The hip new shiny thing for a new company is to position themselves as a service. Stepping back from the hype machine for a minute, can you really identify a service provider when you see one? Or are the companies that sell themselves as services are actually tools. And what differentiates a tool provider from a service provider?

A tool is designed to deliver a single unique function, such as a hammer or Twitter. Yes, Twitter is a tool. It is designed to take customer input in a variety of formats and from a number of sources and blast that content out to a variety of other formats and destinations.

Twitter is the tool. The items that feed into Twitter could be other tools (Tweetdeck as an example), or they could be true services, such as Ping.fm. What separates these two?

TweetDeck is a tool that feeds input into Twitter, and helps you manage output.

Ping.fm takes your input, and sends it where you what, modifying the format appropriately and hiding it all from you. It took the complexity of a problem (How do I post to multiple social media sites simultaneously?) and delivered a service solution, not a tool solution.

The problem with tool providers is that the problem, no matter what it is, always is a great for their tool. All customer problems fit neatly into the boundaries of what they know, and can be solved by what they sell. Tweetdeck’s answer to helping you with Twitter is to give you more Twitter your way. But it doesn’t extend or build on Twitter to create something that is truly new.

Solution providers look at the customer problem and see something new. The team at Ping.fm took a look at their personal social media management issues and found a way to create a social media input service. FriendFeed and FaceBook looked at the social media world and created a social media output service.

While tools are cool and shiny, they inevitable face the “Hammer v Screw” moment. The point when the tool reaches the outer ability of it’s ability to be useful.

Having many different hammers isn’t the solution. Heck, throwing in a wrench and a screwdriver isn’t the answer either. You’re still just selling tools.

When you step back and think about your business, when you consider what you deliver to your customers, can you really say that you deliver a service that extends and adds value to the tools you have at your disposal, that you are providing to your customers?

Or does everything just look like a nail?

Yesterday in the Fast Company Live Fail Whale session [mention on Scoble's blog here], Paul Bucheit of FriendFeed jokingly said that his company’s external alerting mechanism was Louis Gray.

I cringed when I read that, as the last people who should be letting you know you have an issue are your visitors or customers. I know that FriendFeed is new and may not have the ops team that Dorion Carroll and Technorati have developed over the years, but it is still critical.

You have done a lot as a company to build a brand. Don’t let your internal and external performance sully your reputation. There are a number of low-cost and free ways to watch your performance and alert you before things break.

Louis Gray is a great guy. But he is not an objective and reliable way to alert you when something is wrong with your site.

One of the most challenging things in social media is finding the conversation leaders. Those people who drive the conversation, and create a community.

FriendFeedHolic (ffholic) has taken the base knowledge that exists in FriendFeed and added a ranking mechanism to it based on input and output. In fact, they weight the participation in the FriendFeed community more heavily than participation in other communities.

This is important. Although FriendFeedHolic is separate from FriendFeed, they have found the way to isolate and target those users who are most likely to participate and create conversations. These users, be it Scoble or Mona N, are where advertisers and marketers can target their money.

How would they do this?

Think about it. If someone that is a large commenter or conversation-creator on FriendFeed creates new content, they are assigned a higher ranking in the new conversation-driven ad-discovery model that advertisers will have to create to succeed.

This new targeted advertising logic will be forced to discover:

• The content of the conversation
• The context of the conversation
• The tone of the conversation
• The participants in the conversation

This model will be able to identify when it is an inward-facing conversation that involves mostly super-users, or if it is a conversation that engages a wide-spectrum of people.

Conversations among super-users will lead to more passive advertising being shown, as that is a spectator event, with only a few participants.

Conversations created by super-users, or that involve super-users, but have a higher participation from the general community will get more intelligent attention to ensure that the marketing messages and advertising shown fit the four criteria above.

In this new model, advertisers will have to see that they can’t simply slap a set of ads up on the popular kids web sites. They will have to understand who leads a community, who generates buzz, and who can engage the most people on a regular basis.

In this model, the leader has far less power than the community that they create. And maintain.

There is clear dissatisfaction with the current state of marketing among the social media mavens.

• Fred Wilson and Union Square Ventures are looking for companies to invest in to take advantage of this.
• BuzzLogic releases their conversational ad service.
• The Inquisitr moves from AdSense to Technorati Media, indicating a potential shift at b5 Media.
• Lookery is providing demographic information that is relevant to social media providers and shaping ad presentation that way
• A completely off-the-radar person such as myself realizes that there is gold in what holds the attention, and that’s not always the latest and greatest

So what can be done? Jeff Jarvis points out that the problem lies with measurement. I agree, as there is only value in a system where all of the people involved agree on what the metric of record will be, and how it can be validly captured.

