"The Wheel of Time turns, and Ages come and pass, leaving memories that become legend. Legend fades to myth, and even myth is long forgotten when the Age that gave it birth comes again."

It’s a hot Saturday morning here in Houston, and the sunlight is so strong you can almost feel the weight of it on your skin. Maybe it’s early onset of sunstroke, but I felt like musing on random things. Feel free to skip this post; it isn’t likely to be useful to anyone.

But I’m thinking about Google+ more, about Internet 2.0, and human beings. I wonder if the future — what we might term Internet 2.0 — will simply be a return of the walled gardens of the early days of the Internet. Things go in cycles. The Wheel of Time turns.

Before The Internet

Remember these?

I remember the dim days (and I’m sure some of the older tech people really remember) before I discovered the Internet in college. Remember Bulletin Board Systems? Was it 7th grade? I remember my friend and I were hunched over a Commodore 64 with some 300 baud modem with one of those old acoustic couplers a la War Games, because he had somehow gotten the phone number and password to a pirate BBS that supposedly had free video games available on it. It took us a half hour maybe, but I remember our excitement when we got it. It was like being granted entrance into some mystical inner sanctum of mysteries.

The Sysop was unto like a deity, benevolent or malevolent, depending on the BBS. Incur his wrath, and you were booted off pretty quickly and banned.

Then again, if you got established in one BBS, there were enough people talking about — and providing access info to — other BBS’s, so that you could quickly add to your list of phone numbers and access codes. It really was like being initiated into a secret brotherhood.

And really, the early Internet services — Compuserve, AOL, etc. — were not much more than giant BBS’s. Giant walled gardens. You needed to know not only how to find it, but be granted entrance into the mysteries.

The Early Internet

In college, I discovered the Internet. All in the pursuit of a girl. The size of the Usenet Newsgroups, and the level of intelligence and expertise in many of them, was just… staggering. The newsgroups were public, of course, but since the “public” had no idea that the Internet existed, it still felt very much like a tiny little self-selected community. Even if you were aware of it, the things you had to learn how to do to navigate and work in the Internet were daunting. (I taught myself very rudimentary UNIX just to be able to send emails.) There was very much a walled garden aspect to the whole thing.

Marketers, if they were aware of the Internet, ignored it for the most part since the audience numbers were vanishingly small.

Yet, the positives were immense. In retrospect, I feel as if every single social network yearns for the old days. Discussions were focused and intelligent. No one bothered to put up a post talking about some cute puppy he saw, because the amount of work it took, and because the other members would just ignore such posts (and likely flame you to boot). We learned from each other, and took that learning to our real-world lives.

I was active mostly in rec.arts.deckmaster groups because I was really into Magic: the Gathering back then. Sharing deck builds, strategies, and tactics with the other members of the newsgroup helped me win local tournaments left and right. The ability to buy rarest of the rare cards off the newsgroups (rudimentary e-commerce, based entirely on trust) gave me an advantage in my local scene.

In fact, I organized a national student activism movement using the Internet. And I knew this would be a powerful thing then. But again, the whole enterprise had a very much private-only feel to it, not because of any particular policies, but because the early Internet was not easy to use.

The Current Age

The Dotcom boom, and the echo-boom of Web 2.0 and social media and so on, felt like we were throwing the doors open to all of these ‘closed’ networks. Enormous fortunes were made and lost by people and companies that were doing nothing much more than opening up these walled gardens to the billions of people who discovered that there were rare flowers in those gardens.

The search engine revolutionized the Internet for me and for billions of other people. No longer did I have to know where to go, how to get in, and figure out how to be accepted. I just had to go search for whatever it was I was looking for, and voila, there I went. Information that was previously difficult to get became first easy to get and then difficult to avoid getting.

And the marketers got in, and got in in force. We all know how that impacted our online habits.

Taking several thousand steps back, what I see is that the current Internet paradigm is somewhat akin to being in a giant bookstore. Every single book is right there out in the open, in shelves to be easily accessed. Hell, not only easily accessed, but begging for people to come by, pull it out of the bookshelf, and give it a glance. The people who are good at SEO are like those books that are stacked up on feature tables right at the entrance; the ones who aren’t are like the small tomes stuck on the bottom shelf in the New Age section. There are books that are big hits, and there are ones that never get read.

But the point is that each and every “book” is right there in the open, and easily accessible to the public. There are no walled gardens here, just a broad and wide smorgasbord of publicly offered content.

The Next Age?

You know what I’m wondering? If the next turn of the Wheel would bring back the walled gardens in a real way.

Look at Google+… right now, it feels more like the old newsgroups than it does the hot mess that is Facebook. Discussions can be longer, can be edited, and can be targeted. If I don’t want to hear from the public on something I’d like to discuss only with my friends, I don’t have to — I can target the “post” just to my Friends circle. If I don’t want someone listening in, I can simply not include them in the appropriate Circle.

Google+ is a giant wall-making machine. And boy, does it feel good. And since I can do it to others, I know that they can do it to me. That makes me wonder what conversations, what information, what expertise I might be missing. It brings back the same feelings of the old BBS days.

Speculation is that Google+ isn’t a play for social, but a play for something much bigger. I wrote about that here. And I’m sure we’ll all be wrong about what the future will actually look like; prognostication is a tricky business, after all.

But the high-level view does suggest something of the sort, no? A return to the old ways of controlled content, controlled access, sharp distinctions between members and non-members of a tribe? Search engines won’t matter quite as much as they do today, not because content can’t be indexed, but because access is not automatically granted.

Thing is, it has always been thus with human beings. We all have the social impulse, the need to belong. But immediately following that need to belong is the need to exclude. Preschool kids do it naturally, forming little cliques of four year olds, distinguishing between “best friends” and the other kids. Clans, tribes, war bands, companies, organizations, associations, even nations… all of them are expressions of the need to exclude in order to belong.

Why do we think we outgrow that instinct as we grow older? Why did we believe that the Internet, with its great leveling effect, would change human behavior forever?

It will not. And what we’re seeing is the evolution of the Internet to fit human beings, rather than the evolution of human beings to fit the Internet.

The Wheel of Time turns, and Ages come and pass, leaving memories that become legend. Legend fades to myth, and even myth is long forgotten when the Age that gave it birth comes again.

-rsh

No related posts.

Even though this video looks like hundreds of other listing videos that real estate agents have been shooting for years now, with the help of companies like Real Estate Shows and WellcomeMat, that video, you see, constitutes journalism. It comes from the Wall Street Journal, from their Developments Blog, as part of a feature they call House of the Day. The entry above says:

The latest video is of Bob and Linda Glassman’s home on the market, fitting for the upcoming Independence Day holiday. It dates to the late 18th century and was built for the nephew of a man who led a battle at Concord in 1775.

The photos are “courtesy of Coldwell Banker Residential Brokerage”. Good for them, I say, to get so much free advertising for one of their listings, one priced north of $4m. Because those photos are exactly what you’d see in a listing.

Listen to the well-spoken narrator recite, “has a game room, an exercise room, and a two bedroom, one bathroom apartment”. She talks about the wonderful granite countertops in the kitchen, crown moldings, custom cabinetry, and the like. Sounds like a decent real listing agent, except she simply doesn’t sound all that excited about the property.

