Interviews matter. Interviews are the foundation of good reporting. They are the best way of understanding a complicated situation and seeing it from someone else’s perspective.

A wise, old editor of mine used to say “report it out.” She meant ‘go talk to people, don’t rely on your own opinions and judgment.’ It’s a good maxim. One of my rules of thumb is to do one interview for each 250-500 words of final copy.

So here are my top tips for a good interview. Your mileage may vary and I’m keen to hear any other suggestions. (See also how to give a good interview and why interviews go wrong.)

Preparation

1. Choose the right format. Sometimes a face to face interview is good. More often, for me, a phone interview works best.
2. Face to face. For a feature about an individual, I like to do several face to face interviews. The first is really a get-to-know session without notes and off the record. It is a reconnaissance. Then the major interview. Finally a follow-up interview around the time I’m writing the piece.
3. Phone interviews. I love phone interviews. There’s something confessional about them and it’s easy to strike up a rapport with someone. I type quickly enough to take a more or less real time transcript during a phone interview which makes this form of interview particularly efficient. Also, a phone interview cuts out travel time and waiting around for people to turn up. Also, it makes interviews much easier to schedule as most people can find 20 or 30 minutes in their diary but a face to face interview seems to require an hour and a lot more commitment.
4. Avoid email interviews. I’ve done two or three email interviews in my time and they’ve all been unsatisfactory. The results have been stilted and unnatural.
5. Have a backup. For face to face interviews, I prefer to use two recorders or one recorder and hand written notes. Nothing could be worse than getting back from an interview and finding that you didn’t have any record. Mind you I ended up spending 15m of an interview with Google’s Sergey Brin talking about digital Dictaphones instead of Google’s future.
6. Have enough time. I was promised an hour-long interview with an airline executive for an profile I was writing for a UK magazine. On the day, the PR involved said it would have to be a 15 minute phone interview. I talked to my editor and we agreed that I should do it but the three page feature would be cut to a half page news item. Left to my own devices, I would have pulled out altogether.
7. Manage PR people. PR minders are a frequent nuisance when I interview people. They’re helpful when they book up an interview and make sure that the people turn up. However, I find their silent presence on phone interviews oppressive and I suspect that it intimidates the interviewee as well. Generally now, I won’t do an interview unless it is a one to one deal.
8. Don’t give questions in advance. I don’t prepare questions in advance and I always say no to people who ask me to send them a list of questions. Partly, this is because I don’t work that way and partly I don’t want people over-preparing. Also, my interviews tend to be quite free-ranging. Similarly, I don’t give copy approval to interviewees. Apart from anything else, it would be logistically impossible for most of my work. (The exception is for certain corporate assignments where the work is being published by the company that employs the interviewee.)
9. Avoid group interviews. An interview is essentially a one-to-one situation but many interviewees like to have a colleague in on the interview. Often they do this if they feel that their technical knowledge isn’t up to scratch. If I interview two people, it becomes harder to properly attribute quotes. Also, you miss out on potentially valuable contributions. Only one person can talk at a time. I would rather do two separate interviews. Again, I am increasingly against doing this.
10. Prepare and research in advance. I don’t usually prepare a list of questions, although I’ll sometimes have a list of topics to cover. However, I do like to Google the interviewee, look up their employer and review other related interviews for angles and questions. I have an interview template in Word and I usually set this up before the interview with all the contact information and some initial thoughts and topics for the interview.
11. Avoid the word ‘interview’. Most people think an interview is a scary thing. They think of job interviews or the kind of TV interviews that politicians do. Neither model works for a good journalistic interview. I prefer the words ‘chat’, ‘conference call’ or ‘conversation’.
12. Confirm the time and date in advance and send reminders. One in four interviewees don’t turn up or aren’t available when I call them. I’ve started sending Microsoft Outlook meeting invitations which form a sort of contract because they have to be accepted or rejected by the interviewee. It’s also helpful to send an email reminder the day before. I am researching ways to offer interviewees a choice of interview slots on a self-service basis so that I can semi-automate the process of booking interviews. At the moment, arranging the interview usually takes longer than actually doing it. Does anyone have any suggestions?

