If content is king, then its queen is making money.

So says Scott Kessler of Standard and Poor’s Equity Research. Suddenly it seems that everybody is talking about the merger between online sales and off line content. Most agree that the old media still has the best content, but the computer is now so central to people’s lives, that the money is moving online.

The biggest driver is undoubtedly Google which wants to diversify away from its reliance on a single revenue stream – online advertising. It’s partnering with newspapers and now it’s looking at radio too.

Scott Kessler writes:

In our opinion, the faster traditional media firms work toward partnerships focused on making money from content, the sooner they will be able to reap the benefits.

It’s helpful to Exbiblio that analysts are starting to think aloud in this way. The more people start to talk about an idea, the more easy it becomes to sell a concept. Exbiblio is offering a way for traditional media firms to plug into online methods of making revenue – and it’s starting to look as if that’s going to be a good message to be putting out in 2007.

Google – by far the biggest broker of advertising on the net – is expanding its Adsense program into print, heralding the merger of online / offline advertising.

Adsense allows advertisers place small ads which crop up on the side of Google searches. Website owners can also place Google’s code on their sites and receive Adsense ads which fit the context of their content. The more popular key-words cost more per click. It’s also possible to advertise on specific sites that are members of the Google Adsense program. For advertisers large and small it’s very easy just to write a few lines of copy and become an international advertiser.

Next month Google will start a trial with 100 newspapers. The New York Times quotes Google on the commercial logic:

Tom Phillips, who runs Google’s print operations, said the company was attracted by the $48 billion spent every year in the United States on newspaper advertising. Google, nonetheless, is trying to position itself as a friend of the newspapers.

“Print adds value the Internet doesn’t have,” he said. Mr. Phillips, the former publisher of Spy Magazine, was hired by Google earlier this year. “It is a different browse-able reading medium.”

Exbiblio’s vision foresees a time when it will be possible to integrate an online / offline service like this even further, so that readers equipped with a portable scanner will be able carry out the equivalent of a “click through” from print to online. This would make the paper experience even more like advertising on the net.

The Australian Newspaper, The Age, predicts that the next stage of the Internet – when the physical world gets hooked in – will be much bigger than the first:

What we are seeing with the Supranet, or extended internet, or the connected world, or whatever we call it, will change the world much more in the next 20 years than previous technologies have in the past 20.

Many companies are working with barcodes and Radio Frequency Identification tags, which were originally developed by espionage agencies, but which can now track products and presumably how we use them. There’s a good list of companies operating in these spaces at The Pondering Primate which tracks these developments with great dedication.

Exbiblio’s vision is also one where the physical world can plug into the Internet via its scanning oPen which one day might be incorporated into a mobile phone (naturally any tracking will have to be done with the consent of the user). It’s good sometimes to remind yourself that you are not treading a lonely path – even though it might feel that way sometimes. You are in the company of others. Some might be head-on competitors, but there is also such a thing as coopertition, where together a group of pioneers form a trend, and create critical mass behind an idea. You can’t, of course, own the whole landscape of your dreams or vision for the future – that would be hubris.

Here’s a list of businesses that Exbiblio would surely like to join – The Green 50 – as chosen by Inc.com.

Inc.com runs through some of the issues: High oil prices, global warming, the sense that chemicals cause real harm and the earth’s resources are indeed finite. It concludes:

These are not so much charitable causes to embrace as they are problems that entrepreneurs can solve. Wall Street and Silicon Valley certainly understand this: Venture capital firms invested $958 million in renewable energy companies in the first half of 2006 alone.

Exbiblio is committed to Green Design, but it hasn’t got a product that will ‘save the planet’. Instead, it’s going down the charitable route with its Compendia Foundation. I am told that if Exbiblio fulfills its ambitions, there will be a significant amount of capital available for Compendia and the environment. It’s certainly a different approach to Green Business from that chosen by most of the Green 50 – but Exbiblio is never one to take the obvious or easy path, and I have to say that it is one of the things that motivates people at Exbiblio in their daily work on the oPen and its associated software.

Although it is based in Seattle, Exbiblio is legally a Dutch company. Compendia, the non-for-profit fund associated with Exbiblio, is also based in the Netherlands. This set-up obviously involves some extra complications and expenses, but the founders believe that the values and the social system of the Netherlands are more closely aligned with Exbiblio’s than the those of the USA. I have even heard long term plans for the headquarters and bulk of Exbiblio’s employees to be located in Holland. By the way, although Exbiblio is a start-up, it has a lot of “vision” about how what it’s going to look like when it is a big company.