The reason, you see, is that this narrator is a journalist. It says so right at the start of the video: “Reporter: Sushil Cheema”. One assumes that this reporter is the same Sushil Cheema who has a BA in Anthropology and a MS in Journalism, both from Columbia University (our most-brilliant-President-ever’s alma mater) and has joined the WSJ in 2008 as a “multimedia reporter”. She must be narrating these not-so-great real estate ads through gritted teeth, telling herself that this sort of whoring is the price to do real journalism at some point in the future.

I yield to no man in my admiration for the WSJ as a newspaper and as a journalistic organization, but in this case, our friends have badly erred.

We need a rather sharper distinction between real estate journalism and real estate marketing these days, especially as real estate brokers and agents get better and better at producing “content”. WSJ and other outlets that purport to be “real news” organizations ought to stop bothering with these easy eye-candy pieces, and just link to well-produced videos by actual real estate professionals.

Journalists Wanted: Report on Real Estate Matters

I suppose I get why the WSJ Online wants to do these eye-candy pieces: they’re popular with the audience. When you’re in the business of selling eyeballs to advertisers, it doesn’t much matter what you’re producing. Look at the sheer number of celebrity real estate stories all over the Web, from Yahoo Real Estate to Zillow’s Blog to AOL Real Estate. Does the fact that some movie starlet is selling her $8.4 million doghouse in Beverly Hills make any difference to any of our lives? No. But we all care a great deal for some reason, living in the celebrity-obsessed culture of the 21st century America.

At the same time, perhaps now more than ever, given the depth of the crisis in real estate, given that the proximate cause of our Great Recession (now officially worse than the Great Depression!) was real estate, given the importance of real estate to every single family in the nation, and given how much stuff is going on in real estate… we need journalists to do that thing they call “reporting” on real estate.

Sushil Cheema should be producing videos trying to answer why JP Morgan Chase and Bank of America have been proactively doing loan modifications for borrowers who didn’t request one instead of narrating a listing video. Or maybe she could look into what’s going on with the QRM debate; we know it’s happening, but it’s awfully opaque from out here. Stories like this one from the Santa Ana Examiner are welcome, but all it amounts to is free publicity for the organizations pushing changes.

What’s going on with multifamily financing? What’s happening inside the banks and the loan servicing companies that have been raked so harshly over the coals on Foreclosuregate? What happened to HUD’s gigantic PETRA program to change public housing as we know it?

Maybe it’s selfish of me, as a blogger, to want journalists to report news I can use, comment on, and discuss… but isn’t the job of a journalist ostensibly to report… you know… news? Get information the rest of us can’t, or won’t, and tell us what’s going on? Isn’t that value why they get paid a salary (meager as it may be) while we bloggers opine away for free?

A Suggestion to News Organizations

Lest it be said that all I do is complain, let me suggest a possible solution to the various newspapers, online news organizations, and the like as it comes to reporting on real estate.

Launch a new affiliate program that can help you get the eye-candy content you want to generate the eyeballs so you can pay the bills, while your Columbia-trained journalists get around to digging around for real information. Here’s how it would work.

First, offer “free” content publishing to the real estate industry. That listing video above could very easily have been produced by the listing agent (and for all I know, may have been). Create a program where real estate brokers and agents can send you content, and if it meets your approval, you will publish it. Yes, it’s an ad; yes, those people are just trying to expose a client’s listing to more people. And yes, they’d love it if their listing video got picked up by CNN.com for “House of the Day” or some such. But what of it? Just let your audience know that the video came from Such-and-such Realty, and they won’t mind.

Second, create an open-ended Contributor Program. Many a blogger would give you a permanent license to a post of theirs if a big major news company wanted to republish it. Give them some small percentage (15%? 10%?) of ad revenues generated by their post, in exchange for a permanent license. They get to keep the copyright jointly, so they don’t lose ownership (as they do in so many of the $100/post freelance blogger contracts), but you get content you only pay for upon performance. Many people would do this just to have the opportunity to have one of their posts up on WSJ.com or on Forbes or whatever. As long as you’re not obligated to publish everything someone writes, you have a nearly unlimited source of free content.

And many of those bloggers would go out of their way to blog about LeBron’s new house, or some celebutard’s overpriced beach house in Malibu.

Third, create an advertising affiliate platform. I just don’t know why newspapers and local TV with their professional ad sales teams don’t bother with this. Even at some crazy splits like 60/40, and at microscopic CPM’s, many a blogger would gladly embed a little advertising code for a few extra dollars a year.

With those three programs, perhaps your Real Estate Department can make enough money to keep paying your reporters to go out and write hard news stories. We all surely could use more of those, and less of what passes for journalism in real estate these days.

Or, ignore me and you go on with your bad self “reporting” on a listing video. See where that gets ya.

-rsh

No related posts.

Ted Williams: .406 batting average in 1941. Me: .600 in 2009. Sorta...

Coming off of an awesome, Hall-of-Fame type of year in which I batted .600 in predictions (or, alternatively, a year in which I only got 6 out of 10 predictions even remotely close to right, and hence am a big #FAIL), I thought I would don the Nostradamus hat once again and make foolish predictions for 2011. I know I should make 10 predictions, but… y’know, I’m sort of stuck on that number Seven.

Here are seven predictions for 2011. Many are guaranteed to be wrong, or your money back! But as a bonus, each prediction comes with a music video for your entertainment.

[Warning: don't read this is you're feeling happy and optimistic, and you want to stay that way. I'm personally feeling happy and optimistic, but as I put this together, I can't help but want to reach for strong drink for the industry as a whole. I know I tend towards bearishness, and some might suggest, alarmism, so... I'd suggest you go read some other 2011 predictions posts as well. Here are a few I've seen myself: Lani on Agent Genius, Greg Robertson on VendorAlley, and this whole series over at Inman.com.

Click here to view the embedded video.

1. The Beginning of the End of the Homeownership Society

Like it or not, 2011 will see the start of the end of the Homeownership Society that America has become since the New Deal. I wrote about what the Obama Administration is up to here, here, here and here. Much of that is likely to be proven wrong in 2011, but at the same time, a few of those moves and initiatives are likely to be implemented.

I for one believe that the mortgage interest deduction (MID) is probably eliminated altogether, or severely limited, in the course of 2011. The 112th Congress will be a historic one, where voter revolt actually translated into a huge influx of Tea Party fiscal conservatives taking huge chunks of seats at the table. We’ve already seen examples where the new political reality is influencing Washington DC.

Although I’m certain that NAR and the rest of the housing lobby will go to bat in 2011 to preserve the MID, to increase subsidies to housing, to create a better environment for builders, REALTORS, and others, housing is a case in which neither party is particularly friendly to the arguments. Democrats are invested at least rhetorically in populist class warfare pitting the “banksters” against “the people”. Republicans are invested at least rhetorically in free market ideologies, which would argue against government subsidies and distorted incentives.

The phrase I’ve been harping on in 2010 was “sustainable homeownership”. You simply don’t find any defenders, left, right, inside the industry, outside the industry, anywhere for how things used to be during the Bubble. Everyone, including NAR, thinks that making zero-equity no-doc ARM loans to irresponsible borrowers was a horrendous idea. Given the foreclosure crisis going on right now, it’s awfully difficult to argue against “sustainable homeownership”.

