This is similar to the link farms a few years ago, a business model that Google also killed by simply changing its algorithm.

Google is in the business of ensuring that searches have integrity. In other words, if I search for a boutique hotel in Paris, I want to see sites that talk about or review boutique hotels, and boutique hotels themselves. Now Google can place ads for boutique hotels or hotels bookings sites on the right-hand side. These ads are paid for by those businesses. That’s okay. We understand that the right-hand side is for paid placements. But the left-hand side should give the user what he or she expects and that is good content that is not high up on the list simply because someone paid for it.

Thus, when companies like Geosearch “dirty” up the search universe, Google has to change its algorithm to prevent Geosearch websites from rising above sites that actually deliver high quality content.

There is no shortcut to creating a website or blog that brings a lot of traffic. You must create content that people want to read or watch regularly. This takes time and it is, at the core, a publishing business. Companies that try to get around this in a lazy fashion by using technology will not succeed.

[via Techcrunch]

The problem is that people are building products that contribute to Internet pollution when they should be trying to help people weed out the junk (which is what he hopes to achieve with his new search engine called Mahalo).

Jason makes the following points in his presentation:

(1) We all bought into the ideal of a democratic, open Internet. He cites to Usenet as an example, except 15 years after it was created, Usenet groups came the target of the world’s first spam mailing (the green card spam from a law firm). Usenet became polluted shortly after that. Indeed if you go to one of the Usenet groups for travel in Europe, every single entry is spam. Usenet has become unusable; it’s worthless today. The things that make the Internet great: free, open, level playing field, those are the things that make it so easily gamed and destroyed. And it’s not just Usenet.

(2) Search results on Google are also untrustworthy. He showed a slide with search results that point people to a web page that contains malware. If you were to click on them, they would load an ActiveX plugin that would put porn onto your computer. Search is another one of the mediums that about to be destroyed like Usenet. We let all these things be destroyed and we did nothing — we (the entrepreneurs) are all to blame, he says.

(3) The problem is the free, open ecosystem. Seth Godin is a smart guy, a genius at marketing, and a friend, but he created, with good intentions, Squidoo. Much of the content on it is stolen, many of the links are actually affiliate spam, undisclosed “paid” links. How is it that a genius at marketing created a platform for spamming the web? Good intentions. But Seth does not go back and look at what he has done, he does not police what he has made. One cannot build these open platforms, expect it not to be abused, and pretend you do not see the abuse . . . all so you can make money. That is really what’s going on here. A lot of people are pretending they don’t see the abuse and the pollution of the Internet, so they can make money. They’re doing deceptive advertising, they’re spamming the hell out of it.

(4) Dave Sifry (founder of Technorati), who is smart and super nice, and a friend, believed that spam on Technorati could be controlled. Evan Williams, another good friend and the founder of Blogger and Twitter, is a very smart guy. If you go to Technorati and search for Paris hotels, the results are spam. It’s all spam from Blogger sites. So how can Dave Sifry and Ev Williams create systems that are causing massive pollution on the Internet? They’re both not running these things anymore. But these systems are open because if you close them you don’t get as many page views and therefore don’t get as much money. That’s the underlying truth and that’s why people are letting these things progress. This is very short term gain.

You can watch his presentation here: http://www.calacanis.com/2007/12/24/le-web-3-talk/.

The arguments made by Calacanis are similar to those in Andrew Keen‘s book, The Cult of the Amateur. Keen goes one step further, however, to assert that all this free and “open” stuff is actually ruining culture. Wikipedia, Craigslist and YouTube are the villains in his book.

NEXT WEEK: Is Web 2.0 really ruining culture? A review of Andrew Keen’s book.

In France, there’s a mini-scandal brewing over a blog network called Ladies Room (www.ladiesroom.fr), whose members create the content for the site. It turns out that Ladies Room is owned by a marketing agency called Heaven. A lot of people are upset because this was not clearly disclosed and had it been, several users would probably have never opted to become members. The French newspaper, Le Monde, talks about a strike among the contributors, but one of the commenters to the article says only a few members actually went on “strike” (i.e. refuse to post any more content). And again, one wonders who exactly this commenter is, whether she is really a member of the site or someone from the marketing agency (or a friend of the agency).

This is the biggest problem with these free services, whether they are social networking sites like Facebook and MySpace, blogging services, or applications like Twitter. How are they supposed to make money to cover the cost of doing business? Advertising. They must cater to the desires of those who pay them — the advertisers — even if it means using our personal data and content in a way that we did not envision or desire. There is a built-in aversion towards transparency, openness and honesty.

The solution: give members the option to remain on the free service (with the knowledge that their personal data and everything else they do on the site will be sold to the highest bidder); or pay (for privacy).

The most effective ads are those that appear during keyword searches. 78% of the respondents found the most useful ads by performing keyword searches. No wonder Google continues to do well.

