The inescapable reality of doing business online as a local media company is that Google, Yahoo, MSN, AOL and a host of other pureplay internet companies are our competition. With six of every ten local online ad dollars going to these pureplays, we’re slowly being squeezed into a shrinking corner reserved for local content companies. Local media companies may say they believe this, but few behave as though it impacts them, because we’re convinced we’re in the content business. We’re not; we’re in the advertising business.

A couple of announcements over the past week by Google ought to have the attention of anybody in the online advertising business. Last week, the company unveiled “Google Trends,” an application that helps publishers compare how they’re doing against online competition. This week, Google revealed “Ad Planner,” software designed to show advertisers where to put their money based on where their target audiences visit. Together, these new moves put the squeeze on all of the incumbent players in the online advertising world, include online measurement giants comScore and Nielsen.

At first glance, these new applications seem enormously helpful to all web denizens. After all, the lack of a reliable third-party measurement system is one of the things agencies say is holding back the advertising floodwaters. And since both applications provide information about the whole Web, this appears to be just Google being useful Google. We applaud their brilliance and go about our daily routines thankful for all these tools that Google has provided.

But as I wrote last year in “Google Lifts Only Google,” the company’s efforts are all aimed at positioning itself to win. Google defines itself as an advertising system. To be sure, it’s a search engine, and its mission is to organize the world’s information, but when it comes to business, Google is an advertising system.

Google begins the day with the assumption that people come to the Web, because they’re looking for something. We begin the day with the assumption that people are looking for us. In our minds, we are the ones who control growth, because everything has to happen on what we view as our property. In the collective mind of Google, the people who make up the network that is the Web control the growth by their actions, and Google’s ad mechanism doesn’t care where that takes place. As the network grows, so grows Google. Not so for local media.

When I’ve noted that we MUST work to outdo Google at the local level, the immediate reaction is one of disbelief. After all, the thinking goes, Google already does a fantastic job of organizing local information, and we’re fooling ourselves if we think we can do better. But this argument presupposes that Google’s business is information organization. It isn’t. It’s an advertising system, and this is where we can beat them.

But how? Google knows that the real growth in online advertising is at the local level (so do the other pureplays), but it lacks one thing that local media companies have: feet on the street to sell its advertising system. The company has put sales forces in a few cities, but it needs a ubiquitous sales force in order to reach its goal of dominance. So the matter isn’t one of coming up with a better system or organizing information — or creating information portals — it’s coming up with a local advertising system that treats the Local Web as its platform.

Jeff Jarvis is writing a book tentatively called “What Would Google Do?” The idea came from various writings of his about this very topic. In one of the earliest, he wrote that we shouldn’t blame Google for leaving everybody else behind:

Big, old media handed them this opportunity on a platter. Google was the one company that truly understood the economics of the open network. It understood that it could grow much bigger enabling than controlling. We in media should have followed that model. We should have asked WWGD. What would Google do?

So the announcements over the past week about Google Trends and Google Ad Planner are good insofar as they can be used to help the online efforts we have with our brand extension sites and other content plays. We need reliable statistics, and the Ad Planner is likely to show advertisers that they want to spend money with us.

But let’s not be naive as to what’s really taking place here, because if we continue to look the other way, we’ll only have ourselves to blame as online advertising continues to grow while our share of the overall market doesn’t.

(Originally published in this week’s AR&D Media 2.0 Intel newsletter)

Mark Cuban is his usual out-of-focus self with a post (Hulu is kicking Youtube’s ass) declaring Hulu the winner over YouTube. The problem, of course, is that these two companies are not now and have never been in competition, although Cuban thinks otherwise. To Mark, YouTube has always been about the theft of copyrighted material, so he never really bothers to examine what makes it hum.

It’s all about the money to Mark. A media business can only exist if its revenue model is built around scarce content, so he proclaims Hulu king and makes a prediction:

…by next year, not only will Hulu have more monetizable traffic than Youtube, but it will have more total revenues than Youtube as well. It wouldn’t sup rise (sic) me if they are already at a higher annual run rate than Youtube.

Here’s the thing. Mark’s probably right, but in thinking of YouTube only in sustainable business model terms, he misses the larger picture and continues to prove himself ignorant about the Web. Sometimes there are legitimate reasons to do things contrary to the P&Ls of the past, if they work towards a longer term return (why doesn’t Google sell ads on its home page?). He has always viewed YouTube through biased eyes (those damned thieves), and for a smart guy, he sure comes up short here.

“Youtube hides behind the Digital Millennium Copyright Act,” he writes, as if its reason for being is to steal copyrighted material and profit from it. If it looks like a red herring and smells like a red herring, then it’s probably a red herring.