Different people have different ideas of what constitutes “sustainable homeownership” of course; Ron Phipps, President of NAR, is not going to share the same idea of what that means with say, Secretary Donovan of HUD. But whatever else “sustainable homeownership” might mean in the details, it must mean that homeownership will be more difficult in 2011 and beyond than it was in the pre-2009 era.

As I’ve detailed here, I believe that we’ll see a concerted policy push encouraging rentals and discouraging purchases. I believe we will see the start of this new national housing policy starting in 2011.

Click here to view the embedded video.

2. Mass Confusion in Real Estate Finance

The national policy of “sustainable housing” will come into place in 2011 because 2011 will also be the year when the hitherto underground problems in the real estate finance industry will blow up into a full-blown public crisis. The Administration and Congress will have no choice but to respond in some way, shape or form, to calm the capital markets; else, we face the prospect of a bona fide meltdown of the global financial markets.

At issue is the hitherto unknown entity know as MERS (Mortgage Electronic Registration System), various complex laws governing secured transactions, the interaction of local and state laws that date back hundreds of years (Pennsylvania, for example, still uses the law passed in 1717), mortgage insurance, loan servicing practices (some of which may have been straight up fraudulent), the particularities of REMICs, title insurance, and a dozen other topics.

I’m still studying all of the issues and probably won’t even scratch the surface of the complexity, but at stake is the roughly $12 trillion (with a T) securitization market, of which some $7 trillion is mortgages. There are obviously differing opinions from very smart lawyers on the issue. A starting place would be the American Securitization Forum’s white paper vs. Chris Peterson’s law review article on the same topic. Fact is, while both sides present their view as absolute, and everything is “perfectly clear”, a reasonable observer would (and should) conclude that nothing seems absolute and nothing is “perfectly clear”. Different courts in different states have reached opposing conclusions about the arcane legal issues, such as whether MERS has standing to bring a foreclosure action, but the implications of those arcane legal issues are massive and very real. The nightmare scenario is that due to flaws in the transfer process, and due to the very shady way that MERS organization was setup, a huge portion of the RMBS trusts that have taken in trillions of dollars in investor funds may be found to own nothing in fact, be in violation of REMIC regulations and state laws, and end up in a total mess. That would put an immediate halt to capital being available for mortgages, and likely cause a global financial meltdown to boot.

This whole mess has been going on for quite some time. Why do I think 2011 is the year when tensions bubbling beneath the surface breaks out into the open?

First, Congress has begun to hold hearings on foreclosures. You never know where such hearings are going to go, but you do know that media organizations are now on notice and will start to report on these issues, especially when sob stories of innocent poor homeowners being victimized by rapacious Wall Street bankers can be told.

Second, some of the more influential blogs are starting to rage about the issue. Here’s Part I and Part II of a series on Huffington Post for example. Stories that get traction on these types of blogs and sites (especially the liberal-left sites like HuffPo) have a way of finding themselves onto the front pages of the New York Times and Washington Post in due time given the proclivities and ideological makeup of journalists.

At a minimum, I see massive litigation between everyone and everyone else. Investors will be suings REMIC trustees, who will be suing servicers, who will be suing MERS, and homeowners going through foreclosures will be suing everybody, bankruptcy trustees will be filing suits left and right, and there will be opposing decisions from one court to the next… until something is done. Whether that’s a Supreme Court case that decides some of these issues once and for all, or new legislation, something will need to be done (or at least begun) in 2011.

Why? Because until we get some clarity as to who owns what and whether investors in mortgage backed securities could actually get their money back… capital flow to mortgages will be problematic.

The most optimistic view one could take, I think, is to say, “There’s no way in hell that anyone would allow such a catastrophe to come about, so Congress and Obama will do something to prevent it.” Well, I hope so. You probably should too.

Click here to view the embedded video.

3. Double Dip in Housing

Maybe it is the case that economists and forecasting organizations, like Case Shiller, Moody’s, Economy.com, and so on have already taken these policy and litigation related issues into account. But from what I can tell at a high level glance is that most everyone thinks the market in 2011 will be worse than in 2010, without reference to most of these issues.

Nouriel Roubini, aka Dr. Doom, is probably one of the better known bears, and he thinks the double dip in housing is already underway. The less bearish (in theory) S&P reports that the Case-Shiller Index is showing a double dip. Here’s the graph:

Case-Shiller November 2010 Home Price Indices

In fact, apart from Lawrence Yun, it’s hard to find a voice out there who thinks 2011 is going to be a great turnaround year. Even Lawrence is sounding less than super-excited. There are enough caveats and if-then and hedging-of-the-bets in that report to render it a bit of a downer. We expect Lawrence, the Chief Economist for NAR, to sound a bit more cheerleader-like. That report is the equivalent of the Buffalo Bills cheerleader chanting “We’re going to WIN… if the quarterback doesn’t throw another interception, and if our defense can actually stop the run, and if our coach doesn’t make a boneheaded mistake, then you betcha, we’re gonna WIN!” Hardly inspiring.

Given that real estate still is very local (my town in New Jersey, at least for five more days, seems immune to the macroeconomic factors), some areas will be fine, while others will be absolutely devastated. But on the whole, it seems to me that the market in 2011 will be worse than the market in 2010, which in turn was worse than 2009.

What worries me is that the organic decrease as projected by various people do not appear to take into account the possibility of a significant legal crisis (my #2 above) or political change (my #1 above). If either or both of those come to pass, the decline may be far greater than what anyone expected.

Is 2011 the bottom? Who knows. Much depends on the political and legal issues around real estate finance.

Click here to view the embedded video.

4. The Age of Less Will Arrive

Combine all of these factors, and even under an optimistic scenario, I believe 2011 will herald a new era in real estate, which I have dubbed The Age of Less. Less business, less money, fewer deals, fewer agents.

In some way, this will be the start of a real reversion to the historical mean. I wrote back in November that NAR may be headed to 800,000 members. And I started to sketch out what the impact would be on various parts of the industry, so you can go re-read those if you’d like.

As it happens, there are quite a few people who can’t wait for the Age of Less. The widespread sentiment throughout the industry, that there are far too many real estate agents, that it’s far too easy to become a real estate agent, that professionalism is sorely lacking, etc. etc. strikes me as a sort of sobering-up the morning after a wild party. Much good could come from this painful period.

But at the same time, I don’t believe that we will get back to those years in the foreseeable future. Business models that thrived during the Party will fail, and many will applaud. Consolidation will accelerate, not slow down. Business as usual may continue on pure inertia, but I expect 2011 to be the year when we start to see concrete evidence that the Age of Less is here to stay, and this is the New Normal.

Click here to view the embedded video.

5. The Real Estate Industry Will Fail To React

Unfortunately, on the whole, I think the real estate industry will fail to react to the Age of Less. There will be exceptions, of course. But I fear that the vast majority of companies, brokers, agents, Associations, MLS, tech vendors, and others will spend an inordinate amount of time and energy rearranging deck chairs on the Titanic. There will be much effort spent focusing on ancillary issues like agent ratings, franchise IDX, the DotMLS domain, QR Codes and so on while the entire infrastructure of contemporary real estate crumbles around them.

I’m sadly certain that we’ll still find ourselves at some REBarCamp in the summer of 2011 talking about the latest Facebook Groups feature that will let the agent conduct personal branding for a “return on engagement” and so on. Meanwhile, the capital markets will be completely frozen up and Obama will be signing a national foreclosure moratorium into law.