The interview itself

1. Introduce yourself. I like to introduce myself at the start of every interview. I tell people who I am, my relationship to the publication I’m writing for and what the piece is about. I call it the Government health warning. It’s a courtesy but it’s also a kind of protection. Doing it consistently means that any interviewee knows exactly where they stand.
2. How to record interviews. I like to do interviews on Skype and use HotRecorder to record them to MP3. A headset is a must and I use a Plantronics USB CS60 handsfree headset for Skype calls. This leaves both hands free for typing notes. I also have a Microsoft ergonomic keyboard which is quieter than my old Dell keyboard so that the sound of typing doesn’t intrude on the interview.
3. Observe the legalities. In the UK, you have to tell people you’re recording a conversation because of the Regulation of Investigatory Powers Act, or RIPA as it is charmingly known. I tend to say ‘I’m keeping a record of this conversation to make sure I don’t forget anything.’ Even if it weren’t a legal obligation, I think it is a courtesy to say so. I don’t record all my interviews.
4. Be yourself. My interview style is discursive, subjective and personal. My favourite interviews are the ones where I find common ground with the person I’m talking to and we have a fun, stimulating conversation. This means I have to come to the party dressed as myself. I interviewed Stephen Bungay a while ago for this blog and I had expected to chat for an hour. We ended up talking for four hours.
5. Be enthusiastic. People like people who like them. They are also conditioned to think of an ‘interview’ as a potentially hostile situation and be on their guard. Consequently, you should be upbeat and positive. Do this genuinely if you can. Otherwise, engage your sincerity simulator.
6. Shut up. You should be talking about 10-20% of the time at most. (This is my biggest weakness - I often end up interviewing myself!)
7. Listen hard. Sometimes you can pick up a word or a phrase in an answer which you can play back to the interviewee and get something much more intimate, interesting or honest. Interviews aren’t scripted Q&As, they are intense professional conversations and you need to concentrate.
8. Capture the basic information. I use a template form for all my interviews that captures: name (get the spelling right), job title, contact details, time and date of interview and intended publication.
9. Job titles can be difficult. Sometimes people have very long-winded or obscure titles. These don’t work well on the printed page. If this is the case, I like to get a more informal job description agreed with the interviewee. Tech companies are notorious for acronym-laden job titles. The important thing is to get the interviewee’s agreement to whatever you use. I like to ask: ‘how would you like me to describe you in the article.’
10. Get past the canned speech. If an interviewee has been media trained, my heart sinks. Usually, it means I have to listen to 10-20m of self-important waffle prepared for them by their PR department. Sometimes you have to let people do their duty and then you can get to the interview. Sometimes asking the same question three times will elicit, on the third go, a more honest, human answer. Building a rapport with them on non-controversial subjects (like their job title or their recent career history) can put them at their ease. I’m not trying to trick people into saying something they don’t want to say. I’m trying to trick them into saying something in a natural, human way. A good interview sounds like an intelligent conversation over coffee not a standup PowerPoint presentation.
11. Don’t lose control. Sometimes, especially with self-important interviewees, you can get into a bit of a tug-of-war over who is in charge of the interview. Never forget that you are the CEO of the interview. You don’t have to be bossy but its important that you get what you need from the interview and you steer it in the direction you want to go.
12. Focus on what you need. Sometimes people get absorbed in details or get too waffly and abstract. Sometimes you need a specific quote or a good story. A timely intervention is sometimes required to redirect the interview. Phrases like ‘do you have any stories that illustrate that point,’ or ‘how does this relate to the bigger picture’ can be very useful ways to do this.
13. Respect the interviewee’s privacy. Although I make transcripts of all my interviews, I don’t like to share them with anyone else. I know this is an ironic position but corporate clients often ask for the transcript as well as the finished article. There are three problems with this. First, redacting a transcript for public consumption is a task in itself, not a freebie. Second, it encourages clients to start rewriting my piece. Third, I think it’s not fair to the interviewee because an interview has some usable bits and a lot of filler.
14. Be courteous. Say thank you afterwards. If you can provide a copy of the final article, do so.

Technorati Tags: Interviews, interviewing, transcript, how to, interview, journalism, reporting, writing

Years ago, a famous satirist quit the gig when Henry Kissinger won the Nobel Peace prize. He claimed it was unfair competition. I feel the same when the Plain English Campaign publishes its annual Golden Bull awards. Here are some of this year’s winners:

EastleighBorough Council for a Notice given under the Building Act 1984

‘Hereby in accordance with the provision of the Building Act 1984, Section 32 declares that the said plans shall be of no effect and accordingly the said Act and the said Building Regulations shall as respects the proposed work have effect as if no plan had been deposited.’

