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It’s no secret that social networks have had a difficult time integrating advertising that has a bang for its buck. IDC has released some data showing what social networks - and advertisers - are faced with.

Only 57% of social network users have clicked on an ad in the last year versus 79% of all users in the rest of the web.

When it comes to purchasing, only 11% of social network users will actually make one compared to 23% of the rest of the internet.

“The thinking has been that the popularity of SNS will attract a big audience and generate a lot of traffic, which in turn will produce enormous amounts of user-generated content (UGC) and therefore advertising inventory – without any expenses for editorial staff or content distribution deals,” said Karsten Weide, program director, Digital Marketplace: Media and Advertising. “All of the above has proven true – except that almost invariably, SNS have had a hard time selling this inventory.”

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Lawrence Lessig, a Professor of Law at Stanford Law School, will be giving the opening keynote at Search Engine Strategies Chicago on Monday, Dec. 8, 2008. The title of his keynote is “Remix: Making Art and Commerce Thrive in the Hybrid Economy.”

And, if you read the description of Professor Lessig’s keynote in the conference agenda, it says: “The content industry has convinced industry in general that extremism in copyright regulation is good for business and economic growth. That’s false. In this talk, Professor Lessig describes the creative and profitable future that culture and industry could realize, if only we gave up IP extremism.”

What is he getting at?

Well, “Remix: Making Art and Commerce Thrive in the Hybrid Economy” also happens to be the title of Professor Lessig’s new book, which just went on sale on Amazon.com.

And, according to the editorial reviews on Amazon.com, “The author of Free Culture shows how we harm our children — and almost anyone who creates, enjoys, or sells any art form — with a restrictive copyright system driven by corporate interests. Lessig reveals the solutions to this impasse offered by a collaborative yet profitable ‘hybrid economy’.”

It goes on to say that Professor Lessig, who is the reigning authority on intellectual property in the Internet age, “spotlights the newest and possibly the most harmful culture war — a war waged against our kids and others who create and consume art.” It adds, “America’s copyright laws have ceased to perform their original, beneficial role: protecting artists’ creations while allowing them to build on previous creative works. In fact, our system now criminalizes those very actions.”

How does it do that? Well, Professor Lessig argues that “biting” riffs from films, videos, or songs shouldn’t be crimes. Why? It makes felons out of some of today’s most talented artists.

Professor Lessig argues that the way to end this war is to embrace what he calls the “read-write culture,” which allows its users to create art as readily as they consume it. And he can already see glimmers of a new hybrid economy that combines the profit motives of traditional business with the “sharing economy” evident in such websites as Wikipedia and YouTube.

Wow. That’s strong stuff. And, if we play buzzword bingo at SES Chicago 2008, then there are a couple arcane business concepts that we can use on our bingo cards.

But, this short blurb may not do justice to Professor Lessig. So, I emailed him some questions about the topic of his opening keynote. And he emailed me his answers — quickly, I might add.

Here is our Q&A:

Q: Who benefits and who is harmed by extremism in copyright regulation?

A: Benefits: Lawyers (certainly). The record companies (maybe). Harmed: Artists, businesses, consumers — and a generation of (criminalized) kids.

Q: What are the “read-write culture” and the “hybrid economy”?

A: A RW culture is one where ordinary people are empowered to participate in the creation and recreation of their culture. Every culture in human history has been RW, save for a few dark years in the 20th century.

A hybrid is a commercial entity that tries to leverage value out of a sharing economy, or a sharing economy that tries to use a commercial entity to support it. Either way, two radically different cultures need to learn how to work together with each other.

Q: When will this war on our kids stop, the “read-write culture” be reborn, and the “hybrid economy” start to flourish?

A: When policy makers are woken up to the extraordinary cost this war is imposing.

Q: Where can we already see glimmers of a new “hybrid economy” that combines the profit motives of traditional business with the “sharing economy”?

A: I think everywhere around us. All of the interesting Internet businesses today are hybrid: Flickr, Second Life, Yelp!, even Amazon builds much of its business from the sharing activity of its customers.

Q: Why is IP extremism bad for business and economic growth?

