Stephen Logan

Digg, Ask, Cuil and Blekko: How to Compete in Monopolised Markets

12th Nov 2010 News, Industry News, SEO Blog 6 minutes to read

With Digg supposedly dying, Cuil finally being put out of its misery and Ask backing away from search, is there still room for competition in monopolised markets like search and social? Blekko and SERPd suggest there might be.

The Internet has become something of a millionaire’s playground. Rich venture capitalists pump vast sums into start-ups in the quest to discover the next Google, Facebook or eBay – making everyone a little richer in the process. Despite this, there is still room for the common man (or woman) to succeed.

But as the competition increases, so too do the stakes.

The trouble that many find is that they are either re-inventing the wheel or simply innovate too early and end up being swallowed by a deluge of latecomers when they fail to evolve. You only have to look at the history of two of the most competitive contemporary industries to see how easily failure can be grabbed from the clutches of success – social media and search.

The search world is littered with stories of massive achievements followed by cataclysmic failures. Let’s take Lycos. A pretty significant engine in its day. Starts up in 1994 (around the same time as Yahoo), gets bought out during the .com crash (2000) for $12.5 billion, get’s sold off four years later for less than $100 million. Today it is little more than a search bottom feeder.

There just wasn’t room in the world for AltaVista, HotBot or Lycos. The reason for this was simple enough, Google came along.

As far as game-changers go, the birth of Google is right up there. They single-handedly changed the face of search [see: How Google and Facebook Diversified to Conquer the Internet]. No longer were rankings simply judged on keyword frequency; now PageRank was counting your links too. Most of the old guard simply couldn’t adapt and compete.

Social media has an equally chequered past.  Where is Friendster now? (Answer, somewhere in Asia) Like Lycos it was huge in its day, but then came the Myspace and Facebook breakthrough and Friendster was consigned to anonymity – in the Western world at least. The same is true of Friends Reunited (bought and sold for a net £100 million loss over four years – see | ITV Offloads Friends Reunited: Right Idea, Wrong Product) and even, to a certain extent, Myspace itself [see: News Corp runs out of patience with MySpace | Guardian].

Facebook’s strength is in its user numbers. With 500 million fully signed up members, opposing sites are reduced to niche status (with the possible exception of Twitter).

Elsewhere in the social sphere you have the bookmarking sites. The average Internet user probably has no idea that these exist, but they are big business – hence why, as a market, it continues to be so competitive.

But this is a strange market. It’s largely dominated by user opinion and is subject to huge changes engineered by changing public perception – aided by various tech blogs.

Digg have been at the forefront of this social form of news aggregation since 2004, but now it stands peering over the precipice of irrelevance and even extinction – if media reports are to be believed [see: Digg sacks over a third of staff | The Telegraph – also useful to see what the wider world thinks about Digg, read the comments]. But in a fickle social world, a minor downturn can soon snowball into disaster – it can also be turned around.

The bubble may well have burst on Digg. However, the saving grace might just be that there’s no single competitor ready to take up the reins. Reddit, StumbleUpon and Delicious are all lurking in the background ready to siphon off traffic, but each one has their own user base and slightly different take on the basic model. Social bookmarking therefore is more of a hegemony than a monopoly.

This is evidenced by the numerous niche sites that have been spawned. Sphinn is one such example. Created by by the team behind Search Engine Land, Danny Sullivan et al, it is aimed purely a search engine marketing stories – ignoring the worlds of celebrity dirt and politics being dredged up elsewhere.

But even Sphinn haven’t got it all their own way. They’ve now been joined by new upstart SERPd.

Going after the same basic niche, SERPd is attempting to be far more user-orientated. Ensuring that spammers, robots and other trolls are kept at bay (or at least attempting to do so), it is looking to give search stories the exposure they deserve. Whilst there’s little to differentiate Sphinn and SERPd – to the untrained eye at least – there’s no reason to suggest that both can’t succeed.

After all, the reason so many online companies fold isn’t because they aren’t getting traffic, it’s simply that they aren’t monetising it sufficiently to sustain their huge overheads. When costs (server space, hosting and employment) outweigh income, the consequences are predictable.

How about an example then?

Try Cuil.

Even the name is enough to make many an online marketer wince. As far as overblown fanfares go, Cuil was right up there. This was a search engine being created by former Googlers which boldly claimed that it would one day be a market leader [see: Cuil Launches — Can This Search Start-Up Really Best Google? | Search Engine Land]. Unfortunately, it failed (massively) to live up to its own hype. After initial traffic surges, interest soon dissipated.

The search market itself generates billions in ad revenue each year. Therefore even a small startup can become wildly rich simply by getting a 1% slice of that global pie. No doubt this was the incentive for Cuil.

Unfortunately that dream turned sour pretty quickly. Cuil folded in September this year after just two years [Cuil Goes Down, And We Hear It’s Down For Good | TechCrunch]]. It was never meant to be, Cuil simply wasn’t different enough.

As a polar opposite Blekko is a search engine without compare [see: Aiming for Bronze, Blekko Gets a Million Searches a Day | Wired]. No, it isn’t like Bing and claiming to be a ‘decision engine’, this is a community led search platform that uses ‘slashtags’ as a substitute for conventional search phrases.

It’s effectively combining social and search elements to create something new. Whether this concept will work in the long run is anybody’s guess. However, what Blekko does perfectly demonstrate is that you can’t simply play Google at its own game. They are the leaders; others have to find ways to innovate around their brand monopolisation.

You only need to look at Yahoo and now Ask to see how challenging it can be. Both have now surrendered their core search functions and instead looked to incorporate a third party engine within their basic framework. For Yahoo this meant a merger with Microsoft, whilst Ask are weighing up both Google and Bing [see: Cuts 130 Jobs, Moves Away from Core Search | PC Magazine].

Early domination therefore is no guarantee of continued success. Digg might be about to learn this the hard way. Equally, to enter a saturated market dominated by one or two sites, you need to have a unique offering – this is a trend continued across the Internet in all businesses. But once established, you need to keep users onside, which is achieved by offering quality and consistency of service. Yahoo failed to do this and Digg might be in danger of following suit.

PR will only take you so far. Eventually you need to back that hype up with a sustainable services that meet the demands of your audience. Regardless of your success, you can never guarantee that somebody won’t come along and pull the carpet from beneath you – even Google. Whilst the examples in this post barely scratch the surface, there are some universal lessons to be learnt by all startups and online enterprises.

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