Currently CPM is the agreed upon metric. In a feed based online world, how does a CPM model work? And, most importantly, why would I continue to place your ads on my site if all your doing is advertising to people based on the words on the page, rather than who is looking at the page and how often that page is looked at.

In effect, advertisers should be the ones thrying to figure out how to get into the community, get into the conversation. As an advertiser, don’t you want to be where the action is? But how do you find an engaged audience in an online world that makes a sand castle on the beach in a hurricane look stable?

The challenge for advertisers is to be able to find the active communities and conversations effectively. The challenge for content creators and communities is to understand the value of their conversations, the interactions that people who visit the site have with the content.

In effect, a social media advertising model turns the current model on its head. Site owners and community creators gain the benefit of being attractive to advertisers because of the community, not because of the content. And site owners who understand who visits their site, what content most engages them, how they interact with the system will be able to reap the greatest rewards by selling their community as a marketable entity.

And Steven Hodson rounds out the week’s think on communities by throwing out the subversive idea that communities are not always free (as in ‘beer’, not as in ‘land of’). If a community has paid for the privilege of coming together to participate in communal events and discussions, then can’t that become an area for site owners to further control the cost of advertising on their site?

While the benefit of reduced or no marketing content is the benefit of many for-pay communities, this benefit can be used by site owners by saying that an advertiser can have access to the for-pay community at the cost of higher ad rates and smaller ads. The free community is a completely different set of rules, but there are also areas in the free community that are of higher value than others.

In summary, the current model is broken. But there is no way to measure the value of a Twitter stream, a FriendFeed conversation, a Disqus thread, or a Digg rampage. And until there is, we are stuck with an ad model that based on the words on the page, and not the community that created the words.

For FriendFeed has become my replacement for Google Reader, which I only visit occasionally now to see if there are blogs I need to add to my feed.

But, if you are going to replace a reader with FriendFeed, how do you manage the flow of content. While tools will likely improve over time, I have adopted a simple strategy.

1) Scan for items with obvious links

As I power through the front page of my feed, I look for items that are obviously links to longer articles. I can then decide if I want click through to that article. But rather than opening it in a new tab right in front of me, I use the wheel-click option in Firefox and open these articles in a background tab. This allows me to scan through the fees and read the articles when I want.

2) Read Twitter/indenti.ca/Jaiku/etc. last

Personal conversations come second for me. If there is a thread I am interested in, I will wheel click the Twitter page for the person and pick it up that way…or use Twitter Search. Being the kind of person who processes personal communications last makes this easier.

3) Use the FriendFeed interface as much as I can

If there was a way to open posts in a frame such as the way that video and images are embedded in FriendFeed, I would never go to anyone’s actual site. While that may be a feature of the future, the storage implementation for the FriendFeed team is potentially enormous – unless they choose to retrieve the content on the fly.

And finally…

4) Gripe about TinyURL, etc. links and how I don’t know where they lead

A great feature of the future for FriendFeed would be to translate obfuscated URLs to their base URLs in a rollover

And there you have it. Not the world’s most intense primer on using FriendFeed, but it works for me!

Lately, there have been outages for two large sites: Amazon and Facebook. Working for a company that monitors such things made me able to confirm the nature of the outages.  But how I became aware of them has had me thinking in new ways for the last few weeks.

I became aware of both of these outages through a combination of FriendFeed and Twitter within minutes of them starting. This information spread quickly. And, due to the nature of these new technologies, people were able to comment on the outages, and theorize about the cause of the problems these large online firms faced.

The question you are likely asking is “So what?”. Well, as anyone who has been paying attention for the last four years should know, while you cannot completely control the conversation, you can participate in it and help prevent the spread of negative or incorrect theories about what is happening on your site.

The technologies that people who come to your site use to comment when something goes wrong can be used to interact with the customers. The classic example of this is Zappos. If you look on Twitter, you will find a number of members of that organization who are using the service to interact with customers on a human level. And if you have a problem or question, you stand an excellent chance of getting a response from the CEO if you ask a question.

So, if your site experiences an issue or problem, how do you interact with customers? Or do you just hope they don’t notice?