There will, as I’ve said, be exceptions. Forward-looking professionals will realize that in times like this, what the consumer really wants is not a social media expert or a branding expert but a real estate expert, who can help them navigate the truly treacherous and uncertain waters of the even-more-confusing-than-normal housing markets. They will, of course, have already figured out all the marketing stuff and have that in place by the time 2011 really gets underway, giving them the ability to focus on what is now important to the consumer.

The reason to hope, of course, is that while 2011 might be a lost year, perhaps more and more people will come to realize that the Same Old Way of doing business is not going to work in the Age of Less. Maybe it will be painful lessons learned. Maybe not. Perhaps more people will see the example set by the leaders and realize that battening down the hatches and cutting office space aren’t going to work this time around, and by 2012, be ready to take on the challenge of transformation.

Click here to view the embedded video.

6. Return of the Broker

One such hopeful sign will be that 2011 will see the return of the Broker to the industry. We have been seeing signs of this rebirth for quite a few years, but they have all been beneath the radar in small companies, in a few larger innovative companies, and at the “Agent Team” levels. But the trend will break out in 2011.

What do I mean by return of the Broker?

Today’s real estate broker is not in the real estate business. Although in theory, every 1099 agent works for a broker, who is in fact the person being hired by a consumer to carry out a real estate transaction, fact is that the standard operating procedure for the broker is that he has no consumer clients. This phenomenon is not limited to “big box” brokerage. Whatever the size of the brokerage, the industry has evolved to a point where brokers provide services to agents, who in turn have consumer clients.

The problems of this model are, I think, pretty well-documented by now and fairly well-known to all industry participants: lack of quality, total lack of brand meaning, abdication of fiduciary duty, the ‘churn and burn’ mentality, the focus on recruiting and retaining agents, glorification of number of agents, and so on.

The alternative model has been growing under the surface at the “Agent Team” level, where the lead agent still has consumer clients. In fact, in many agent teams, the lead agent still regards the consumer as his or her client, and the team members as servicing his or her client. I have long held that the Agent Team is little more than a proto-brokerage, especially in companies like Keller Williams where teams are emphasized.

In the Age of Less, as more and more agents are driven out of the industry, the old ‘recruit and retention’ models face significant problems. That lays the groundwork for the return of the Broker: a company that regards all of the consumer clients as its clients, and the agents who service them as its employees in fact if not in tax treatment.

Small independents will lead the way, of course, but by the end of 2011, I expect to see some of the savvier larger brokerages start to reassert themselves as real estate brokers first, and agent-servicers second.

Click here to view the embedded video.

7. No Groundbreaking New Technology

My final prediction in this gloomy Eeyore-like post is that we will see no groundbreaking new technology in 2011.

QR Codes will not make an appreciable impact, although it will generate a ton of hype and chatter.

The iPad will be a small efficiency gain perhaps, but nothing more.

The various Android pads will not change the industry.

Perhaps wide availability of 4G through Verizon will make a difference, but I don’t think in 2011.

HTML5 will become more widespread, but that isn’t going to make a fundamental difference to either consumers or to companies.

Looking at what various companies in the real estate technology space are working on, all I see for 2011 is incremental improvements, rather than fundamental shifts. Move, Inc. will be up to some cool stuff with their new acquisition, ListHub, but that will result in needed reform rather than a full-blown shift. There will be competition in getting consumers to mortgages, but mortgage portals hardly matter if the entire real estate finance industry is in turmoil (as above).

So as I see it, no new business models will be enabled by breakthrough technology, and no existing model will be threatened by technology. No, 2011 is about business disruption through competition, economy, and government, rather than through technology.

In Conclusion…

I realize these predictions tend to be on the gloomy side. Who am I kidding, they’re downright terrifying in some ways. I batted .600 for 2010. I hope I bat more like .150 for 2011.

Of course, each market is local, each company and each individual agent is different, and there will be success stories even as the macro conditions worsen. In fact, truly great service combined with expertise and truthfulness (as opposed to truthiness) are what more and more consumers will seek out in 2011. Those that are prepared, willing to take risks, and able to focus on the important things while disregarding distractions will emerge from 2011 stronger than ever.

So even if you think I might be right, take heart! Through the fire and flames, we carry on.

Click here to view the embedded video.

Related posts:

1. Slouching Towards DC, Part 2: A “Balanced” Policy
2. Like It or Not, You’re All Political Analysts Now
3. Slouching Towards DC: A New Era in Real Estate?

My friend Matt Dollinger recently commented on a post by the longtime real estate expert Steve Harney. Both were commenting on the doom & gloom article from Time Magazine on how homeownership is overrated. Steve Harney rightfully takes Time to task:

Again, they are simply arguing a miniscule point of an extensive research paper that proves the benefits of homeownership. Where is their research, their study, their expert testimony disproving this study’s results? They gave none because there is none. (Emphasis in original.)

Matt, in commenting on what Steve Harney wrote, and on the gloomy headlines from newspapers and magazines, suggests that real estate agents need to start focusing on how to answer questions from confused consumers:

We all understand that this is a difficult time for those in real estate… both consumers and agents alike.  However, your job above all else, is to become the Trusted Advisor of those closest to you and choosing you to represent them.  That means that you are responsible for being able to decipher fact from fiction and opinion from proof.  There are many conflicting headlines out there today published by everyone from trusted sources like Wall Street Journal, CNN and many others.  Your job is to sift through this material and create KNOWLEDGE from the DATA presented.  Only by creating this knowledge and providing it objectively to your clients can you truly assist in their decision to buy, sell or invest in real estate.

I agree wholeheartedly with both Steve and Matt insofar as their trashing of Time’s “reporting” and their recommendations to real estate professionals.  I do, however, think that the implications they draw are not necessarily what we’re going to face.

I believe that every real estate professional today, like it or not, has to become an amateur political analyst because it is well-nigh impossible even to understand what to make of conflicting headlines without understanding the political implications.

What If Time Isn’t Reporting?

Steve rather thrashes Time for its insipid “report” on the dark side of homeownership.  And his point about Time’s incredible claims based on nonexistent mixed results is 100% on the mark.  But where Steve assumes that Time is performing a journalistic function, thereby failing it horribly, I assume instead that Time is performing a public relations function, and succeeding in pushing the agenda of its friends in government.

The title should give away the game: “The Case Against Homeownership”.  The writer, Barbara Kiviat, is a vegetarian “happily living in Manhattan” which tells me something about her socio-economic and socio-cultural status, as well as what personal views she might hold on the American Dream.  Because I too lived happily in Manhattan in my late 20′s and remember my views on homeownership.  Ms. Kiviat is likely a lovely woman, brilliant and funny, and probably lots of fun to hang out with — but I seriously doubt that she counts many middle-class Americans amongst her circle of friends.

I think we should take Time at its word.  It isn’t reporting anything; it is making the case against homeownership. It is asking the readers (the ones who aren’t leaving in droves) to think that owning a home in America is a bad idea indeed.  The article is an extended op/ed.

The question one should ask then is, Why?  Why is Time Magazine interested in pushing the narrative that homeownership is a bad idea?  Is it out of the goodness of their hearts?  Their deep concern about Americans making foolish financial decisions that will ruin them for life?  If so, the time to run that story would have been in 2005 (pun fully intended).  Instead, as Steve Harney points out, in 2005, Time was singing a rather different tune.