YouTube is about sharing, people sharing what they see and what they make, things we’ve been doing since before the term “media” referred only to the home of the Medes. In the 15th Century, the Roman Church didn’t want the Bible being shared with the laity, because they felt they “owned” it. I took my 45s with me to friends’ homes back in the 50s, so that they could hear the music too. Back then, the record industry knew that exposing people to the music was the best chance they had to sell another record.

YouTube’s tentacles within the personal media revolution go on for miles, because people don’t use it to view stolen goodies. Its business model hasn’t been written yet, and those who insist on looking for one just don’t have the patience to wait. I use YouTube to post videos that I’ve made on my MySpace page. There are lots of ways I could do that, but the Flip camera and YouTube make other options seem obsolete. How does YouTube gain from that? For one thing, they keep anybody else from charging fees or profiting from interruptive commercials, and in so doing, buy time for an acceptable business model to develop.

But that’s not the point. We’re in another Gutenberg moment here and the “church,” led by priests like Cuban, want absolute control over material the law tells them they own. I don’t think anybody objects to that concept, but the more people like Cuban press the matter, the more unseemly the whole thing seems.

I love Hulu and have expressed that love before. I watch “House” via Hulu, and while I wonder why there’s such an emphasis on clips from shows instead of the shows themselves, it’s a great experience. But I go to Hulu knowing what I’m getting, just as I go to YouTube knowing what I’m getting.

They’re two different things.

Mike Orren is asking important questions about journalistic responsibility in an era when online search goes a long way toward determining a person’s identity and character. This is a new animal in the history of the press, and I think it bears discussion. Here’s the nut of it:

A media company with lots of Google Juice does a “man charged with” story. A search for that man’s name puts that story high in the search results. Later, the charges are dropped but the search results don’t change.

Orren, who cites personal examples in his post about the subject, thinks journalists might have some responsibility to update the original story in such a way that it assists the reader in determining the truth. That could be by adding a link to or otherwise re-editing the original text, things that could only be done with direct access to the database storage of the archived content produced by the media company.

This is new territory for journalism, because we’ve always been able to fall back on the notion that today’s content supersedes yesterday’s. You can get away with that as the “voice of record,” but nowadays, that position is increasingly being given to search engines and search technology.

It’s also interesting to me that these questions are coming from Mike, a guy who spends his life dealing with media at the hyperlocal level. It’s here — where your subjects are your neighbors — that the meaty issues of journalistic responsibility are most acute. For example, it’s one thing for the New York Times to “expose” a guy here in Grapevine, Texas, but it’s entirely another matter for the local paper to do the same thing.

Two of the top tech observers are drumming a death march for Yahoo in the wake of yesterday’s big announcement that the company had struck a search advertising deal with arch-enemy Google. Michael Arrington of TechCrunch and Om Malik of GigaOm both think the company has shot itself in the foot (or worse). Arrington:

The deal terms announced with Google appear to be fairly innocent - a non-exclusive arrangement that let’s Yahoo take Google’s ads if and when they choose to, and put them alongside their own ads, and/or other third party ads. But the truth is that this will cause even more advertisers to flee Yahoo’s platform. Which will drive auction-determined ad rates down. Which will drive Yahoo to take more Google ads. Which will…

It’s a vicious cycle and they will have no choice, as a public company, but to rely more and more on Google as time goes on.

Malik echoes Arrington’s feelings in his typically colorful way:

I think this is yet another critical blunder by a company that lost its way back three years ago when then CEO Terry Semel lost interest in the company, putting it on a path of mediocrity. Of course, as one of my gurus once said, in hindsight, everyone is an idiot (or a genius).

And while that might assuage the short term concerns Wall Streeters have, the company is shooting itself in the face with deal. It is a almost like knowing your spouse is going to divorce while standing in the aisle, waiting for the priest.

Arrington went on to argue that this deal hurts more than just Yahoo; it hurts everybody in Silicon Valley, because competition in the search space means better value for publishers. It’s hard to argue with that, but his blind spot — and frankly that of all Valleyites — is their failure to understand the potential for competing with Google at the local level. And to that, I’ll say, “We’ll see.”

For members of the Yahoo newspaper (and TV) consortium, this deal is likely creating some serious stomach churn. The long-term value prop for local media is Yahoo’s reach, which is a tricky beast that has a lot to do with brand and the fickle happiness of users. It’s hard to believe the company can keep up with the relentless pace of web development when it’s struggling with revenue problems downstream. As I have said all along, Yahoo needs the local media companies a whole lot more than the local companies need Yahoo, and this deal makes that even clearer.

So what the deal with Google means is uncertainty but probably not enough to disrupt the relationship at this point.

