Comments for Technorati's Opportunities and Exit Options

Technorati's Opportunities and Exit Options

2007-03-05T20:37:41Z

About 2 months ago, HitWise published a report stating that Technorati, the leading blog search company, had for the first time fallen behind Google BlogSearch in traffic. The reason was Google's new strategy of pushing Google BlogSearch on the Google News homepage. A quite unfair competition for Technorati, but this was an expected and very natural move for Google. So in this article, we take Technorati under the microscope - looking at their technologies, strategies and ultimately their exit options.

Source: Hitwise

Technorati vs Google - Blog Search vs Regular Web Search

The Technorati vs Google question is equivalent to the Blog Search vs Web Search question. But while in regular web search, relevancy is the key parameter; in blog search, it is only a secondary parameter. The most important aspect of a blog search result is its actuality. In other words, time is the primary parameter in Blog Search.

]]> The best way of keeping up with latest reactions in the blogosphere is having a good ping database - and that was the sole reason why Yahoo snapped up open source ping service Blo.gs in 2005. Technorati, as the most popular blog search player and one of the earliest entrants in this market, should have a great ping database. On the other hand, Google's page rank algorithms are not so handy in this race.

However, Google's vast resources are definitely something that Technorati is missing. Technorati is known for their unhealthy infrastructure, that results in frequent annoying outages. We only need to look at what happened to Friendster, where their technical issues (amongst other things) gave a big opportunity to their competitors - particularly, as it turned out, MySpace.

Technorati's Bloated Design

Technorati has a relatively bloated design, at least in comparison to the sparseness of Google's UI. This is a sign of their courage and self-confidence. Technorati was born in the time of Google's PR honeymoon, when everyone was talking about the supremacy of Google's simplistic and lightweight design choices. At that time people were also saying that Yahoo had lost the game, because of their design and page sizes. This is why all of the early blog search ventures, like Feedster, followed Google's rules and chose similar minimalist patterns.

But Technorati was the only one that recognized that blog search is completely different from web search. Unlike regular search, blog search is a social thing - so it requires more social elements. That's why Technorati's design has always been emotive and they have chosen to "bloat" their homepage with features like popular searches and 'Featured Bloggers'.

Technorati Tools

Another great asset of Technorati is their blogger-friendly utilities and blog popularity ranking. These tools have made Technorati a unique blogging authority and a site for all bloggers to keep their eye on.

The latest add-on, WTF? (supposedly standing for "Where's the fire?"), is a buzz indicator and aims to make Technorati the Wikipedia of topics. It's a very new feature and has a long way to go.

Microformats Advocacy

Another differentiating feature of Technorati is their strong advocacy and leadership in microformats. Very briefly, microformats add semantics to HTML markup - to take it from being machine readable to being machine understandable.

Technorati's relationship with microformats is similar to Six Apart and OpenID - it is beneficial from a business perspective as well as being good for the Web. Technorati's CTO Tantek Celik is a prominent player in the world of microformats and is also a founder of the Global Multimedia Protocols Group.

Exit?

Now the big question is: what will be the exit of this small San Francisco based company? An IPO, an acquisition? No one knows, but there are some obvious considerations:

Technorati may be a big opportunity for existing search companies, like Yahoo, to extend their success to blog search. Just imagine if Technorati had a web search option, wouldn't you start using it? Search is not just a technology game, as we stated in our previous article. The gap between search technologies is getting smaller. It's becoming more about habits, and most authorities like Compete and Alexa say that an increasing amount of people have gotten addicted to Technorati's blog search.
Technorati is also a social company and a blogging authority. So any company interested in social media startups may be interested in Technorati as well. Viacom and News Corp are known to be hungry for that.
Technorati may not be financially healthy. They struggle under high loads and they lost a valuable employee last month to Google. They are keeping track of millions of blogs, so their burn rate is probably high (while that doesn't imply an exit, it may lead to another round of financing soon).

Michael Arrington posted similar predictions one year ago, but nothing has happened since then. So we light the flame one more time - when will Technorati be acquired?

Comment from Stan Schroeder on 2007-03-05

2007-03-05T21:59:37Z

Technorati's strength is its authority, and the fact that it's commonly used as an important metric.