The answer, I think, is that the Obama Administration is committed to changing the American housing policy.  I’ve written on this before here, here, here, here, and here, as well as on AOL Housingwatch, so will save many innocent pixels.  If you’re interested, go read those posts.  Apparently, Time magazine, as part of the government-media complex, has decided to support the Administration in its objective to change housing forever.

Whenever you see gloomy headlines about housing, whenever you see Op/Ed pieces about how homeownership is overrated, about the risks to owning a home, etc., I believe you should naturally assume that the newspapers/magazines/bloggers are doing so for a reason — unless shown otherwise.

Political Awareness Required

Thing is, just because the government-media complex is pushing a particular storyline about housing and have no idea what they’re talking about does not mean that you can simply ignore them either.  Consider, for example, this post from Steve Harney’s blog entitled, “Five Reasons to Buy A House Today”.  In it, the “KCM Crew” makes five major points:

1. Buying may be cheaper than renting
2. There are tax advantages to owning
3. Homeownership builds wealth
4. Real Estate is a good longterm investment
5. Experts Expect Price Appreciation Starting in 2011

All interesting points that we can debate in some other post.  But what they all ignore is the possible impact from policy decisions.

Tax advantages to homeownership?  Sure.  Today.  But note that Barbara Kiviat in her Time hit-piece specifically mentions this tax advantage:

As a consequence, Washington lavishes homeowners with special treatment. When they file their income taxes, they can deduct mortgage interest and property taxes. When they sell, they don’t have to pay tax on the first few hundreds of thousands of dollars in profit. In 1986 the tax code was rewritten, disallowing the deduction of interest from consumer loans like credit card debt, but an exception was made for the interest paid on a mortgage — a caveat that cost the government some $80 billion in lost revenue in 2009.

With the discussions going on in policy circles in Washington DC these days, any professional Realtor who tells a client to buy a house because of tax savings, without also mentioning that said tax break may be in jeopardy, is engaging in malpractice.

And of course, if the mortgage interest deduction goes, that changes the rent vs. buy calculation as well.  It will also have an impact on longterm housing price appreciation.  And I’d like to meet the expert who believes in home price appreciation in 2011 if the mortgage interest deduction goes away.  That’s just one small piece of the housing policy puzzle; we haven’t even touched Fannie Mae, Freddie Mac, and what the government is thinking about doing on that front.

Fact is, there is not a single aspect of real estate that is not impacted — and heavily so — by government policy.  This industry is a regulated one that exists in its current form only because of government policy.

This is not to suggest that no one is going to buy homes in the future.  Nor is it to suggest that realtors should just climb under their bedcovers and wait for death to arrive.  The market will change and adapt, as markets always do, to government policy.  The smart brokers and agents will figure out a way, and the rest will find other employment in other fields.

It is, however, to suggest that the professional who wishes to follow Matt’s advice to remain a trusted advisor, who wants to sift through the headlines and create knowledge out of data, must today become an amateur political analyst.  She has to know how to read between the lines in propaganda pieces, delve into the minutiae of committee hearings, think tank working papers, and little-advertised conferences.  (Or find someone who will do all that and give her the low-down, like NAR’s political wing.)

Isn’t it great?  As if you didn’t have enough things to learn and study to be an effective real estate professional….

-rsh

Related posts:

1. Slouching Towards DC: A New Era in Real Estate?

So this morning, I do something completely unusual for me: I turn on the TV and watch one of the morning shows while sipping coffee.  I normally never turn the TV on except for NFL games, maybe ESPN, or something special I really have to see.  But I did today, and happened to catch a segment on CBS Early Show where a Rebecca Jarvis, on how to avoid common real estate mistakes.  This is the associated web story (I am looking for the video of that segment right now).

In that segment, and the associated story, Jarvis brought up some good solid advice as well as a couple of points that I found… shall we say, “interesting”.

First, she thinks the #1 mistake that sellers make is that they pick “bad agents”.  The advice, then, is as follows (from the web article linked to above):

Find someone who has successfully sold similar homes in your area. When you’re selecting an agent, ask them to show you three recent sales of homes comparable to yours in price and location. You may also want to look at their asking price-to-selling price ratio.

Hmm.

Second, she advises buyers to retain a real estate attorney:

You may want to consider hiring a lawyer. It’s the only person in a transaction that’s not incentivized to get a deal done. A real estate attorney will charge flat fees and offer objective advice.

Uh-huh.

Some questions and thoughts from yours truly follow.

First, Rebecca Jarvis is Smart

Rebecca Jarvis, CBS News

Before we get into this, it’s probably worth noting that Rebecca Jarvis isn’t exactly an airhead.  She’s pretty damn smart:

Previously, Jarvis wrote for numerous publications, including Crain’s Chicago Business and Business 2.0. She also has worked in investment banking and foreign currency trading.

Jarvis graduated from the University of Chicago with a degree in Economics and Constitutional Law. A recipient of the University of Chicago Dean’s Grant, she studied European banking and financial markets and the formation of the European Union at the Université Sciences Po in Paris, France. Jarvis has received national recognition for her work with Colin Powell to empower children and improve communities. She was named “One of Twenty Teens Who Will Change the World” by Teen People magazine, and named a “National Point of Light,” receiving accolades from Presidents Bill Clinton and George Bush, Sr.

So we have a law and economics trained journalist who used to work as an investment banker, studied abroad in Paris, is likely fluent in multiple languages, and is a “National Point of Light”.  Let’s not knock her opinion as someone who is uneducated or ignorant; this is a quality journalist, insofar as such a thing actually exists.

Good Agents and Bad

In the broadcast segment, Jarvis made it clear that the biggest mistake a seller makes is hiring “bad agents”.  But the definition of good agent is implicitly “someone who has sold similar homes in the neighborhood”.

As the RE.net is well aware, there is raging debate and questions about what constitutes quality in a real estate agent.  And there is a substantial base of opinion that production alone does not constitute quality.  So what does Jarvis base this claim on?  After all, she’s a former investment banker, a scholar of economics and finance, and reports on financial markets all the time.  Surely, she wouldn’t just invent an opinion without backup?

For Jarvis’s claim to be legitimate, she should be able to produce some evidence that agents who have a track record of selling similar priced homes in the neighborhood in question deliver some sort of value to the seller: money, time, and/or convenience.

Money: Does the agent who sells more homes in an area get higher price-to-list ratios than an agent who sells fewer (or no previous) homes in that area?

Time: Does the agent who sells more homes in an area get lower DOM (Days On Market) numbers than one who sells fewer?

Convenience:  Does the agent who sells more homes in an area deliver some intangible convenience benefit to the seller over one who sells fewer homes?  How we measure this is a question (perhaps consumer surveys? time elapsed between contract date and closing date?) but some sort of evidence must exist, no?

So a threshold question for Jarvis and the layers of editors and fact-checkers over at CBS is, “Got evidence?”

And Now, the Devilish Details

The above are just basics.  As an accomplished reporter, Jarvis probably could have called the local MLS for some data, or called a local broker or an agent to get some of this data, in order to form an opinion.  This assumes, of course, that she didn’t already have the narrative in mind as she set out to report on the “biggest mistakes” that consumers make in real estate.  Let us assume for her sake and the sake of American journalism that such was not the case, that she drew conclusions from some sort of evidence.

