Running into an article in Art Technica on US broadband policy got me thinking again about the shape of language on the web.  Today, the web is predominantly English.  Nobody knows exactly how many of the world’s 15b webpages are in English, but estimates are between 65 – 80%. 

Most readers of this webpage will probably have had slim experience with the web in a foreign language.  Maybe a few of us have tried playing with Google Translate or even AltaVista’s Babelfish back in the day.  But far less yet will have considered purchasing Systran or Language Weaver translation tools to close an international deal or read an academic paper in Portugueuse. 

As Anglophones, we’re the lucky ones.  Wry observer Momus says we’ve benefited from the emergent structure of global cultural exchange.  That structure routes knowledge through English akin to the way airlines route flights through regional hubs.  “If culture were like an aviation model,” he asks, “would Poles be able to fly to Tokyo without having to stop at LAX?”

So we Anglophones have enjoyed a positive-feedback loop as the Lingua Franca of the Web, riding virtual shotgun to English’s preponderance in cultural and economic global spheres.  As only 31.7% of Internet users, we account for 65 – 80% of web content. 

(Of course, the ride has not been all gung-ho for us.  Ever wonder why today’s blockbusters lack the sophistication of a Billy Wilder masterpiece?  That’s because Hollywood studios recoup costs on expensive special effects by exporting movies to foreign audiences; thus, the easily translated dialog and plot.)

But, in the immortal words of Bob Dylan, “the times they are a-changin’.”  In the 21st Century, America will share global leadership with 5 rapidly-emerging economies, known as the BRICs: Brazil, Russia, India and China. 

What does this mean for the Web?  Massive shifts in the origin of web content from English to other languages.  Chinese, in particular, will overtake English as the dominant Internet vernacular.  Today, Chinese grows 2.6x faster than English on the Web.  “By 2011,” says JupiterResearch, “Asians will make up 42% of the world’s Internet population.” 

Yikes.  With reliable machine translation still decades away, I guess now is the time to brush up on my Mandarin. 

Yesterday was the Microsoft Analyst Day and if you needed any more proof that the Redmond Giant was serious about taking the lead in online advertising just note CFO Chris Liddell’s observation that MSFT spent more acquiring aQuantive than they have ever spent on R&D. 

The $6b deal was steep relative to a potential early take-out of display leader DoubleClick, but after GOOG snatched DC away for $3b, it was a damned-if-you-don’t situation for MSFT, especially given tie-ups between Yahoo-Right Media and WPP-24/7.  Yet there is strong potential to grow the display category and justify not just aQuant’s hefty pricetag but the high multiples paid for DC and RM too.   

With MSFT’s additional purchase of AdECN yesterday, The Big 3 now all have the ad exchange technology plus the established relationships with market makers to reverse the revenue per impression decline and overall slowdown in display growth.  According to RM’s CEO, the growth of user generated content and web-based email have created a “glut of inventory” that monetization technology and services have struggled to keep up with.  Now, the ad exchanges promise to improve efficiency through transparency, buyer/seller disintermediation and easier access to targeting technology, raising the revenue per impression and overall market size.  Like Google’s search auction tweeks that ignited search in 2002, the auction model could supercharge display.  

Interestingly, ContextWeb’s ADSDAQ was not picked up in the M&A frenzy, perhaps because the exchange focuses on premium publishers?  (There is a shortage of premium inventory versus the overhang of UGC, etc…) 

So now MSFT has a stake in the increasingly important display category and the ability to cross-sell a value-added package with Live Search.  By the way, to mitigate conflicts-of-interest, expect MSFT to spin-off AA||RF and, for that matter, GOOG to jettison Performics.  (That is, if GOOG-DC overcomes MSFT-backed Antitrust scrutiny.)

 MSFT can also extend aQuant into new markets like video games, as seen in the announcement of major partnerships with EA and in-game ad network Massive on Analyst Day.   But perhaps the surest sign of a sea change in online advertising comes not from Wall St. or Madison Ave but Silicon Valley.  By signing Digg, Microsoft has effectively proven that Google can no longer get away with its dual image as rowdy, idealistic startup that also happens to have a $160b market cap.  Only a few years ago, the industry tacitly approved when Google scored the default search box in Mozilla’s Firefox, a deal worth reportedly $50MM to the open-source nonprofit.  Today, we might expect to hear some concerns about Google’s privacy policies. 

