The hot topic of the week is Jeremy Shoemaker, aka Shoemoney, being extorted by a Dmoz editor.

Newbie note: DMOZ, also known as the Open Directory Project, is a moderated directory of web sites. Due to its weight with Google and other search engines, being listed is considered very valuable.

Shawn Collins decided to look into the situation and was pointed to a DigitalPoint post Jeremy made way back in 2005 — “if anyone seriously does know a dmoz editor pm me ill pay there lame corruption fee to get in the dmoz… I dont like it but I want to be listed.” Another blogger (who hit the front page of Digg) had his Dmoz editor account banned after posting a note questioning Shoemoney’s removal.

Most Dmoz editors are web site owners, or promoters, themselves. Shawn Collins said that he applied for his Dmoz editor account after having trouble getting a site listed. This is a conflict of interest to Dmoz’s integrity. Editors are blocking the competition as well as collecting cash in exchange for listing sites. The system is broken and has been justly exploited.

What can be done? Easy. Add transparency.

Just like Wikipedia, all edits must be made public. Additions, deletions, times, dates, and ip addresses. Real names and faces must be assigned to the editors. Whether an identity is real or fake, the reputation behind that identity takes time to build up. This minimizes corruption. Directory categories need to be open to all editors.

Does Dmoz even matter anymore? Between millions of blogs, Wikipedia, Digg, and forums, is there not enough timely social media to far outweigh a single directory? Perhaps, yes. However, Dmoz still remains a valuable internet property. Just like real estate, without maintenance and renovation it can fall into slums.

Frank Schilling delivered the keynote speech at August’s Domain Roundtable in Seattle. Great example how on entrepreneur laid the groundwork for a multi-million dollar empire while dot com speculators were losing everything.

Frank points out that one of the problems domainers face is flying under the traffic radar since traffic is spread out across a massive portfolio of domains. He is considering consolidating the traffic to a single domain & brand so others take notice. If Facebook is worth over a billion dollars with an audience of 30 million who buy nothing, what is an audience of 30 million super targeted & converting worth? Readers, here is the next internet billionaire.

Watch the full video of the speech with Q&A at DomainRoundtable. Frank Schilling has a great blog thats updated obsessively when he isn’t on vacation.

A recent report indicates that online gaming beats social networking and video sharing for internet users over 18. This year 34% reported playing online games weekly, 29% watching videos, and only 19% participating in social networking sites. Gaming saw the largest yearly growth — from 19% in 2006 to 34% this year.

Gaming, as a whole, is hot. MTV recently announced they were investing half a billion dollars in gaming. The unpredicted global success of the World of Warcraft MMORPG raking in $1 billion in revenue have certainly helped grease the flow of revenue to online gaming (that was in 2006.)

So how can an independent online entrepreneur take advantage of this information? (Those of you who voted “no” to owning your own business in our latest poll, take note.)

First, its what isn’t being done that matters. Is this story just about gaming being big? What I see is that adults need more social networking sites to call home. Myspace’s audience either appears to be young & wild while Facebook remains home to the young & educated.

Second, advertisers need performance from gaming advertising (and video, as well.) Considering the religious zeal mega corporations poured millions in to promoting themselves on the tiny niche virtual world of Second Life, this is easy money. Game developers + public relations machine = a money printing press. Give the brand advertisers real engagement, not a sideshow a few academics and jounalists visit.

There is a lot of money to be made. Lots of competition is not a bad thing. Simply work your business around and with the competition rather against it — thats the way to go.

Need more ideas?

YPN made quite a few layout web site publishers criminal amounts of money last year. Massive amounts of traffic combined with $1+ clicks adds up very rapidly. Following a crackdown by Yahoo, quite a few were scrambling to unload their inventories on Sitepoint & Digitalpoint’s marketplace.

One teen girl is in it for the layout market long term. Ashley Qualls has turned down a $1.5 million buy out offer and is growing strong. She’s made those quick to cash out look very foolish.

“Whateverlife attracts more than 7 million individuals and 60 million page views a month. That’s a larger audience than the circulations of Seventeen, Teen Vogue, and CosmoGirl! magazines combined.”

This story is great evidence that you don’t have to be a programming wizard to make very good money on the web. I recommend you check out the full article in Fast Company magazine, read it for yourself here.

I am interested in how many readers own their own business. More specifically, is the business your primary source of income?

Computer repairmen,

(click here for part 2, it gets better)

Car mechanics,

Home Depot salesmen,

Mercedes dealers,

Anything technical or mechanical that you don’t understand — you are probably getting ripped off.

During my flight to Affiliate Summit East in Miami last month I read the latest issue of Harvard Business Review. The July-August issue was titled “Going the Distance” and it focused on long term success management.

The article that stuck with me the most was “The 4 Principles of Enduring Success.” A group from Innsbruck University School of Management studied European companies who have outperformed their competitors (more details here.) The results appeared to be based on current stock prices (which in itself is questionable,) however the points are valid if not containing a bit of common sense.

First, “exploit before you explore.” Great companies use their existing assets before moving on to greener pastures. If you are a one man band with attention deficit disorder, your in trouble. Web publishers: squeeze as much profit as you can out of your existing web properties. Marketers: saturate the heck out of what works.