The Institute for Fiscal Studies for a website document description

‘While the literature on nonclassical measurement error traditionally relies on the availability of an auxiliary dataset containing correctly measured observations, this paper establishes that the availability of instruments enables the identification of a large class of nonclassical nonlinear errors-in-variables models with continuously distributed variables.’

There is a surprising lack of business examples. Perhaps there is still a role for BadLanguage.net

Here is a list of Web 2.0-ish sites that I use on a daily basis:

• Email: Outlook Web Access
• Email: Google Mail
• Time recording: Harvest
• Extranet: Basecamp
• Website analysis: Google Analytics, Technorati
• RSS reader: Newsgator Online
• Motivation: Joe’s Goals
• Blog (this site): Wordpress
• Blog (ModernPilot.com): Joomla

There are lots more, of course, but the point here is that all these sites have become an intimate part of my working life in the last twelve months. 

Whether ‘Web 2.0′ is a useful term or not, something is happening to me.

PS I just got my beta access to Coghead, an online database and business application builder, and I’m really looking forward to getting some time over the holidays to experiment with that.

Technorati Tags: Web 2.0, Harvest, Basecamp, Analytics, Google, Technorati, Joomla, WordPress

I had a couple of emails recently from bloggers who I like and respect ‘tagging’ me in some kind of blogging chain mail thingy.  If you want to know something new about me, it’s that I really object to chain letters.  With a passion that can’t be healthy.  I wrote about chain emails early on in my blogging career.  So I’m not going to pass this on.  I hope there’s no gypsy curse for chain-breakers on this one.

In 2003, Nicholas Carr, author of the Rough Type blog, asked the provocative question: “Does IT matter?” His article appeared in the prestigious Harvard Business Review. It was a closely argued, well-written article, which triggered what The Economist called “an existentialist debate” in the IT industry.

I interviewed him recently for an article in another magazine. Here is the interview transcript (in full but edited and tidied up a little). One of the great things about my job is talking to experts and articulate people like Nick. It was a great interview and his views are a useful challenge to Web 2.0 boosters.

What prompted you to write Does IT Matter?

The dotcom crash was a very interesting phenomenon. It showed that technology itself wasn’t a strong basis for the success of an individual company. At that time, I edited a long article by Michael Porter about ‘Strategy and the internet. The dotcoms were doomed because their technology was so easily copied. If that was true of IT used by entrepreneurs, wouldn’t it also be true of IT used in large companies. It’s very hard to to keep anything proprietary or secret.

The other inspiration was that I had been doing a lot reading into economic and technological history, especially the first and second industrial revolutions, where a series of technologies had a tremendous impact on business but very quickly disappeared into the background because they were broadly shared by all businesses. It struck me that IT was following that same pattern. When it was new and untested, companies could get a competitive advantage because it took a long time for competitors to copy it. It’s now become a cost of doing business.

Did you expect the furore that your article triggered?

No. I knew that what I was writing was controversial but I thought it would stir some comments for a week or so. What’s interesting is that I looked at a very basic or fundamental question: does it provide a competitive advantage? The reaction shows that up until that article, there hadn’t been much debate about that. The IT industry had succeeded through its marketing efforts to create a common assumption that it is strategic and creates a competitive advantage. My article and book challenged that. I was threatening the core marketing message that the IT industry put out.

On your blog you say that they didn’t run another IT article for several years – why?

In the three years since I left Harvard Business Review, my sense is that they haven’t published any high profile IT articles. There’s still a lot of interest in technology in business. One thing that got me thinking about the original article, when I was at Harvard Business Review, was that we did reader research after each issue. This is the period of the dotcom boom, where IT was all over the place. The reader research showed that IT articles didn’t get read much. That was one indicator that perhaps IT wasn’t as important as it was assumed. IT was something that if it wasn’t managed well could be a nuisance but it wasn’t on top management’s agenda.

Are there still pockets of competitive advantage from IT?

I don’t think its universally true but it’s true for most companies at this point. Even where there are exceptions its still generally true. The only times now where IT becomes strategic is in quite narrow, specialised uses of it that are specific to an industry or an individual company. All the broadly used hardware and software – basically all the hardware and most of the business software, particularly the big enterprise programs for big processes such as supply chain, financial management, CRM. They’re so broadly adopted and standardised. Some companies are still able to create proprietary software to help them do things. For example an investment banks, like Goldman Sachs, who have done some clever thinking about the prices of derivatives and embed that expertise in proprietary software that can assist trading.