Its weaknesses are pretty bad customer support, a myriad of technical problems, and as you correctly point out, frequent outages.

However, one of its main problems, and this includes Sphere, and many other competitors, is the fact that it actually does nothing else. Anyone who knows better will something else to actually follow the blogs: a desktop RSS reader, online RSS reader, a news aggregator, or a social media site. As far as blog search goes...well, I can't see why wouldn't you just search regular Google. I'm not a big fan of vertical search and I don't see the benefits of restricting your search to blogs.

So, what is it good for, except for measuring inbound links? Not much. With WTF they're on the right track, but it was poorly and half-heartedly implemented. If they wanted to take the social media road, they should have gone full force and slap it on the front page, like Netscape did. It would make a lot of sense if the upcoming stories were simply new blog posts on which users could vote to bring them to the top of the front page. But WTF is a mess which leads nowhere and achieves nothing.

The one thing that Technorati clings to is its authority, and that's based on ranking the blogs based on inbound links. If Google implements that (based on how Google Blog search looks right now, they don't plan it anytime soon), Technorati is superfluous, unless they do some major changes to the service.

Comment from Steven Noble on 2007-03-05

2007-03-05T22:05:26Z

C'mon! Of course Google has linked Blog & News search. It's "competition" to be sure, but calling "unfair" is absurd.

Comment from John Doe on 2007-03-05

2007-03-05T22:25:22Z

The buyout by Yahoo is right on the money. Yahoo or AOL for that matter. I would not recommend AOL because right now they need to focus on finishing the restructuring of AOL.

I remember when PayPal was bought out by eBay it was a cow eating a ton of hay with very little milk to provide, but it was an additional service that has helped eBay stay on top as far as Auctions go and today PayPal is profitable.

The same argument can be applied to Yahoo in regards to Technorati on a smaller scale. Yahoo needs a good blog search engine. They could buy out Technorati, on the condition they get asset commitment from all its team members and move them to Yahoo HQ.

I would leave Technorati as is as far as it style goes, but I would try to convert the new Yahoo blog search engine to have similar traits as the Google blog search engine but with an enhanced Technorati index as well as tools from Technorati.

The Technorati property can go as far as allowing Yahoo users log in directly rather then creating a whole new account if they choose to and they could offer import account functions for Yahoo users for existing Technorati users who prefer consolidating their accounts into Yahoo.

Yahoo should make a move for Technorati ASAP before AOL, Amazon, Fox, or another competitor moves in.

My two cents :)

Comment from Joh doe on 2007-03-05

2007-03-05T22:30:33Z

P.S.

Ask.com could also benefit from the buyout of Technorati as far as a little PR goes for the current blog search engine and adding a little sign on their current blog search engine stating "Enchanced by Technorati" or something, but they actually should enchance their current blog search with technorati technology rather than just putting up empty PR.

Comment from Zoli Erdos on 2007-03-05

2007-03-05T22:31:08Z

Technorati was down again today. They clearly ar an IP company that cannot cope with the infrastructure requirements of the growing Blogosphere. Need a White Knight to save them - and us.

Comment from Sam Sethi on 2007-03-05

2007-03-05T22:34:37Z

Technorati is a perfect acquisition for Yahoo. Add the HTTP://kitchen.technorati.com microformat search engine to Yahoo Search. It's a no brainer.

Comment from Emre Sokullu on 2007-03-05

2007-03-05T23:32:48Z

@Steven Noble, please read the rest of the sentence too :) - A quite unfair competition for Technorati, but this was an expected and very natural move for Google

Comment from Emre Sokullu on 2007-03-05

2007-03-06T00:15:09Z

@Zoli, what a coincidence really, I totally agree with you. Their error messages are sweet and creative but that's not the reason why people keep visiting their site. We should have illustrated the article with a Technorati error message like you did.

@Sam, thanks for the link, I wasn't aware of that new feature. Well done.

@John, I would not touch Technorati's design, I would leave them free but just help them fortify their infrastructure. I like Yahoo's Peanut Butter strategy :) mixd was a good example, but it's gone now!

@Stan, very good points but I don't think I would not limit my searches with blogs. Blog search is a very specific problem. In blog search, your purpose is to see latest reactions to a topic, news etc - this is a huge need that should be treated separately IMO.