The next level of inquiry should have been:

In addition to the Price-to-List ratio, how many price reductions did the agent’s listings take on average?  Was this because of the agent or because of the seller?

If you ask most experienced listing agents what a top mistake a seller makes in real estate is, inflating the value of their own home has to be one of the top answers.  Homeowners become emotionally attached to their 3BR/2BA ranch in which they raised their two kids, planted gardens, had backyard picnics galore, and so on.  They all think their house is special, that it’s got some redeeming feature that should make it go for far more than what the market will actually pay for it.

Is an agent good or bad if she takes a listing knowing that the seller has unrealistic expectations, but hoping to convince the seller into price reductions over the period of months?

Is an agent good or bad if she takes a listing, and motivated solely by the desire to move the property as quickly as possible to generate a commission, prices it way below market?  The latter would show up as many successful sales in a neighborhood, but one could argue that such an agent’s clients got screwed.

This is but one example.  Other relevant details might be the transaction history of a particular agent on the difficulty of those transactions.  Did the agent work through tough situations with banks, mortgage applications, inspection issues, weird situations, and ultimately deliver a market-price result to the seller after weeks and weeks of working through barrier after another?  Or did the agent simply put on a yard sign, put the listing in the MLS, did minimal negotiations, and collect a fat commission?  Which is good and which is bad?

Jarvis’s simplistic formula of “production = better” ignores all of the details that go into a real estate transaction, and may end up harming the consumer rather than helping.

Finally, On the Public Perception of Realtors

We come, at last, to the most interesting observation that Jarvis sort of casually throws out there as if it’s the most obvious thing in the world:

You may want to consider hiring a lawyer. It’s the only person in a transaction that’s not incentivized to get a deal done. A real estate attorney will charge flat fees and offer objective advice.

Did you get that, all you incentivized realtors?  The real estate attorney for your client is the only person in the transaction who isn’t biased or incentivized.  The attorney will offer objective advice, while you apparently offer logic-twisting sales pitches because you want to cash commission checks.

What’s that about fiduciary responsibility?  Why are you paying all that liability insurance?  According to the Business and Economics Correspondent for CBS News, you all are commissioned salespeople out to make a buck.  A couple million consumers, as I understand it, tune into that show every morning.  And that’s what they think of you.

And the reason is because you’re paid on commission.  Apparently, if you charge a flat fee like a real estate attorney, your advice might be seen as objective whether or not said advice is actually objective.

It’s something to think about.  Hard.  And often.

A final observation: Given the above… is now really the best time for the industry to be spending millions advertising how now is a great time to buy a house?

Your thoughts are welcome, as always.

-rsh

No related posts.

I've uncovered a terrible secret... a conspiracy...

So earlier today, I get an interesting email from our form on 7DSAssociates.com:

First Name: NAR
Last Name: Scandal
Email Address:
Company: NARscandal.com
Title:
Phone:
Comments: Breaking News!  New Scandal at the NAR

Exclusive from NARscandal.com

A new scandal is brewing over at the National Association of Realtors and we at (www.NARscandal.com) have the “exclusive story” along with quality in-depth reporting you can find no where else.

This scandal is a true living tale of real estate, the internet, technology, money, power & greed.

A must read for every member of the National Association of Realtors (NAR) as well as every citizen and homeowner within the United States and modernized world, as this one actually has the power to affect our future as well as future generations to follow, in so many ways.

Click here to read all of the latest details at ( http://www.NARscandal.com ).

Sincerely,

The Researchers & Writers
www.NARscandal.com

http://twitter.com/narscandal.com

“The Next Generation of Real Estate Media”

Naturally, I am intrigued by the “Next Generation of Real Estate Media” that is talking about scandals and intrigues, power and greed, a shadowy powerful conspiracy with the power to affect future generations for years to come!  I’m sure there’s some sort of a DaVinci Code type of puzzle or three involved.  Tom Hanks and sexy French lady can’t be far behind!

Wait A Second… You Want My Money?

So I go on over and visit the site.  Looks professionally designed, and look at these headlines!

• Breaking News! RETS Scandal at the NAR
• Upcoming! Our “NAR Deep Throat” Series

So I click on an article.  What’s this then?  You want my credit card info?  You want me to subscribe?

Hrm… well… now it depends.  Who the hell are you?  I don’t know that I’m all that comfortable giving some company my credit card information when I don’t know much about them.

So Who Is NARScandal.com?

So naturally, I go over to the handy dandy About Us page:

Our writing staff is comprised of a team of highly skilled real estate technologists, researchers and industry analysts who luckily stumbled upon a powerful but little known NAR and MLS technology network more than 3 years ago.

We were tasked to compile background information on the NAR and MLS as it related to several next-generation real estate technology legal cases making their way through the courts.

Huh.  So I go searching for who these real estate technologists, researchers and industry analysts are.  No names.  No identities.  No nothing.

Hrm, well, they were “tasked to compile” information on NAR and MLS.  By whom?  Well, it says that NARScandal.com is a “division of Imagine Publishing, Inc.” based in Wilmington, DE.  But a search of the WhitePages.com for “Imagine Publishing” returns no results.  And a Google Search returns some results that don’t really fit…

There’s an Imagine Publishing in the UK that publishes a bunch of photography magazines.  There’s Imagine Publishing, Inc., which sounds like the right company, but they publish educational books, and is based in New York.  There’s ImaginePublishing.com, which appears to be some sort of a religious ministry website.

None of those guys appear to be the type of company that would have had a three year investigative reporting campaign.

But here’s the thing.  This is an operation that’s claiming to be the “next generation of real estate media“.  MEDIA.  We’re supposed to rely on this for information.  Anonymous sources in news are a common thing, but anonymous reporters and editors?  I don’t think so.  Even the Pravda on the Hudson lists its editors on the masthead; the stories have bylines with names of reporters attached to them so those who have stories written about them know who to contact for corrections.

Researchers & Writers?  More like Cowards and Character Assassins.  Some of the allegations they’re making are baseless, wrong, and expose incredible ignorance.  Put your names up, boys and girls.  You ain’t sources; you’re not the “Deep Throat”.  You’re supposed to be the reporters and the editors.  Step up, or shut up.

Media, my ass.  And then you want me to give you my credit card information, for a “company” that has no mailing address or telephone number?

Riiight.  Sorry; I don’t pay cowards and assassins from mysterious “companies”.

-rsh

No related posts.

I found something recently that bears directly on my post on Employer Liability for Employee Social Media, and I’m somewhat hopeful that we’ll see more clarity on this topic.

Michael Yon is an independent journalist who reports from Iraq, Afghanistan, and other parts of the world where the U.S. military (and its allies) are fighting.  I happen to love his work, and believe it points to the future of journalism, but that’s a different story.

He recently posted a report on Facebook about two soldiers who were killed by Taliban attacks.  That in and of itself is not unusual. He does this all the time, doing the job that the national media rarely does.

What is unusual is that in the comments to this report on Facebook, a Mike Garcia attacked Yon for releasing the names of the soldiers before the DoD got around to it.  Scroll down in Michael’s fan page to find this thread, as I couldn’t find a way to link directly to his post and to the comments.