Does the rapid evolution of IT mean that new opportunities for advantage are emerging?

Innovation rarely translates into meaningful competitive advantage. Most of the innovation is coming from vendors who can package the valuable new technology and blow it out to as many people as possible. It’s true that your company can buy some new piece of technology but it is also available to everyone else. The price of technology goes down with incredible speed. The early movers end up spending much more on something and fast followers get it cheaper. The speed with which commoditisation happens gets faster all the time so the window for getting any kind of advantage gets small.

And is every technology susceptible to being rapidly copied? Surely there are ways of preserving exclusivity and preserving advantage?

It is certainly possible. If there is a way to keep it confidential and keep it proprietary. Unlike with earlier machines, IT is very tricky to keep secret. In the age of the internet everything tends to be exposed online. Even if you can’t see the raw code, companies are pretty good at reverse engineering features. Let’s say that there’s some robotics control software and your factory manages to see it coming and your competitors don’t and you can increase the productivity of your factory. It’s rare.

Today there are huge numbers of ways in which IT innovation gets communicated and shared, whether through a zillion IT conferences, web sites and magazines. This wasn’t there twenty or thirty years ago.

If IT stops being a competitive advantage, could failing to move quickly enough become a source of disadvantage? If everyone uses telephones but you still rely on telegrams, don’t you look silly?

I think that’s right. In my book I talk about this a bit. I’m not suggesting that companies should be complacent or stagnant. The state of the art in business processes today is often expressed in software. If you don’t follow the curve you can be put at a disadvantage. Even if the ability get advantage has been neutralised the ability to fall behind is still there.

Obviously, Microsoft (and others) disagree with you – what are the most cogent anti-arguments you’ve heard? Do you find them persuasive?

There is new innovation happening all the time. Not just in the underlying hardware but also in the applications of hardware. One of the lines of criticism is that IT is different from railroads in that IT is much more malleable and flexible. The ability to keep innovation proprietary has declined over time. Every innovation of value gets copied and replicated very quickly.

The other objection – which I discuss more in the book – is that the sense that there are still possibilities for companies to take distinctive intellectual capital and build it into a software program and make it hard for competitors to copy.

A final example is that in some industries, some traditional established industries, the existing competitors can all be competing with a very similar business model and all their IT systems have been built up to support that model and some times it becomes possible for an entrepreneur to enter with a different business model and use software to enable it. For example, traditional airlines with complex hubs and pricing models and then you have a Ryanair or a Jetblue with a much simpler business model and they tend to use a lot of new technology to support their business. It is very hard for the old companies simply because they are wrapped up in their existing systems. Theoretically, it would be easy but they’re stuck with what they have but they can’t move quickly.

You gave a talk at a Microsoft event recently. What did you say? Wasn’t that Daniel in the Lion’s den?

I have had a number of debates with [Microsoft people] but in July we did one at Tech Ready and there were 4-5,000 Microsoft employees. They were very hospitable. The interesting thing about my argument is that the reaction to it has changed over the past three years. There was a lot of hostility at the beginning. Today, it’s almost as if my basic argument is being transformed into the common wisdom. I hear people say ‘most of what you say is right but there are exceptions’. It no longer seems as heretical.

Technorati Tags: Nicholas Carr, Rough Type, Does IT matter?, HBR, Harvard Business Review, dotcom, Web 2.0

Seth Godin’s blog today damns pilots by praising them.

He says that they are “calm and focused and consistent, and yes, boring.” Nothing more than checklist tickers and interview puppets. He concludes by saying:

We don’t need pilots. We need instigators and navigators, rabble rousers and innovators. People who can’t follow a checklist to save their life, but invent the future every day.

I think the world needs more pilots, both literally and as instigators and innovators. Today, unusually, I think Seth Godin is talking rubbish.

First, let’s look at some of the other skills that pilots have:

• Precise, controlled risk-taking. Looking at the weather, I think I might need to take extra fuel in case I have to divert to a different airfield.
• Leadership. An airliner captain has to manage passengers and crew. Even a small plane pilot has to work with maintenance, operations, air traffic controllers and the ramp crew. Either way, as the commander of the plane, the flight is your legal responsibility. No buck passing.
• Multi-factor planning. Pilots constantly juggle many variables: time, performance, fuel, air traffic control restrictions, logistics (fuel, oil, equipment, charts) to achieve a specific goal. This isn’t checklist-following, this is making the best decision with the best available information.
• Multitasking and prioritisation. Pilots have to fly the plane, navigate, work the radio, manage all the systems and keep the passengers happy. They have to do these things more or less simultaneously. At the same time they have to give their attention fully to each task in turn. It’s a flow state, perfected and sustained. If pilots seem calm and collected, it’s because they have trained long and hard to be like that, not because they are boring.