A: Practice moderation. When the lawyers in the room start insisting that the licenses you create must impose perfect control over everything you have, ask them to prove it. Ask them to demonstrate that the business return from that relationship of antagonism is higher than its cost. Don’t give over your business’ future to those who don’t think like a business man or woman. Keep focused on the only undeniable truth: IP is an asset. Like any business asset, it should be deployed to maximize the value of the corporation.

Let me add that I’ve watched the 19-minute-long video of Professor Lessig speaking at last year’s TED Conference as well as the 4-minute 35 second video from OpenSourceCinema which is embedded below. So, I am confident that he will rock the house at Search Engine Strategies Chicago.

Lessig Remix

Professor Lessig was also named one of Scientific American’s Top 50 Visionaries, for arguing “against interpretations of copyright that could stifle innovation and discourse online.” He’s on the board of the Creative Commons project has served on the board of the Electronic Frontier Foundation. He was also a columnist for Wired, Red Herring, and the Industry Standard.

In other words, he’s a speaker worth coming to SES Chicago to hear. And, yes, I do think I’ll put some of his arcane business concepts on a buzzword bingo card.

Despite Yahoo’s decline in the search market as of late, some are beginning to cry foul, saying Wall Street is punishing YHOO just a little too much. Prices dipped below $11 a share this week, almost half the value when Microsoft made its acquisition offer for $31 per share.

A couple of points in defense of Yahoo:

1. Its decline in search market share is slight. They’re still #2. They’re comparable to the Apple of the search world if you’re just looking at the numbers.
2. The stock is being brought down by the greater market. Even Google’s stock is down to the mid-300s, despite beginning the year in the high 500s. But Google posted an increase in revenue and beat the pessimistic Street yesterday. Their stock is on the rise at this hour, while the Dow Jones is on the decline again.
3. They have a bunch of strong properties, including Yahoo Sports, which had a stellar August thanks to the Olympics. They’re also number 1 in email.

A couple of points in defense of Wall Street:

1. Jerry Yang is no Steve Jobs (or at least not anymore).
2. The search advertising partnership with Google has been delayed while they attempt to work things out with a wary DOJ.
3. The economy has everyone holding their wallets tight.

Jerry Yang and the gang need to refocus on the customer instead of executive bonuses, while Wall Street needs to understand that while advertising in general may decline, search advertising is an attractive option for advertisers looking to maximize budgets.

Oh, and in case you’re wondering, Microsoft remains a scorned lover.

Google beat Wall Street with its third quarter earnings, announced today. Their revenue is up 31% year-over-year and up 3% over Q2.

Analysts have been worried that a weak economy would mean worse results for the search giant, due to tightening advertising budgets and decreased consumer confidence.

But, of course, almost the opposite is true. Advertising on Google is much more affordable than traditional marketing methods such as print and television. Search advertising is also more easily measured and has the opportunity to provide a wealth of behavioral data.

Have a Facebook app? Well, now you can deploy it on Friendster. They’re now supporting the Facebook Developer Community. It comes almost two months after deploying the OpenSocial API. This could be a good opportunity if you’re looking to go global. Friendster has 80 million members worldwide, many of which are in Asia.

“Friendster’s support of both the Facebook and OpenSocial platforms is a big win for business and individual developers, as well as for Friendster users,” said David Jones, vice president of global marketing for Friendster. “For the developers that have invested resources in developing and launching a Facebook app, Friendster has now made it very easy for them to ‘port’ these applications to Friendster, enabling them to tap into Friendster’s 80 million users. For Web 2.0 companies that have developed apps using Facebook and OpenSocial APIs, they now have the flexibility to choose between approaches when launching applications on Friendster.”

To learn more check out the Friendster Developer Platform.

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Last week, Google launched a site that explained what they feel are the facts behind their search advertising agreement with Yahoo. Now, Yahoo is doing the same.

The site does not offer much new in the way of arguments supporting the partnership. Yahoo reiterates the point that advertisers set the price of search ads through the bidding process, and that there will be no price setting between Google and Yahoo.

But that argument hasn’t seemed to calm many fears. It’s almost like saying, “Hey, if the price goes up, it’s your own fault.”

There has been no denying that the price could, indeed, rise as a result of the deal. If there was such assurance, that would mean that Yahoo and Google are, in fact, price setting. That would go against Google’s business model that has brought them so much success.