Turns out that Yon had followed all guidelines, directives, and had cleared the release with Army commanders on the ground in Afghanistan.  What followed is where things get interesting for us.

We see that Mike Garcia says that the FB comment is is personal opinion, that he is not representing the US Army or speak in any official capacity, even though he is a Public Affairs Officer.

Michael Yon is having none of it.  He believes that the fact that Mike Garcia is a Public Affairs Officer of the US Army means that he represents the Army even on a Facebook comment.  Which means that Yon believes he can now sue the Army for defamation and libel.

Now while it’s highly unlikely that Yon would actually sue the Army for defamation, I sorta hope he would so we’d get a case directly on point as to when the employer is and is not responsible for the social media actions of an employee, and what the relevant factors might be.  In this case, Major Garcia is a Public Affairs Officer — something close to a PR person — and posting on Facebook is likely in the sphere of his employment.  Respondeat superior ought to follow.

But at a minimum, we might see the Army promulgate specific directives clarifying when a soldier (an employee of the Army) is and is not speaking for the Army when engaging in social media.  That would be helpful for additional clarity.

-rsh

No related posts.

The science is SETTLED, I say!

If you live in the United States, and rely solely on Pravda New York Times or similar for your news, you’re probably unaware of Climategate.  Basically, the entire premise of the global warming/carbon footprint craze of the past few years turns out to be totally bogus.  From the RealClearPolitics.com overview:

Global warming “skeptics” had unearthed evidence that scientists at the Hadley Climatic Research Unit at Britain’s University of East Anglia had cherry-picked data to manufacture a “hockey stick” graph showing a dramatic-but illusory-runaway warming trend in the late 20th century.

But now newer and much broader evidence has emerged that looks like it will break that scandal wide open. Pundits have already named it “Climategate.”

A hacker-or possibly a disillusioned insider-has gathered thousands of e-mails and data from the CRU and made them available on the Web. Officials at the CRU have verified the breach of their system and acknowledged that the e-mails appear to be genuine.

For even more damning evidence of a conspiracy to defraud the world, pervert the scientific process, and cover things up, check out this post from Australia.  Because they still have, you know, “journalists” interested in investigative journalism there.  One day, we might import some of these useful fellows from Australia to the United States….

While Climategate is a scandal of the first order, and all Americans (indeed, all humans) should care about it, as real estate people, we need to take a look at how Climategate will impact the industry.

“Green” Designations

Still a good idea

Because of all the hype around “green”, there have been a number of organizations that have sprung up to try and take advantage of it for marketing purposes.  EcoBroker designation is just one example; Green Real Estate Education is another one.  And the granddaddy of them all: NAR’s Green Designation.

Thing is, there is absolutely nothing wrong with going “green”.  There are real issues with how housing impacts the environment: water, air quality, trash, harmful chemicals, etc.  And people of all types enjoy saving money on energy costs.  You don’t have to be a disciple of the Goracle to embrace recycling or installing more energy-efficient lights.

But, might I suggest that all these “green” designation programs — and every realtor who has such a designation — start to back away rapidly from the “global warming” or “climate change” or “carbon footprint” rhetoric?  There has always been significant disagreement on how valid this whole carbon footprint deal is anyway, and Climategate pretty much nails that coffin shut.  Unless you’re a radical, or a “scientist” whose grant funding depends on such things being true, the revelation that most of the climate data has been faked, under political/economic pressure, makes “global warming” the equivalent of invoking Papa Legba for protection.

Houselogic.com

I wrote about NAR‘s wonderful new consumer website: HouseLogic.com in my Inman column recently (link is for subscribers only).  It’s a great new site, and hopefully a great strategic initiative for NAR.

It might be a good idea to go through the content on that site — including the tool for homeowners — and start scrubbing it of reference to “carbon footprint” or “climate change”.  Even though HouseLogic.com is, at its heart, a political venture, it is not a partisan political venture — nor is it a handmaiden of the green movement.  It is something that focuses on issues related to housing, homeowner rights, and real estate industry issues.

The last thing that NAR or HouseLogic.com needs is to be connected — or to be seen to be connected — to a discredited and discreditable ideology that is based on fraud, lies, and cover-ups.  At best, HouseLogic/NAR will be seen as clueless and out of touch — a dangerous thing in the age of instant information — and at worst, as a AGW fanatic.

By shifting the focus towards the core issue of saving money on heating bills, electric bills, water bills, etc., I believe that the site can maintain its trajectory of successfully appealing to homeowners.

An Aside

Just as an aside, Climategate is yet another example of how “social media” and “citizen journalism” are impacting the world we live in.  Take a look at some of these comments from a Houston Chronicle editorial that completely ignores the Climategate scandal:

Apparently, the clowns on the Houston Comical editorial board do zero research prior to sitting down at the keyboard to compose their lies. The “researchers” at East Anglia have been exposed as the perpetrators of a massive fraud by manipulating statistics. Yet, here comes the Comical citing the liars at East Anglia in support of their thesis. It’s all over the news – even the Houston Comical. (Maybe the editorial board doesn’t read the Comical – only the press releases of the DNC.)
+++++++++++++++++++++
The material was taken from servers at the University of East Anglia’s Climatic Research Unit – a world-renowned climate change research centre – before it was published on websites run by climate change sceptics.
+++++++++++++++++++++
One of the emails under scrutiny, dated November 1999, reads: “I’ve just completed Mike’s Nature [the science journal] trick of adding in the real temps to each series for the last 20 years (ie, from 1981 onwards) and from 1961 for Keith’s to hide the decline.”

The lesson in the social age is that organizations do not get a grace period when news or information breaks.  There is no patience on the part of the connected consumer.  Waiting a couple of days to gather one’s thoughts, formulate a response, etc. may not be the ideal strategy for dealing with breaking stories.

There’s something to be learned there too for real estate professionals.

-rsh

No related posts.

Nearly one in five (19%) online Americans now uses Twitter or a similar service to post and share updates about themselves, or to see updates about others, according to the latest survey data from the Pew Internet & American Life Project.

This figure represents a significant increase over previous surveys that reported on Twitter use. Research in in December 2008 and April 2009 from Pew found that only 11% of internet users preported using a status-update service, while a similar study by Harris Interactive in March/April of 2009 found that number to be even lower, at 5%.

Let’s assume that the research is valid and accurate.  1 out of 5 is an amazing figure in and of itself.

There are, however, two other even more amazing observations that can be made if we take the 20% figure as valid.

First, we may be heading towards a self-balkanized America with no common shared cultural touchpoint.

If 19% of online Americans are on Twitter, and some 73% of all American adults are online (this is from 2006, by the way, so the actual number might be higher), and there are 304 million Americans of which 227.4 million are 18 years of age and older, what we get is that there are some 31.5 million Americans on Twitter.

Well, the #1 highest ranked Twitter user in terms of number of followers is one Ashton Kutcher, with 3.88 million followers or 12.3% of the total Twittering Americans.  That’s it.  in terms of news or information sources, CNN tops the list with 2.79 million followers, or 8.8%.

The implication is that Americans have formed a bunch of small cells of their friends, colleagues, people they know on Twitter — there is no Twitter user/company/whatever that commands the majority of the Americans using Twitter for whatever it is that they use it for.