Now let’s look at the correlation between being a pilot and being an “instigator, rabble rouser and innovator.” I won’t say navigator, because all pilots can navigate.

• Pilots make good entrepreneurs. In a typical syndicate of plane owners in the UK, the one I fly with, more than half are entrepreneurs. Speaking personally, I have started two businesses in my life: Intelligent Games and now, Articulate Marketing. Did I mention that I’m a pilot? (See my other blog, ModernPilot.com.)
• Pilots make good innovators. Eclipse Aviation. They started a revolution in air transport with the Eclipse 500 very light jet. Who started Eclipse? Vern Raburn, ex-Microsoft. Pilot.
• Pilots make good instigators. Scaled Composites, Spaceship One, Burt Rutan. Pilot.
• Pilots (sometimes) make good rabble-rousers. The world land speed record is held by Andy Green who drove a car called ThrustSSC past the sound barrier in 1997. The team was run by Richard Noble, who raised the money and won tens of thousands of supporters for the project. Pilot. He should also consider some of the great writers and journalists who are pilots, including James Fallows, William Langewiesche and, I believe, James Surowiecki.

So, Seth Godin, if you’re ever in the UK, let me introduce you to some of these wonderful pilots and let me take you up for a proper flying lesson.

Technorati Tags: Seth Godin, pilots, Eclipse, Burt Rutan, Scaled Composites, flying

The next internet revolution will not be created by geeks, MBAs and venture capitalists. It will be created by you, me and everyone else. Welcome to the democratic web.

You can afford 30 staff but you’d like 500. How do you get the rest of them to work for nothing? This is the challenge faced by Canadian software firm, Cambrian House. The answer is crowdsourcing. The company is building programs and websites using a nucleus of paid staff and a wider team of collaborators who work for royalty points. If a project is successful, they share in the upside. If not, nada. “It’s like open source development. With profits,” says CEO Michael Sikorsky.

Jeff Howe coined the phrase ‘crowdsourcing’ in a June article in Wired magazine and has developed the theme on his blog. He tells the story of iStockPhoto.com, a website that sells stock photography for as little as $1 a picture. This is a fraction of the price charged by traditional libraries. It charges so little because its photographs are supplier by non-professional (but highly proficient) photographers. Anyone can submit pictures. The company only lists good photos and only pays contributors if they sell. It is the stock library for the rest of us, by the rest of us. It is good business too. They are on track for selling 10m photos this year. Getty Images recently bought the company for $50m.

The long tail

Some contributors might be happy if just one person buys their picture. Others hope for thousands of downloads. For all practical purposes, there is no limit to the number of images that iStockPhoto can store or sell. It has no warehouse or supply chain. Being able to offer a very wide selection is another part of the democratic web.

In most businesses, a minority of products produce the majority of sales. The internet allows companies to make money selling small volumes of a much wider product line. Imagine a multiplex cinema with a thousand screens. The first ten screens will show the latest blockbusters, but the other 990 will show foreign films, classic movies, films with niche appeal. This is what the internet is like.

This is what Chris Anderson describes as the ‘long tail’ in his eponymous book. Like iStockPhoto, Amazon is an example of a long tail business. It can sell a much, much wider selection of books than a typical high street shop and this means that it can profitably cater to niche audiences and make money from books that are not written by Dan Brown or J.K. Rowling.

Ricall is a British company that is exploiting this phenomenon. It is a music research and library company. Advertising firms, TV directors and ring tone companies are among its clients. If you want an up-tempo song that sounds like an early Madonna hit, they can track it down for you from among their 2.5m tracks using an advanced search engine. The more songs they have and the smarter their search technology, the better they can serve their customers. Search, whether by Google or individual websites is the magic technology that enables businesses to exploit the long tail. “Search is critical. If you can’t find it, you can’t buy it,” explains Richard Corbett, the company’s CEO.