Most of this just chalks up to bad timing. The economy is what it is right now, emotions are high, fears are high. It’s a bad time to defend this deal, whether it has merit or not.

Knowing how and when to make decisions about your PPC campaign’s keyword and ad performance can make or break your campaign. In today’s Profitable PPC column, “Judging PPC Performance: Focus on Conversions,” David Szetela reminds you that almost every action you take to improve your PPC ad campaign should be based on conversion data.

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Read the news and it quickly becomes obvious how complex this world is. So, it’s no wonder that what’s popular in social media and electronics is simple.

MySpace (IMHO) was easier than Friendster. But Facebook took the best of both and now reigns.

LinkedIn makes it easy to network professionally, and YouTube makes it easy to be entertained - and quickly.

Twitter makes a bunch of things easy - from breaking news to gathering feedback about a product you’re considering.

In electronics, the Flip Video has revolutionized camcorders (I am a proud owner of one myself). And now, smaller, more affordable laptops are all the rage. Plus, Apple threw its iPod on a mobile phone, inserted the internet and simplified mobile communications.

So why are these services and gadgets so popular but companies like Microsoft are watching their market share slowly fade?

Dan Kimerling at TechCrunch thinks its all about motivation. Microsoft is motivated by features, while Facebook, et al, are motivated by the user experience.

He has a point. Microsoft considers Google a major rival, and Google is almost always talking about the user experience.

Steve Ballmer might want to take a cue, because he talks an awful lot about catching Google via advertising. And while advertising revenues are most certainly a key to Microsoft’s long term success, it will only prove profitable if the customer is happy.

Google should also watch out to avoid the pitfalls that plagued Microsoft. But a Google failure would not automatically equal Microsoft success. It would only leave the door open for a Facebook-esque startup to come along and steal the show.

Idearc CEO Scott Klein has announced the nine members of the new Executive Council. In addition to the new Council, Idearc is reorganizing their sales operations.

The nine Council members are:

• Samuel D. (Dee) Jones, executive vice president, Chief Financial Officer and Treasurer. Jones, who also served as senior vice president - Investor Relations, has been Acting CFO since November 2007.
• Cody Wilbanks, executive vice president - General Counsel and Corporate Secretary. Wilbanks has been Acting General Counsel since March.
• Sandy Henjum, executive vice president - Transformation and Marketing. Henjum’s centralized organization will guide a wide range of business transformation initiatives that address sales productivity, new products, pricing programs and market and customer segmentation.
• Briggs Ferguson continues as president - Internet. Ferguson, a former Citysearch executive who joined Idearc in April, will focus on executing Idearc’s complete digital strategy as rapidly as possible.
• Georgia Scaife, executive vice president - Human Resources and Employee Administration. Scaife’s organization has been restructured to further centralize the department and improve its efficiency and focus.
• Frank Gatto continues in his role as executive vice president – Operations. Gatto’s organization is responsible for receivables management and billing, sales support and customer care, publishing and printing services, distribution, Information Technology (IT) and other operational functions.

In sales, three Vice Presidents will oversee new divisions, divided into East, West, and Central.

Mike Pawlowski will oversee East and Scott Laver will oversee Central. Newcomber Dave Bethea joins Idearc from PrimeSource Building Products, an independent distributor of building products, where he served as regional Vice President for Operations.

“I’m very pleased and excited about our new organization,” Klein said. “I’m thrilled to be able to make this announcement almost one month ahead of schedule in order to allow us to even more aggressively move ahead with our transformational plans.”

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Traditional advertising agencies have long been wary of Google. That’s no surprise, really, when a company comes out of almost nowhere to change an entire industry.

And as Google has grown, the search company has expanded beyond search to create revenue streams from other all-too-lucrative advertising mediums.

Now, Google is courting agencies in an attempt to get them to divert those ad spends via Google ad products.

The New York Times features a story about how Google employees set up shop at an agency for a day to expand upon the technology and opportunities the internet giant has to offer. It wasn’t a laptop-fest. Google brought couches, bean bag chairs, candy and food. This isn’t your three martini lunch on Madison Avenue, but it is making an impression.

Still, many remain wary. They feel Google is just using the ad agencies to get to their clients, with an ulterior motive of stealing them away.

What do you think of Google’s efforts? Let us know in the comments.

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