That’s an issue where Google is increasingly sensitive to Microsoft and the other top search engines, which recently banded together to announce opt-out tracking search and shortened record retention periods.  To be sure, Google still dominates search with 65% market share in June (after weeding out Live Search Club). 

So Microsoft has made some major inroads in search and display, but the fight has really just begun.  As Kevin Johnson, president at Platform and Services Division said, “We think there will be few significant players in the advertising platform business and intend to be one of the top two.”

Howard Morgan – First Round Capital VC, internet pioneer and all-around genius rockstar in my book – once said online advertising was like the “Wild, Wild West” in a innovation management class from my last semester of business school.  So true.  But the while the West was gradually settled with railroads, cars and then suburbs, the Internet seems to just keep finding server space for scammers, phishers and black hat SEOs even as its settled by legitimate companies.

Jonathan Zittrain had an interesting take on online security in his article, “Saving the Internet.”  He argues that scams and malicious hackers spawn from the Internet’s openness as a developer and user platform, the same conditions which enable innovation and egalitarian participation.   

“Though the Internet’s lack of centralized structure makes it difficult to assess the sturdiness of its foundations, there are strong signals that our network and computers are subject to abuse in ways that have become deeper and more prevalent as their popularity has grown.” 

Facebook’s Developer Platform is a prime example of what Zittrain characterizes as ambiguously generative, a quasi-open model which promotes developer innovation and user adoption but under Facebook’s control, so that the company can limit what it deems inappropriate or threatening not only for its community but also for its interests.  

The quasi-generative model is in the ascendance, and threatens to pervade the Internet with garden walls (again) and even to displace the PC.  Zittrain cites the example of “tethered appliances” such as the Xbox and iPhone, which work brilliantly to create a safe and seamless user experience, but also severely limit the potential of marginal developers and users to effectuate disruptive innovation. 

To uphold the Internet’s promise of generativity while limiting abuse, he advocates supporting several movements, including Netizenship, Virtual Machines and Network Neutrailty for MashUps. While Zittrain’s argument is brilliant, it approaches the Internet from a macro-level perspective and I’m left wanting more on the micro-level behavior of individual firms and actors.

What do you think?  What are the economic trade-offs of open vs. proprietary elements in a product like Facebook or Microsoft Office, from a firm’s point-of-view?  When network effects are uncertain, how do you manage both elements to a point of optimal allocation?

Last night, on my way to bed, I made a quick stop at TechCrunch and found out that Yahoo has a new social network, Mosh.  Minutes later it came out that Google is sponsoring a CMU SocNet project, SocialStream.  Is this W-O-W news? 

We probably could have guessed that both companies had projects in development.  But whereas SocialStream looks pretty amateurish in the demo, Mosh might just be ready for primetime soon. 

It’s clear both companies need to make moves into social networking, and now.  Facebook is on a tear and MySpace’s still growing fast.  Combined, they’re the leading photo upload, people search and video-sharing (if you count YouTube’s presence on MySpace) sites on the web and poised to become ”the next homepage” or central hub of the personalized, community web.  

Those GooBook rumors may even be true. 

But for now, it’s a question of build vs. buy.  And I think Yahoo’s got the right strategy with Mosh.  Facebook’s off the table so long as Mark Z. thinks he can IPO, which he very well may.  MySpace would be a strong fit, especially with its search traffic – 10% of Google’s, but at nowhere near Murdoch’s current valuation of $10B.  MySpace may actually be worth that much on just the financials, but I just don’t think the timing is right. 

And the lesser networks don’t offer the right demographic.  Friendster, as the SocNet pioneer, skews to a crowd that’s now post-college, 25 – 35.  Yahoo needs the younger segment, those in high school and just entering college, to stretch its mighty reach.  This cannot be comprised: Demographics is destiny.  Meanwhile Bebo has a female, African-American base.  And Tagged might have once been a viable acquisition, but its notorious spam tactics are unforgivable.

If I had to buy, I’d buy Hi5 or Piczo.  Hi5 plays to Yahoo’s international strengths, even as MySpace enters China.  And Piczo will lead with kids.  (The strict age controls could be relaxed for an adult section of the network, as Tagged was.)