If social networks is the future of information distribution and communication, then we’re likely headed into a society without a defining common shared source of information or culture.  We’re going to make references, allusions, and jokes that will become increasingly “insider info”.  Gamers will instantly know what other gamers are talking about, while art fans will be speaking mostly with other art fans.  Micro-fragmentation appears to be something we need to think about.

Second, maybe none of that micro-fragmentation stuff will matter because Americans are just plain too dumb to survive in a challenging world.

Here’s the top ten most popular (in terms of number of followers) users on Twitter:

1.  Ashton Kutcher (aplusk)
2.  Britney Spears (britneyspears)
3.  Ellen DeGeneres (TheEllenShow)
4.  CNN Breaking News (cnnbrk)
5.  Twitter (twitter)
6.  Kim Kardashian (KimKardashian)
7.  Ryan Seacrest (RyanSeacrest)
8.  Barack Obama (BarackObama)
9.  John Mayer (johncmayer)
10.  Oprah Winfrey (Oprah)

Seven of the Top Ten (eight if you include Barack Obama, Celebrity President) is an entertainer/celebrity.  Some are celebrities that are famous for being famous — Kim Kardashian for example.

If this is what Americans want, then that’s what Americans want.  Just don’t ask me to think the future is rosy and wonderful on this evidence.

-rsh

PS: Note that adult Twitter users are computer-literate, tech-savvy people over 18.  The supposed creme de la creme of our society, who “get it”.  Oh #*@(%@!

No related posts.

Yo, FaceBook me homie!

In my Top Nine Things I’ve Learned at BlogWorld post, I wrote:

Many social media professionals talk as if social media is the future of media, then act exactly the opposite when camera crews show up.

I can’t forget the moment.  Due to some deadlines, I excused myself from a session to get some work done while everyone else was attending a session or a keynote.  I found myself at the cafe near the Convention Center, setup the mobile office, and started working.  The TV on the wall was tuned to something I can’t recall, since i wasn’t paying attention to it.

Suddenly, a youngish gent walks in, instantly recognizable as a BlogWorld attendee: thick black plastic frame glasses, some witty geek-chic T-shirt (like, “I Twitter, therefore I am” or some such), jeans, and a backpack.  He asks the cafe staff if he can change the channel to CNN — and they say yes.  CNN comes on, and they’re doing a segment on BlogWorld.  Ah ha!  That’s why this guy was so interested.

Some nameless anchor who I couldn’t pick out at a lineup is interviewing a number of folks, including one of the founders of BlogWorld, and the talking heads are going on and on.  And I found myself wondering… if a blogger had contacted the organizer of the Annual Conference of the American Society of Newspaper Editors... would one of them have dropped everything in the middle of the conference to get on a videochat with him?

Would any attendee at ASNE’s Annual Conference have stopped whatever he was doing to rush to a laptop because he had heard that The Bloggess was going to post an interview with the editor of some newspaper?

Actions speak louder than words.  And this, frankly, is why I fear that social media might be hype after all.

Rhetoric vs. Evidence

The rhetoric around social media is that it’s the end of the world as we know it, and I feel fine.  Social media will change the relationship between companies and customers, blow journalism apart, and create a new society where everyone is a publisher and audience, everyone is a producer and consumer, and every connection is genuine, human, and authentic.

Part of me really believes that.  Really.  I’ve seen enough in my own life to believe that there is indeed something revolutionary in networked communications.

At the same time, I can’t get over the fact that the more recognized and more famous “social media gurus” are more recognized and more famous because of legacy media.  Why, for example, does Chris Brogan tout the fact that “He has been quoted in the Wall Street Journal, US News & World Report, The Montreal Gazette, Newsweek, and some other places”?

Social media is supposed to be a massive paradigm shift in the way companies market themselves and their products to consumers.  If you don’t get with the program, your company will quickly become irrelevant to consumers who are all interconnected and networked and so on — so you need to hire a social media guru to put together a kickass social media marketing campaign for you!

And yet, evidence suggests something else altogether.  Coca-Cola, with all of its sophistication, all of its money, and all of its marketing brilliance, is reduced to saying things like:

It’s about bringing incremental increases in brand love, purchase intent and actual purchase. But for some brands, like if it’s a new brand—we’re launching vitaminwater around the world—the brand strategy is building awareness and trial. What are you going to measure there? You’re going to measure awareness and brand recall. There’s not one pat answer of what we’re looking to measure because it depends on the brand and the business objectives.

And of course, it seems plenty obvious that Coca-Cola hasn’t exactly stopped spending money on legacy media in order to, you know, drive things like “true incremental volumes and true increases in sales”.

The only example I can think of where a major national company has bet big on social media (at least, online marketing) for marketing is Century 21 — a real estate company.  And the jury is still out on whether that was a good move or not.

Given the shakiness of the claims of social media for transformative power, I would have thought that those who are most in the know, those who are most convinced that social media is the paradigm shift, would act as if they believed it themselves.

On the Other Hand…

There are, however, signs that maybe this social media thing is a big deal after all.

Exhibit 1: Sarah Palin.  Now, you don’t have to like her, agree with her politics, or any such thing to notice that the woman is rewriting the rules of political media pretty much all by herself.  Her endorsement of Doug Hoffman for NY-23 was published only on her Facebook page, and nowhere else.  No press conference, no press release, no begging CNN or Fox News for time — just a direct to the public Note via Facebook.

But everyone is talking about the endorsement, and within political circles, everyone knows that Palin broke with the GOP in endorsing Hoffman.

Again, leave the politics to the side and look at what happened here from a media standpoint.  Sarah Palin completely bypassed legacy media and all of its infrastructure and yet still got the news out to the world.  She acted as if social media was the only channel that truly mattered.

Writing about her decision, blogger Melissa Clouthier made this point:

Palin has been sending a couple messages recently. First, she has, since stepping down as governor, started to communicate with the people not through the press but around the press. In other words, she’s speaking directly to the people through social media. She has had a couple well-timed and well-placed op-eds that have helped define policy arguments. However, most of the time she’s talked to the people via social media. (It should be noted that she’s been silent on Twiiter for some time — something I hope she’ll change soon.) This has had the benefit of letting the press know that she does not need them. Rather than go the Obama route and deny what is perceived as the one “enemy” to her aims, Sarah denies nearly everyone. And why not? The press trashed her with risible lies. Why give a dying breed ratings when she can reach the people herself? (Emphasis mine)

Shouldn’t the social media illuminati be behaving precisely as Palin does?

Exhibit 2: Real Estate Industry.  One of the reasons why I and others believe that real estate is ahead of the rest of the world when it comes to social media is that we have actual success stories in real estate.  Even as I pick at the nits, and want clearer data/evidence, fact is that we do have clear success stories of companies and individuals who have achieved real business success, real dollars, and real meaningful results from social media.

I would point to Altos Research as the poster child for a company that achieved success almost entirely through social media.  But it is by no means alone.  Individual realtors are seeing real results (even if they have trouble compiling the data for ROI measurements) from Facebook, LinkedIn, blogs, and Twitter.  And they behave exactly as if the legacy media is dead and dying — print advertising has fallen through the floor, at least at the individual level, while investment in web, blogs, and social networks is through the roof.

Again, actions speak louder than words.  Results trump rhetoric every single time.

I believe social media is more hope than hype.  If only the leaders of our nascent little movement would show us the same by walking the walk, rather than talking the talk.

-rsh

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