But the one certainty that the Web brings is change, and I’d be a fool to predict where this is all headed. I will repeat, however, that online revenue growth is guaranteed at the local level, and that the real competitor of all local media companies is Google, the company that Yahoo just snuggled up against.

It’s almost entertaining to watch, this disconnect between media companies and the Web. In fact, it would be entirely entertaining if so much wasn’t at stake.

Diane Mermigas writes of the problem media moguls are having with the inability to make money with online videos. Former Disney chairman Michael Eisner is frustrated, both as an investor and a participant, and Diane does her best to get her arms around it.

The online ad frontier is fraught with problems–from enraging members of a social network to easy misplacement of ads. (Eisner complained that a male enhancement drug ad was automatically targeted for and appeared with an episode of “Foreign Body.”) Other revenue sources must be created: from sponsorships and transaction-related fees to various forms of sharing revenue and costs.

The answers are found in shifting the online focus from the value of the content and the advertising to the value of connecting to and continuously transacting with the right consumer.

Um, huh? You see, folks, the problem is that the Web collapses every hierarchical attempt to control it, so while traditional media types search for the “formula” that will turn it into a money tree, the Web just sticks its tongue out at them. As a result, the whole media world — including the advertising industry — is unwilling or unable to participate in the very disruption that could save them.

It’s a disconnect, and there’s no other way to explain it.

For example, Zachary Rodgers at ClickZ penned a nice piece last week about signs of growth with RSS advertising. On balance, it’s an encouraging article, but RSS advertising is an uphill, almost vertical climb due to low adoption rates in the U.S. and its inability to serve the flashier types of ads.

…the U.S. ranks far down on the adoption list, with penetration of only 18.6 percent. That’s tiny compared to RSS-addicted nations like Russia (57 percent adoption), Brazil (55 percent) and China (54 percent). Additionally, of those who access feeds, only 25 percent of U.S. respondents said they do so daily. Another 35 percent said they access them weekly, while 16 percent said feed reading is a monthly endeavor.

The reason the U.S. lags in this arena — as it does with mobile technology — is that the quo wants to protect its status, so it is reluctant to move through even obvious doors. RSS isn’t huge in this country, because the media companies that could benefit most from it refuse to promote it or use it as anything other than a way to draw people back to the walled gardens they know so well. RSS 2.0 is a real communications marvel, but it will never reach its potential until media companies begin to use it and explore its possibilities.

Dave Winer is one of those web geniuses who mainstream people don’t like (or refuse) to hear, but he speaks the truth regarding the Web. One of his core teachings is this: “People come back to places that send them away.” That makes no sense whatsoever to traditional media people, but it is, in fact, what “works” on the Web. Google practices it every day, and so do Yahoo and other forms of quality aggregators. And yet media companies are reluctant to offer outbound links to help users with stories for fear of driving them away.

Like I said. It’s a disconnect.

Yesterday was the anniversary of the conquering of Mount Everest, and Google was Johnny-on-the-spot with one of its usual customized front door logos.

I’ve grown accustomed to these cute logo treatments and have written about them before. It’s one of the things that makes Google Google.

But in the nine years since they’ve been doing this, they’ve not once acknowledged Memorial Day (at least from what my research can tell). What’s that all about, huh? It’s so obvious that it has to be deliberate, and I would love to hear the rationale. Protest war by not honoring those who’ve died? Surely that can’t be it.

There’s a pretty large contingent of bloggers who take Google to task for this every year. Please add my voice to the group.

The unveiling of Google’s new “Friend Connect” program this week is very big news that must not be overlooked by local media companies as we work to become more web-centric. Friend Connect is the latest from Google’s “Open Social” project, which is designed to allow users to aggregate and take with them various important aspects of social networking sites. The logic is simple (and typical Google): the walled-garden approach to the Web is archaic. What’s needed is portability.

So as MySpace and Facebook duke it out to see who can gather the most users, Google says “let’s make it possible for people to take social elements with them wherever they go (if they wish).” To Google, the Web is the platform. To Facebook, for example, Facebook is the platform. This, Google argues, is limiting, so the Open Social project is a natural extension of the Google model.

Open Social treats elements of social networking like widgets (Google’s term is “gadgets”) that can be moved anywhere. Software developers can use the “open” aspects of the project to create gadgets that can be used by anyone on any site anywhere. Friend Connect makes this possible, and local media sites need to jump in as soon as we can. Google is moving slowly with the project, they say, so they can study potential privacy ramifications, among other things.