According to Hitwise, Piczo is one of a handful of Web2.0 sites that is popular with the young & influential early adopters and thus poised to cross the chasm.  With Yahoo Front Page integration, it could pole vault the Grand Canyon. 

But it makes most sense for Yahoo to build.  They know their communities best, and can customize a network from the ground up.  With well-tuned viral acquisition strategies, Mosh will flourish.

Meanwhile, Google’s SocialStream appears to be just an aggregator.  I guess this is useful, but I’m betting it will only appeal to a techy set of people who prefer utility over interface.  MySpacers love to get submersed in friends’ personal pages.   And Facebook retains an aura of exclusivity, despite the everyman email policy and developer platform.

Update: Pete Cashmere has an interesting post on the aggregator vs. “specialist” debate.  I’m not sure how much I agree that MySpace is an aggregator given the volume of ugc created there first.   

“Trezr aggregates online deals, coupons, and money-saving tips from around the web.  It is entirely user-driven and boasts an impressive feature set…”

So Trezr would be just another social shopping site with its anemic traffic and cookie cutter web 2.0 design, except its 1) for sale on eBay and 2) brilliantly monetized.  Setting aside the valuation exercise for a rainy day, let’s look at the business model.  The startup team whipped up a nifty trick: automatically splicing affiliate network code into user-submitted links. 

That’s an interesting twist because most social networks run on display-type placements and leave affiliate marketing to the shopping aggregators like NexTag.  It’s also a glimpse of ad tech in development that will monetize UGC in all its mashable viralicious forms… brand planners be warned.  To wit, TechCrunch had a great run-down of video ad startups today.But where are the UGC video affiliates? 

Is there something unsexy about affiliate advertising, i.e. when a publisher only gets paid when an ad generates a sale?  Sure.  From the publisher’s POV, it preempts all the opportunity of approximating the ROI of CPMs.  But for an advertiser, affiliate networks are the ultimate in accountability. 

Google knows this.  That’s why they’re soooooo late to the party with their PPA model.  Go PPA and *poof* bye, bye click fraud.  But so also goes incremental rev from click fraud and, perhaps more significantly, from “fuzzy” math. 

What I mean is that a lot of PPCer’s overpay, especially the less sophisticated ones.   This happens when conversion rate variance distorts the true value of a lead, driving up bids.  With PPA, the conversion inference is taken out of the equation so acquisition costs are easier to control. 

And PPA is not just for eCommerce.  Even a media site should have measurable actions which serve as a yardstick for traffic acquisition tactics like PPA/PPC.  

Yet, don’t expect Google to implement PPA soon.  Even if advertisers recognize PPA superiority, they would still bow to the search giant’s reach with consumers.   Ad revenue follows traffic like a fly fisherman on the Beaverkill.  That’s why great hope for PPA is social media, the only credible threat to search.

The social media blogosphere is buzzing about a comScore report on Facebook’s impressive growth from May ‘06 – ‘07.  Back in September ‘06, some observers proclaimed trouble at the SocNet’s move to open up, saying it would kill the site’s exclusivity, a primary factor in its appeal.  But with improved privacy controls and the ever-spiraling popularity race for new friends, Facebook has thrived and effectively repositioned itself as a social media utility with broad-base appeal. 

The 12 – 17 segment, which grew 149% during the year-long period, is particularly valuable for the company over the next 4 – 8 years as teens transition into existing college networks, potentially cementing Facebook’s base with “lifers”.

And the mass of 25+’s to have recently joined Facebook makes it look more like MySpace, still the biggest SocNet with 4x more visitors.  Check out this comScore report from last year, stating more than half of MySpace’s visitors are 35+. 

With this shift into the upper age brackets, Facebook heads into direct competition to MySpace.  But MySpace isn’t ignoring the threat.  They recently announced a plan to roll out their own Developer Platform, following Facebook’s move earlier this summer.

And coexistence is possible.  As reluctant internet pundit Danah Boyd pointed out in a recent essay, American youth self-selects along a class divide into their preferred online network.

Welcome to MetaMash.  I’ll be blogging on all things interesting in tech, new media and marketing.