As it has happens, there has been a big discussion raging on Slashdot along similar lines. If a US citizen wants to go and find a better place to live, should they move to the Netherlands? You will find a variety of views and perspectives on the Dutch immigration and taxation systems.

Exbiblio aims to add a digital dimension to print. As you read a book with your oPen scanner in your hand, you will be able to capture lines of text that you want to remember. Later on, these will be loaded onto your computer where you can do digital things with them – like emailing or blogging them. Perhaps one day people will embed links into books so that you can go to an audio-video experience on the net.

But does this take some of the pleasure out of reading? A much discussed blog post by Nostrich describes the difference between the experience of reading a book and reading something online:

Traditionally, reading a book – or any printed word, for that matter – is a rather involved process. As you read, you are listening to the words in your mind. The book remains static in your hands; on your lap; on the desk; forcing you to move your eyes to each consecutive word. Knowing the arduous process the book has been through – editing, proof-reading, typesetting, etc. – instills a sense of trust in the words before you; someone put a hell of a lot of work into making this book, just for you. The cost of books also instills pride of ownership.

But now, with the popularity increase of digital media, all this goes out the window. I don’t own the words I read online, I’m merely a guest; it’s impersonal. When reading words published online, my eyes remain static as each line scrolls past my eyes. Online publications are ephemeral.

It would be a shame if the experience of reading a book became filled up with digital clutter of the ephemeral kind. In many ways reading a book in an antidote to our addiction to the always-on Internet. It’s a much calmer mental experience.

Exbiblio would argue that the oPen is mainly an off-line tool that only connects later on to the digital world. But future generations of portable scanners might well be integrated into mobile phones. There’s already a mouse that will read colored bar codes.

It’s pretty much inevitable that the habits we pick up while reading online will start to invade traditional literature. It’s happening already and language is constantly evolving. Over here in Europe we are ahead of America as we send SMS text messages back and forth many times a day with phrases like “C U 2morrow”, a trend which hasn’t caught on quite so much in the States. Many Britains under 30 do not use capital letters in emails. It will be very hard for even the most traditional authors to ignore the digital dynamics of language.

The morale at Exbiblio is noticeably higher than when I was there a month ago – and yet everyone is far more aware of all the numerous tasks that still need to be done to get a functioning prototype in their hands. It’s a strange conundrum. They know better than ever that they are on a long hard road, and yet they feel more satisfaction from their daily work.

Ian MacDuff, who looks like a much happier engineer than last time I saw him, tells me that it comes down to good process starting to be implemented. There is now a list of tasks and milestones. As these get ticked off, people feel they are making progress. What he warns against is the “death march” which describes a project where you continually think that you are almost done, and constantly disappointed to find that you aren’t. It seems never ending, largely because you can’t see how far you have come down the road, or indeed where the road finishes.

Ian believes that good process begets more good process, because as people understand its value, they start to demand more of it. Information empowers, even if it tells you what you don’t always want to hear. There’s a motto pasted on the window of his office: “The truth will set you free, but first it will piss you off.” (Perhaps those words could apply to transparent blogging).

Ed Mahlum – for the management – also sees a discernible improvement: “I don’t think we were doing as good a job as we could in the way we were managing our work. We are now very specifically tracking all the work we are doing. Everything is much more concrete. This is bread and butter project management stuff.”

So why was Exbiblio not doing this before? I don’t think it’s because the management were naive or inexperienced, but it was a deliberate attempt to foster creativity and experimentation. Ed still says “the presumption of not knowing everything is a very good presumption”, but he now thinks that the creative / development process was too loose, and perhaps there should have been a better defined box to play in.

Ed believes that the improvement in morale is also due to better communication of Exbiblio’s environmental project, Compendia, which is starting to take shape.

“It’s always been there in word, but no one has been working on it, aside from a few conversations here and there. It makes it real to put effort in there and for people to see it.”

Hilary Franz is an environmental lawyer who represents non-profit environmental organizations. She divides her life between her environmental legal work, small scale farming, home-schooling three boys, and working at Exbiblio. On her desk at Exbiblio there is a book called “Collapse” by Jared Diamond – her reading matter is an indication of her serious concerns about the environment, and the direction of our society.