Roll your own content

User-generated content is another example of crowdsourcing. When you see book reviews on Amazon or look something up in Wikipedia, the online encyclopaedia, you are reading user-created content. Reevoo, another UK company, provides user-created reviews for ecommerce firms such as Comet, Currys and Orange. Buyers are more likely to believe impartial reviews by other users than marketing hype by vendors. Increased trust generates increased sales.

Sites like eBay and Craigslist are the ultimate crowdsourcing businesses. They rely on users not only for content but also for stock, warehousing, shipping and customer service. They are not the ecommerce giants promised by the dotcom boosters. They are more like credit card companies because they make money by providing a forum for others to trade in and take a cut of each transaction.

Online marketplaces like eBay inspired Zopa. It is a forum where lenders and borrowers can do business. Like a bond market for the masses, it wants to supplant banks in the personal lending business. It has over 75,000 members, split between borrowers and lenders. It also embraces user content. A company blog and discussion board allow customers to give feedback, make complaints and suggestion ideas to the company. A wiki (a kind of website that allows any user to write or edit the information on it) serves as a primary source of customer support. “It’s an outsourced R&D function and the quality of input is fantastic,” says James Alexander, the company’s co-founder. “Why wouldn’t you listen to what your customers think about you?”

Social networking

New web technology makes it easy for anyone to publish their own running commentary on any subject they fancy. These are blogs. Technorati, the Google of blogs, tracks over 50m of them. The number is doubling every six months.

Many are created by the under-18s. Sites like MySpace, with over 3m users in the UK and Bebo with over 2.5m are largely populated by teenagers who spend more time with these sites than they do watching TV. However, there are many niches. For example, Facebook is a site that specialises in university students. Increasingly, companies and individual executives also blog.

Users do not pay to participate but the businesses that host blogs, such as MSN Spaces (Microsoft), Blogger (Google) and MySpace (News Corp.), make real money. Despite all the dot bomb pessimism, it turns out that online advertising is big and real. Google has a $115 billion market capitalisation on the strength of online advertising. Blog authors can easily put advertising on their sites using services like Google’s AdSense. Google makes the lion’s share of any revenue from the advertiser but shares some revenue with the site owner. It is enough that popular bloggers can make a living from their sites.

Let’s not get carried away with the idea that every internet user is a budding encyclopaedist, online trader, blogger or advertising mogul. More than two thirds of Wikipedia’s articles were written by just 1.8% of its users. In the blogosphere (another buzzword meaning the community of blogs, authors and their readers), only about one per cent actually create original postings. The rest comment, synthesise or just read. However, it’s enough participation to hint at something new and important.

Dotbomb 2.0?

Suddenly dotcom era buzzwords are flying around again. In researching this piece, I heard people talk about ‘first mover advantage’ and ‘incubators’ for the first time in six years. There are new buzzwords too: crowdsourcing, long tail, social networks, blogs, wikis etc. So is this just a case of history repeating itself?

In answering this, crowds make another appearance. Charles Mackay’s book Extraordinary Popular Delusions and the Madness of Crowds tells the story of an 18th century stock swindle where subscribers were persuaded to invest in “A company for carrying on an undertaking of great advantage, but nobody to know what it is.” In many ways, this describes the hype and bubble around the first dotcom revolution. On the other hand, James Surowiecki published The Wisdom of Crowds in 2004, which describes how large numbers of people may come to better decisions than individuals. Who is right?

Things have changed in the last six years. The first generation of internet kids have become teenagers. At the same time fast, always-on internet connections are now the norm rather than the exception. When I first wrote about the internet in 2000, my company had a 2mb/s leased line, which I shared with 65 other staff. Now I have an 8mb/s connection all to myself. In addition, the technology is easier now. Blogs can make anyone into a web publisher. eBay can make anyone an online trader. For the cognoscenti, technology like AJAX and Java make websites more interactive. Martin Turner, an industry veteran and founder of Swopex says, “The revolution is just beginning to kick off.”

There are other changes too. The original internet bubble was founded on the belief that if you build it they will come. This is only ever true if you build something people want. The big difference is that if you do, advertising revenues will follow. Today’s innovators do not need to spend a fortune building a brand overnight. It is cheap to start a dotcom company now and word of mouth marketing does the rest. Skype, MySpace, Wikipedia and the rest don’t have sock puppet TV ads, celebrity endorsers or even advertising budgets. The days of the IPO are gone but venture capital firms recognize that a small, early investment can pay off big if a technology company can build an audience and sell itself to a media conglomerate or established dotcom. News Corp. bought MySpace. eBay bought Skype.