Second, “diversify your business portfolio.” Can you exploit what you are good at and diversify at the same time? These sound contradictory; the author notes diversification in suppliers and customers. Web publishers: If 95% of your traffic comes from Google and 95% of your revenue from Google Adsense, watch out! Marketers: just the same as publishers, make sure all you income and leads are not coming from a single source.

Third, “remember your mistakes.” This may be common since, but in a corporate environment it takes effort to communicate failures that may have occurred even 5 years ago. Publishers & Marketers: Record your major changes in a journal, noting what works and what doesn’t. When dealing with future projects you can look back and identify success trends (I am doing this already with great results.)

Finally, “be conservative about change.” When 3 year old companies get eaten up for billion-dollar price tags and search engine algorithms send small businesses into bankruptcy taking things slowly seems insane. Perhaps a better take on the word conservative is testing things before going all in. That means understanding what you are getting yourself into rather than just trying to follow everyone else. Web publishers: Build sites up slowly, rather than working 3 months solid and rolling the dice on a launch. Marketers: gather market intelligence and run lengthy testing before dropping millions, or thousands, on a new product.

Harvard Business Review often has insightful articles. Unlike typical news magazines covering stories of the latest trends and events, HBR’s articles read like detailed case studies. Unfortunately retrospective views often lead to cherry picking facts, so it is fair to view the conclusions with some skepticism.

Google has been making internet publishers rip out their own hair since their first search algorithm update. Thats ok, publishers don’t own Google’s results. However, one would expect a little more respect going out to those responsible for multi-billion dollar profits, the advertisers.

Graywolf made a good post questioning the most recent update to Google’s placement algorithm. PPC Blogger has his own thoughts as well. Bottom line, Google’s official updates now sound more like a Nostradamus quatrain than anything remotely logical or straight forward. Is Google becoming more confusing and convoluted — both to publishers and advertisers?

I don’t pick apart Google’s updates, but I have a few ideas. Since financial fraud HYIP ads are still covering Google I am quite certain no one there is reading my blog (that might be a good thing.)

#1. Google’s book smarts have asphyxiated the street smarts. Sometimes companies benefit by not having the ability to only hire the top .01% of graduates.

#2. Google is trying to distract publishers and advertisers with zany tricks. Trying to keep the desire to crank up their profits while minimizing spam a secret is like hiding an elephant behind a stop sign.

#3. Little guys are being trampled. The days of part time campaign management are over. PPC search marketing is a full time job, as hard as SEO, and more risky financially.

#4. Accelerating revenues through algorithms instead of letting the market set its own prices will lead to investor shock during an economic down cycle when upward bid price trends reverse.

#5. The only clients who win are blackhats who spend the time to reverse engineer Google’s paid search ranking algorithm.

Old websites get redesigned. Yahoo, for example, has seen over 10 redesigns since its launch in 1994.

My general attitude is that redesigns should be gradual rather than radical. User confusion is minimized while file integrity remains (massive changes can cause issues with your search engine indexing; even SEO-positive changes can hurt your organic traffic for months.)

Here is an example of a site taking a pretty major change recently, problogger.net. I am not going to criticize the redesign because I simply have no data to pass worthwhile judgments.

Original design:

New design:

So what steps should you take when redesigning your website? Is it important to hire a top web 2.0 designer? Or should your designer be sharp and clean?

Design is treated as an art. However, its impacts can be measured and manipulated as a science.

Google provides a very powerful free tool — Google Website Optimizer, (Adwords account required.) The name is generic but it functions as a multivariate tester. Traditionally, web publishers & marketers take two or more designs and run a split test to discover which more successfully accomplishes their goals. With multivariate testing you can run small tests of independent website elements and these determine which combination accomplishes your goals the most successfully (goals such as: ad clicks, e-mail sign ups, RSS subscriptions, product purchases, etc.)

(in this example, combination 4 received a conversion ratio of 1:3.5 while the original design converted at 1:7.3)

This is why I am in favor of evolutionary design — assuming your current design works. Just like with the scientific method, your need a controlled environment. When making major changes all at once, you lose that control.

When working in highly competitive marketplaces with a steep cost of visitor acquisition, an optimized design can be the difference between making millions of dollars or losing them. Of course, it doesn’t get any easier from here. Each individual visitor is unique. Geography, demographics, and even the time and day of the week are all variables in web site performance.

There is one dummy rule to use if you don’t care about this stuff (most people don’t need to) — keep it simple. Even your smartest users don’t want to learn a new user interface at every website they visit. Aim for the lowest common denominator and everyone will be happy.

February of 2006 I reported a story about the publisher of an adult magazine, Perfect 10, going after Google over copyright “infringement” on Google Images. They lost the case, but appealed.

Breaking news, as reported at NetworkWorld.com it appears Perfect 10 has now decided to sue Microsoft over their image search (hey, why not!) As an added bonus, they are also sueing over — “MSN search engine can find passwords” and “Microsoft also takes advertising money from Web sites that have stolen Perfect 10 images.”

The reason I reported this story before was because affiliate publishers were being pulled in to the mess. There were claims that made it appear Perfect 10 purchased the rights to specific photographs based solely on their appearance in Google Images. Blackhat legal system manipulation at its finest.