, neither issue is really at the core of the company’s problems. Yahoo is still #1 in both users and page views, and will remain a leading internet property for the foreseeable future. And though some critics contend Yahoo is spread too thin, most businesses would kill to have Yahoo’s broad diversity of content and commerce properties and worldwide brand recognition.

There’s really just one big thing Yahoo needs to fix: monetization.

While Yahoo substantially outpaces Google in page views, Google does a much better job of converting traffic into dollars than Yahoo and is kicking their butt in revenue per search and revenue per page. As long as Google keeps monetizing traffic at a far better rate than Yahoo, they can always afford to pay more for acquisition or partnership deals — or at least jack up the price on anything Yahoo might want (note: possibly why a rumored deal to acquire Facebook still hasn’t happened).

So what’s the solution? Well I don’t know how to solve all Yahoo’s problems, but I don’t believe it’s about ‘too much peanut butter’. If monetization was working better, they could buy any content property under the sun and make the deal work. Rather than eliminating people or product groups, here are 3 things I’d suggest Yahoo do to right the ship:

1. Ship the new Panama advertising engine platform asap
2. Figure out a way to implement CPA-based (Cost Per Action) advertising
3. As monetization improves, accelerate acquisition activity (both large & small)

I’ll elaborate on each of these three points further below.

A Man, a Plan, a Canal: Panama!

Panama is the code name for a long-overdue upgrade to the Yahoo search engine advertising platform, and its delay last quarter contributed to the dramatic fall in Yahoo’s stock price. If Yahoo can get it out the door quickly • and if it works as promised to improve monetization • they may be in better shape to compete more effectively, both in quarterly reports and at the negotiating table. However if Panama doesn’t make a significant impact or is further delayed, look for Terry Semel to have more time to relax on a Santa Monica beach in 2007, and for private equity firms and hedge funds to stalk Yahoo and try to take it private, perhaps even sell to Microsoft.

CPA beats CPC beats CPM

Long-term, Yahoo has one significant advantage over Google it has yet to leverage: it controls point of transaction for a large collection of online commerce sites: Yahoo Stores. Furthermore via the Yahoo-eBay partnership earlier this year, Yahoo also has access to transaction info from the eBay marketplace, eBay stores, and all of PayPal’s small business websites and merchants. Why is this important? Because Yahoo might be able to use all that transaction data to implement a new, more efficient method of advertising known as CPA or Cost-Per-Action. CPA has the potential to leapfrog current CPC-based (Cost Per Click) advertising, just as Google has used CPC to leapfrog CPM-based (Cost Per iMpression) advertising. But if Yahoo and eBay take too long, Google will use its own growing pool of transaction data gathered from Google Analytics and Google Checkout to implement CPA-based advertising itself and get there first.

Attention K-Mart Shoppers: Web 2.0 Blue Light Specials on Sale

Finally, improved monetization is critical for Yahoo to better leverage partnerships and acquisitions to fuel its growth. This last point should be obvious — not just to Yahoo, but also to Google, Microsoft, eBay, Amazon, AOL, NewsCorp, and every other aspiring internet gorilla and media mogul. Here’s the basic playbook: you have millions of users, billions in cash… go find web properties with new products and features, buy them, and use your advertising platform to monetize their traffic! For Yahoo, it might make sense to look at acquisitions complementary to demographics they are lacking, or those with features that exploit popular Yahoo properties such as Yahoo Groups, Yahoo Finance, and Yahoo Answers. And if Panama doesn’t fix monetization, maybe they should go buy a startup developing CPA-based advertising.

If Yahoo can improve monetization, they should be doing small acquisitions ($25-50M) every month, larger deals ($100-500M) every quarter, and betting big ($1-2B+) once a year on a deal like Facebook or YouTube. So far, Yahoo has only done a good job on the small stuff — they’ve whiffed on most other big deals since Overture. In summary: buy LOTS of stuff, do it FASTER, then distribute it across your worldwide audience and monetize using your advertising engine.

Fortunately for Yahoo there’s no shortage of innovation available. Thanks to capitalism, entrepreneurship, Web 2.0, and lots of geeks in Silicon Valley and around the world, there are plenty of cool startups to go around.

But first, fix the monetization. Then eat more peanut butter.