Kiran Sandford, a partner at law firm Mishcon de Reya raises a more mundane concern. “Crowdsourcing has the potential to be the wild west of the R&D field – it may not be clear who owns the results.” Businesses may need to pay as much attention to the legal side as they do to the technology and consider taking a more structured approach to building communities of users who create content.

Trust and safety is another critical area. Wikipedia has been tainted by scandals where anonymous users have libelled individuals or deliberately distorted facts. While the system is largely self-regulating it is not policed in a conventional sense and it is difficult to sue someone who can edit pages anonymously from any web browser. Similarly, anyone who trades regularly on eBay will be familiar with its scammers and dodgy dealers (and learn quickly how to avoid them).

Blog your way to success

This article itself is partly the result of crowdsourcing. Most of the contacts and interviewees came to me in response to a request on my blog, BadLanguage.net. Some came from ResponseSource, a website that links journalists and PR companies. Others came from LinkedIn, which is to business people what MySpace is to teenagers – a networking and friend-finding site. I also did some of my research on Wikipedia (with a pinch of salt always at hand).

Blogs help with marketing too. I probably wouldn’t have been asked to write it if my blog had not already covered many of the same topics. In the UK, blogs have a slightly seedy reputation, at least in the mainstream media. Private sex lives are turned into blogs and then into summer bonkbusters. However, in the US they are increasingly seen as important marketing and PR assets. For example Southwest Airlines have a blog that draws contributions from across the company and Boeing executive, Randy Baseler’s blog has won several PR bouts with non-blogging rival Airbus.

Blogs can also have a softening, humanising effect on a company’s reputation. Microsoft has no official policy on employee blogging. It also has hundreds, perhaps thousands, of staff who regularly blog on all aspects of life at the company and its products. Although there are surely unwritten guidelines and expectations, the result is a human face for the company. In the same way, Sun’s CEO Jonathan Schwartz keeps a very popular online diary. It is hard to find similarly candid insider blogs at Apple or Google, despite their cuddlier reputations.

All these new online technologies make it is easy and cheap to experiment. There are many ways to test the waters. For example: start a blog, set up an online shop on eBay, open a customer service wiki, add user reviews of your products on your website, buy stock photography from iStockPhoto or join a networking service like LinkedIn. You don’t need a big design team, big technology or a big budget.

“Do keep a level head,” advises Richard Anson, CEO of Reevoo, “what is happening is real and there are significant opportunities but don’t get lost or intimidated by the jargon and buzzwords.” Welcome to the democratic web: internet of the people, by the people, for the people.

This article was first published in Director in the UK last month. This version is my pre-editing writer’s draft. It was written for a non-technical business audience.

Technorati Tags: Director, Web 2.0, Democratic web, crowdsourcing, popular delusions, Charles Mackay, Zopa, Long Tail, Anderson, Cambrian House, Zopa, Southwest, social networking

Tim O’Reilly, coiner of the phrase “Web 2.0″ and CEO of O’Reilly Media, agreed to do an email interview with me for an article I wrote recently. However, my questions to him got lost in the cloud and, like the star he is, he wrote a short essay based on my original description of the article - “Set your data free”. I’m very grateful to him for his permission to run it here in full.

Set your data free? Well, maybe. I certainly agree that groups like movemydata.org or wesabe.com’s “User’s data bill of rights,” are the first of many such declarations that user data belongs to the user, and that companies should or will make it easy for the user to move, delete or edit that data. Just as free and open source software became an unstoppable movement, so too will the free and open data movement one day be front page news in the computer industry.

But the reason that it will be front page news is that data is becoming so valuable that many companies are wanting to put it under lock and key. Yes, some companies are promising open data, web search engines depend on the right to freely copy and make indexes as derivative works, and Web 2.0 phenomena such as mashups are dependent on data sharing between sites, but there is also a gravitational pull in the opposite direction.

The problem is this: open internet standards and open source software lead inevitably to the commodification of software. It’s hard to charge for a web server or a web browser when there’s a great free one implementing the same standard protocol. It’s even getting harder to charge for an operating system, or programming tools, or even general business applications, when user expectations of functionality are standardized and there are free and open source offerings. But as Harvard Business School professor Clayton Christensen notes, there’s a “Law of Conservation of Attractive Profits” that ensures that when some product becomes commoditized, value migrates to an adjacent level in the stack or product pipeline. In short, people are looking for new business models.