Comment from Erik on 2007-03-05

2007-03-06T01:09:56Z

Beyond the persistent outages, Technorati suffers from slow and often irrelevant search results. If someone does snap up Technorati, they'll have their hands full getting it up to speed. I agree with Stan that right now authority is all they have going for them. That won't last forever, either.

Comment from Anne Mills on 2007-03-05

2007-03-06T01:48:38Z

Google could update their market share even further by placing a blog option above the search box and totaly bury the competition.

Comment from Emre Sokullu on 2007-03-05

2007-03-06T02:01:30Z

@Anne, yes http://www.alexaholic.com/google.com+technorati.com tells something for sure... But blog search is still not mainstream, putting an extra link at the top of searchbox will be nothing but extra confusion and a few useless bytes of download for the users. I don't think Google would do that. Everyone seems to be in consensus that bottom to top approach is better - you should first welcome bloggers, blog enthusiasts to your blog search engine.

Comment from Doug Karr on 2007-03-05

2007-03-06T05:08:53Z

I really appreciate all the analytics that Technorati has as well as the ranking mechanism... which I believe is the best on the web for ranking blogs. (That's why I made a Technorati Plugin!)

Google may be great with regard to search, but they lack in everything else. Go Technorati!!!

Comment from kamy on 2007-03-06

2007-03-06T15:34:42Z

Technorati provides a great service. I've bee using them since the beggining.

Comment from Hashim on 2007-03-06

2007-03-06T15:54:46Z

Getting aquired by FOX/MySpace makes the most sense to me. Especially in ligt of their traffic relationship:

"Of those people visiting Technorati.com in April, 29.6 percent arrived at the site via MySpace.com. Similarly, 26.6 percent of those leaving the site immediately went to MySpace.com. The high level of cross-visitation suggests a symbiotic relationship between the two sites."

http://www.imediaconnection.com/content/9934.asp

Comment from TagMan on 2007-03-06

2007-03-06T17:26:10Z

I think Yahoo! would be a logical buyer. Google will continue to build their own product. AOL might also want Technorati but I don't think they're focused on acquisitions right now. From an end user perspective, I'm with Zoli - we need a white knight (established web firm with solid, scalable infrastructure) to buy them. Perhaps even Amazon or eBay or Microsoft? There's a long list of potential suitors. Is Technorati even interested in selling, though?

Comment from Paul Walker on 2007-03-06

2007-03-06T17:40:29Z

Good overview of the situation. I use Technorati and other blog search options (a lot) and have a couple comments from an large enterprise perspective:

1. "Authority" is the most important parameter from an enterprise perspective, then "time."

2. Technorati is "challenged" outside of the U.S. and with non-English languages. My sense is that Google Blog Search is a much better option if you are sitting outside North America and need to identify the most relevant blogs to your business.

3. Technorati and Google both fall short when it comes to newsgroups and forums which is a problem since a lot of "the conversation" on any given industry or brand happens in these venues.

4. My VC friends tell me Technorati is speeding toward a cliff. Little revenue and a major burn rate. Technorati feels it's worth more than $225 million which may be a stretch. The management team is considered "difficult."

5. Hopefully, they will work something out because I do believe they've built something valuable. I think some businesses would pay for Technorati if they added some functionality and cleaned up the non-English search capabilities.

Thanks for your continued analysis!

Comment from Derek Gordon on 2007-03-06

2007-03-06T22:40:59Z

Great post (as usual) and thanks for thinking of us here at Technorati. I particularly love all the comments and please know that all of here (all 40 of us) read these and take them to heart and do everything we can to be the best service we can be.

One small thing: if you're able, I recommend getting the most recent Hitwise data; it paints a radically different picture than the one at the top of your post right now.

Keep up the great work -- we love your blog!

Comment from Markus on 2007-03-07

2007-03-07T09:11:24Z

Emre: I'm amazed that you 1) use Alexa(holic) and 2) Compete and not Quantcast. Alexa is way off. Compete is still showing data from January, and it's March. Hitwise chart you have is from 2006. It's March 2007. Have you looked at the latest Quantcast or Hitwise chart for Technorati? Check it out, you'll like it!

Comment from Emre Sokullu on 2007-03-07

2007-03-08T05:38:27Z

@Markus, I've just found it, will try, thanks!