The findings contradict a study conducted last summer in the Netherlands by Dutch research firm Qrius. In that study, they found that only 11 and 13 percent of those surveyed (ages 6 through 29) gave a positive or neutral reaction to ads on chat and game sites. Ads on websites and in emails received a positive/neutral rating among 13 and 15 percent, respectively.  Oddly, 33 and 41 percent of young people consider ads in traditional media, TV and newspapers, not to be irritating.

How about no TV in restaurants unless it’s a sports bar where people gather around to watch a game? Recently I was in a Vietnamese restaurant with my parents and my brother. We couldn’t keep our eyes off a large TV screen that was showing a Vietnamese song-and-dance program. It definitely interfered with the flow of conversation. That TV screen was intrusive. A lot of Asian restaurants have these big-screen TVs and I wish they’d just take them down. The staff are not watching it because they’re too busy serving customers. So who’s it for? The customers? They’re trying to eat and having conversations!

But even that’s not enough. There should be less advertising all around. We are assaulted by billboards on the street, ads on the Internet and TV, phone calls from telemarketers, junk email, spam, everywhere! There’s no place to hide. The result is the opposite that advertisers want to accomplish: people tune them out because they have become part of the landscape like street lights. But that act of tuning out takes a lot of energy and having all that stuff around disturbs our peace of mind. It comes at a real cost.

Facebook is purportedly worth $15 billion. If my company were worth even $1 billion, I would spend at least $100M working on a super-targeted advertising solution and with that kind of money, $100M, I could do it. First, I would definitely ask the person to whom I am showing the ads what he or she is interested in.

Clearly, I don’t live in California. Even without asking me, Facebook would have known NOT to show the ad. Who gets ripped off? The advertiser. Who gets annoyed? Me.

If this is all Facebook can muster, what can I expect next in my feed? Dog and cat food ads, even though I own no pets? Weight-loss diet ads even though I weigh 100 lbs (five feet four inches in height)?

Wouldn’t surprise me. Sloppy, unprofessional work from a company worth bucket loads of money. I am not impressed.

UPDATE: Several hours later, I see on the left hand side of my Facebook feeds, two ads delivered one after the other: (1) Botox and (2) Tired of Dating?

First, I do NOT need Botox. I may be 46 years old but I don’t have hideous wrinkles and the thought of getting large needle next to my head to inject poison sounds gruesome to me. Second, I don’t give a damn about dating or being tired of dating. Where the hell does Facebook get this idea that I need wrinkle-reducing treatments or help in my romantic life? Is my photo THAT bad?

• only 16-24 year olds can get the service
• they get 43 minutes and 217 text messages free every month
• they agree to receive up to 6 messages per day from advertisers of their choice

Read more on Muniwireless.

This is a much more acceptable way of advertising that Pudding Media.

Now comes Pudding Media, founded by two guys who used to do intelligence work for the military. You can see where they got their ideas. This is the ultimate monetization of phone surveillance or snooping. They have a web-based phone service that lets you call any phone number for free (in the US for now), but they (or rather their software) listen in on your conversations and display ads on your browser.

Here’s what the NY Times says:

. . . Pudding Media is eavesdropping on phone calls in order to display ads on the screen that are related to the conversation. Voice recognition software monitors the calls, selects ads based on what it hears and pushes the ads to the subscriber’s computer screen while he or she is still talking . . . The company’s model, of course, raises questions about the line between target advertising and violation of privacy. Consumer-brand companies are increasingly trying to use data about people to deliver different ads to them based on their demographics and behavior online. Pudding Media executives said that scanning the words used in phone calls was not substantially different from what Google does with e-mail. Still, even some advertising executives were wary of the concept.

You might think it’s not different from Gmail, Google’s free web-based mail service that delivers ads on the side. But I think it is. There’s something very intimate about phone calls and I would be completely freaked out if strangers, even if it were a software bot, were listening in on mine. Of course Pudding’s founders don’t think so, having been in the military intelligence business. Does it help them to have the former chief privacy officer of Microsoft on their advisory board? It depends on whether you think Microsoft is a friend or foe of privacy.

I think most people will be freaked out by the idea even though Pudding says they don’t record your conversations.

Where it might work well: the sex chat industry

But I can see where it would be quite popular: in the sex chat industry. The caller dials a number via Pudding’s web-based service, sees ads on the side while he or she is chatting — although I think this destroys the pay-per-chat business model of sex chat businesses unless they offer this free version to their customers in exchange for seeing ads on a web browser (and the ads actually make up the lose in revenue).

Qrius believes that young people consider their mobile phones and chat programs to be private domains where advertisers are not welcome. I think there’s a simpler reason: they’re used to seeing ads in newspaper and on TV.Qrius will present the results of its annual survey next week.

I have not seen Qrius’s report and don’t know what kind of advertising young people find objectionable. Still, I wonder how Blyk, the first free, ad-supported mobile operator, will do when it launches in the UK in a few weeks. Those who plan to monetize their sites (gaming, video, chat, etc.) may be turning off their audience by inserting annoying ads.