And as both hardware and software are being commoditized, value and business leverage are moving to data, and more specifically to large databases that harness network effects to get better the more people use them. EBay’s continued dominance of the online auction market isn’t the result of superior software so much as its the result of first mover advantage in achieving a critical mass of user-generated buyer and seller data. Ditto CraigsList. Amazon and Barnes & Noble offer the same books, but Amazon’s catalog is better because it has an order-of-magnitude more user-contributed data. And do you really think that another online encyclopedia could now displace Wikipedia?

Even Google, much of whose data is extrinsic to the company, on the web itself, and available to competitors, market dominance is driven not just by superior algorithms, but by its richer database of relevant ads, its better data mining of user search behavior, its richer insight into the data structure of the web. All of these are data competencies, and one secret to Google’s speed is the extent to which it has built proprietary databases that accelerate the application of all the knowledge they’ve accumulated.

And when data is valuable, and the key to competitive advantage, companies don’t want to share. And so, when Zooomr wanted to use Flickr’s own API to populate its service with photos, Flickr said no. They don’t mind the user taking down their own photos, but they don’t want a competitor to do it wholesale. Similarly, Craigslist recently asked companies like SimplyHired and Indeed to stop spidering their job listings for their job aggregation sites.

Already, forward-thinking companies realize that a great deal of their business leverage is in their data. NavTeq, one of the two companies that dominates the street map data that drives everything from in-car navigation to web-based maps and directions, cheekily imitates the Intel Inside logo with a “NavTeq Onboard” badge on cars. And as early as 1991, General Motors realized that the value in the Onstar system would be in the data they collect — and sure enough, as GPS technology becomes more widespread, businesses are using that data in new ways. For example, Norwich Union. a UK insurance company, has begun offering “Pay as You Drive” insurance, in which your rates are based not on where you live but on where, how fast, and how far you drive.

In short, I believe that we’re in for a round of data wars analogous to the software API wars of the 1990s. Peter Bloom, a managing partner at General Atlantic Partners, recently brought to my attention the fact that there’s currently a $40 million dollar lawsuit over who owns a single data item: the 3 pm closing spot price of Texas crude oil.

Another front in the data wars is around online file sharing. While the music and movie industries are gradually seeking accomodation with purveyors of file sharing technology, and I believe that there will ultimately be a rich marketplace of paid content, there’s no question but that the ease of digital copying challenges the business models of content industries based on scarcity. Instead, there is a new calculus in which the benefits of viral distribution compete in the bookkeeper’s mind with the value of restricted access. In 2002, I wrote an essay entitled “Piracy is Progressive Taxation,” in which I argued that for most creative works, obscurity is a greater danger than piracy, and if piracy brings greater visibility to what Chris Anderson later called the Long Tail [See the Bad Language post on The Long Tail], it will be worth some dimunition in the revenues accruing to the top artists. And as Chris has so compellingly argued, the benefits of unlimited access to obscure long tail content has driven the success of new media giants, from Netflix and Amazon to Google.

But music, movies and books are the least of it. Personal fabrication machines are at the point on the cost curve where typesetters were just before the desktop publishing revolution. And already, on sites like Second Life, or Google Earth with sketchup, or instructables.com, people are sharing designs for physical goods. What battles can we expect over open vs. closed data when the files that people are downloading from Limewire or BitTorrent are not songs but stuff?

All in all, it’s going to get a lot more interesting. Open data is essential, but as data becomes the locus for value capture, so too will closed data be essential. It’s never either-or. Instead, as with software and with virtually every other part of the economy, there are tradeoffs between what you share and what you keep for your own advantage, and the secret of success is to make the right choices.

Technorati Tags: Web 2.0, Tim O’Reilly, data, open source, interview

I am planning a series of posts about the Web 2.0 phenomenon, starting today with an exclusive interview with Tim O’Reilly, who invented the phrase. Coming up over the next few days:

• Interview with Nicholas Carr: does IT still not matter?
• A beginners guide to Web 2.0 for PR and marcomms agencies
• Article on how small businesses in the UK are exploiting Web 2.0
• A survey of what companies are actually doing in the Web 2.0 space.
• Matthew 2.0: my favourite Web 2.0 websites

Running a series of posts in a theme is an experiment for me. I really hope it will spark some debate and comment from readers. I hope that running it over a period of time will sustain and deepen the discussion.

Technorati Tags: Web 2.0, Tim O’Reilly, week, Nicholas Carr, debate