She admits to being “challenged” by the whole notion of technology. She points to her computer and says that it has a “real world environmental impact”, and in fact, she would throw it out of the window right now, if it were not for the fact that she couldn’t do her legal work without it. She recognises that a computer has benefits as well as minuses for the world:

“It also provides an opportunity for connecting people to education and information that is going to create power for change in the world, and help create a sustainable environment,” she says.

This is why she insists that we should “do honour to Exbiblio”, because Exbiblio states in its values that technology in itself is valueless. It must be a force for good through information, connections, knowledge and the power that comes from each of these to change and improve the world.

Hilary is starting to investigate the best model for Compendia, the non-for-profit organisation set up by Exbiblio to work on the environment. She believes that Compendia goes right to the heart of what makes Exbiblio “so different.”

“People should be inspired to work here every day,” she says. “Wealth will be generated by this product that will then go to fund real life world-changing work; preservation of rain forests, environmental education, tackling climate change. It’s not just about what Exbiblio produces. We are creating a model. The hope is that we will go out and spread this model, speaking about it, talking about it, sharing it with others to transform the way corporations operate.”

“This is a corporate redesign. We are establishing a new set of norms where we direct the creativity and resources of business towards the great challenges of creating a sustainable future, and where the power of real change can be an engine for creativity within the company.”

She says that other companies create wealth, and only then think about whether they might donate some of it to good causes. Exbiblio is about fully integrating its values with the work that it does on a daily basis.

As for Exbiblio, she says, “Here’s a company that’s doing work that needs to be honoured! They are dealing and grappling with the issue. Many companies historically have not always looked at the environmental impacts of doing business. Exbiblio is wanting to make sure that they are not just designing a product to make profit and that will cause harm, but instead they are planning to make profit, while minimizing the harmful impacts, and maximizing value for the environment.”

She concludes,”We can’t say ‘if” this is going to happen. This needs to happen. It has to happen.”

Exbiblio’s friend Bill Valenti joined the team for the regular Wednesday lunch. Bill and Martin King were both founders of Tegic which created T9 text-inputting for mobiles, and eventually sold to AOL. Bill’s current venture is Melodeo which puts music and podcasts on mobile phones. Martin asked Bill to reminisce a little about Tegic days, and the experience of raising funding.

Bill recalled that in 1996 the company was running perilously low on funds. They had turned down some offers to licence their technology to mobile phone makers on an exclusive basis, as they saw that as limiting its potential. But an opportunity to discuss putting T9 on mobiles in the Korean market with Samsung. Tegic saw that an exclusive deal in the Korean language contained the downside quite nicely. This first Tegic agreement also included a license for the US market, but was not exclusive and was for a limited term.

Bill and Martin flew out to Seoul for a few “extremely intense” days of negotiations. They were two entrepreneurs from a Seattle startup dealing with a global corporation. Fortunately Bill had been a banker in Seoul in the 1970s and had lent money to Samsung in that capacity. He brought out the business cards of the first chairman of Samsung and the people he had helped 20 years back. He also speaks enough Korean for social chit-chat and singing (karaoke). All in all, they got on well and came back with a deal worth 1.6 million which was paid up-front without any loss of equity in the company.

The first revenues in-the-bank led directly to Tegic’s very-well received first round of external funding, completed only a few months later. Bill thinks it preserved 25% of the equity in the company for the existing investors, management and employees. And Martin believes that this transaction and relationship with Samsung was the making of the Company.

“Timing is everything” concludes Bill, and he endorses Exbiblio’s approach of waiting until it has a product in hand before it goes to investors. It’s entirely logical to want to negotiate from a position of strength, and there’s nothing like revenues for breathing life into a startup.

Here’s another list of start-up mistakes that bloggers are pointing towards. I’m not saying that these are directly applicable to Exbiblio, but some of them just make good food for thought.

Don’t get too attached to your original plan, because it’s probably wrong.

Exbiblio is aware of the sin of obstinacy, and has left quite a few key decisions until very late in the day, to allow for discovery of what users really want.

Having no specific user in mind is listed as another start-up slayer:

A surprising number of founders seem willing to assume that someone, they’re not sure exactly who, will want what they’re building.

And here is some advice which I think Exbiblio should take pretty seriously, given that it doesn’t have much of a marketing budget:

If you’re going to attract users, you’ll probably have to get up from your computer and go find some.

Perhaps one day somebody will write up the ten things that start-ups get right.