Google provides the code, which can be embedded anywhere on your pages via iFrames (code that displays, essentially, a site within a site). When completed, users are able to interact with your content socially by inviting others within their established social networks into your site, ranking stories, sharing comments, and meeting new friends. Publishers who use Friend Connect don’t have access to the data involved, but that shouldn’t stop people from using it. In its introductory materials, Google concludes by saying “Everyone wins in a friend connected web:

• You, the site owner - Google Friend Connect gives you a snippet of code that, when put into your site, will equip the site with social features, including the ability to run third-party social applications. Moreover, it enables your visitors to log in with existing credentials, see who among their friends is already registered at that site. It also gives them one-click access to invite friends from their existing friends lists on other sites, such as Facebook or orkut.
• Your site’s visitors - Visitors no longer need to create a new account or develop yet another friends list just to use the social applications on your site. We create the infrastructure that allows one login to be used across multiple sites and the ability to reuse existing friend relationships that the visitor has already established elsewhere.
• OpenSocial developers - With Google Friend Connect, any website on the web can become an OpenSocial container. Their social applications can now run on social networking sites and anywhere else on the web that uses Google Friend Connect. By placing these applications on sites where users already visit, these application will be seen and used by more users more often.
• Social networks - With Google Friend Connect, social networks thrive as hubs of activity while giving their users more opportunities to bring their friend relationships to other websites while simultaneously bringing their friends and activities from outside the social network back in — with people having the ability to publish their activities across the web into the activity streams of their social networks.

However, not all observers are impressed. Marshall Kirkpatrick of Read Write Web thinks the Google initiative simply buries social connections in a “dark little box” and dismisses privacy concerns along the way.

Google could have worked with other large companies and with the creators of these standards (some are in the Data Portability Working Group that Google joined, for example) to tackle the hard questions around data exposure, integration and privacy. Instead they are pushing their Open Social standard around in an iframe. Easy is very good, but co-operation could have come up with something better than this.

Kirkpatrick and others are also noting that the service isn’t widely available yet and that Google is limiting access in order to let others help them build it.

Still, it’s hard to argue with the essence of what’s taking place here, and Google’s involvement will accelerate the work of others in developing social portability. MySpace (Data Availability) and Facebook (Connect) are both trying to accomplish similar goals, but both want to be THE platform leading the charge. Google (again) takes a bigger view and says the Web itself is the platform, describing Friend Connect as a form of “social plumbing” for the Web.

And the message to media companies is clear: we need to be in this space in ways beyond providing simple content widgets that can be swapped and shared. We need to be developing gadgets under the Open Social standards, so that we can participate even beyond just bringing “social” to our sites.

After all, “social” is still largely “local,” and that means opportunities beyond that which the big platforms currently provide.

Stay with me here.

Carl Icahn has done his hostile deed in an attempt to take over Yahoo at its annual meeting next month, offering up a slate of directors for shareholder consideration. Michael Arrington at TechCrunch has the details, including the letter from Icahn to Yahoo Chairman Roy Bostock. Icahn personifies the word “colorful” in his thoughts about the “botched” Microsoft-Yahoo merger.

I am perplexed by the board’s actions. It is irresponsible to hide behind management’s more than overly optimistic financial forecasts. It is unconscionable that you have not allowed your shareholders to choose to accept an offer that represented a 72% premium over Yahoo’s closing price of $19.18 on the day before the initial Microsoft offer. I and many of your shareholders strongly believe that a combination between Yahoo and Microsoft would form a dynamic company and more importantly would be a force strong enough to compete with Google on the Internet.

That last thought is significant, especially because Mark Cuban is one of the directors that Icahn wants on the Yahoo board. The always outspoken — and often controversial — Cuban is no friend of Google and is thinking out loud about how to beat them (with his Mahalo, Cuban has a considerable dog in the fight), prompting John Battelle to note that Cuban “is clearly drinking and blogging again.” That’s because Cuban’s Microhoo strategy is a doozie: “What would happen,” Cuban asks, “if MicroSoft or Yahoo or a MicroHoo went to the 5 top results for the top 25k searches and paid them to leave the Google Index?” He reasons that at $1,000 a site and 100,000 sites, “thats only $ 1 Billion Dollars.” (sic)

Battelle rolls his eyes and invites Cuban to try:

One big problem: No one would do it. Well, some would, but assuming that folks would be willing to be paid to screw over Google assumes folks 1. have no soul and/or 2. hate Google. I pray that for most folks, #1 is not true, and Google prays that for most folks, #2 is not true. So far, I think we’re both right.

But hey, Mark, you have the money! Why not find out?!

Carl Icahn is a smart and colorful fellow who’s making a hard run at this (and getting a ton of attention for it), but by putting Mark Cuban on his Yahoo wonder board at the precise moment Cuban is talking about paying people to leave Google’s index boggles the mind.