Technology360

Better Than Free + Free! Why $0.00 Is the Future of Business

Maybe some regular reader can set me straight, but I swear that recently I linked to Kevin Kelly's terrific piece with this in his blog, The Technium (Kelly was one of the founders of Wired)  However, can't find it, so I either dreamed it or accidentally deleted it.  Seriously, it is the best thing I've read this year as part of this blogging effort and was a core part of a brief presentation that I made to last month's Public Media 2008 conference in L.A.  Now comes Chris Anderson with a lengthy article in Wired that's previewing a new book, FREE, that will be out next year.

Kelly begins by noting:

The internet is a copy machine. At its most foundational level, it copies every action, every character, every thought we make while we ride upon it. In order to send a message from one corner of the internet to another, the protocols of communication demand that the whole message be copied along the way several times. IT companies make a lot of money selling equipment that facilitates this ceaseless copying. Every bit of data ever produced on any computer is copied somewhere. The digital economy is thus run on a river of copies. Unlike the mass-produced reproductions of the machine age, these copies are not just cheap, they are free. ...

He goes on:

... From my study of the network economy I see roughly eight categories of intangible value that we buy when we pay for something that could be free. ...

These eight "generatives," as he calls them ("A generative value is a quality or attribute that must be generated, grown, cultivated, nurtured. A generative thing can not be copied, cloned, faked, replicated, counterfeited, or reproduced.") are as follows:

• Immediacy
• Personalization
• Interpretation
• Authenticity
• Accessibility
• Embodiment
• Patronage
• Findability

Link:  The Technium.

Anderson looks at "free" a different way (though if you think advertising, for example, is truly free, think about how much of the cost of the products you buy goes into making you aware of and desire them).  Here's his taxonomy:

• "Freemium" (basic version free, premium version costs you)
• Advertising
• Cross-subsidies (free product entices you to buy something else)
• Zero marginal cost (e.g., online music)
• Gift economy (e.g., open source software)

Link:  Wired.

We can learn from both these guys, but for those of us making the transition from legacy media to emerging forms, I think Kelly's offers especially valuable insights.  --Dennis

Goldmine of media econometric charts

Someone whose flickr handle is "have_a_cigar" (Adam Thierer?) has posted a goldmine of media econometric charts.  Here are the titles of some of the charts and direct links.

• Google Valuation vs. Newspaper Industry
• Changing Fortunes? Market Cap, Enterprise Value, & Revenues for Media Operators
• Google Valuation vs. Radio Industry (wow, is this one telling!)
• Internet Advertising Revenue 1997-2007
• Projected U.S. Social Networking Advertising Spending 2006-2011
• U.S. Online & Total Media Advertising 2006-2011
• Average Prices for Selected Technologies 2003-2008
• Household Penetration Rates for Various Technologies 1970-2008
• Number of Years It Took for Major Technologies to Reach 50% of Homes (the longest? telephones @ 71 years; 2nd longest? electricity @ 52 years)
• Year-to-Year Advertising Growth by Sector
• Percentage of Ad Dollars by Media 1980-2007
• The Media Environment Circa 1970
• The Media Environment Circa 2007
• Video Choices Exploding, But Vertical Integration Plummeting
• Cable & Satellite Channel Growth Exploding

Updated 2 February 2008:
Actually, I'm thinking this must be from Adam Thierer because he uses all these charts in four five posts worth reading titled:

• Media Metrics #1: Introduction & Analytical Framework
• Media Metrics #2: Household Access to Media Services & Technologies
• Media Metrics #3: Ad Wars
• Media Metrics #4: Changing Fortunes
• Media Metrics #5: The Competition for Our Ears

All from The Progress & Freedom Foundation blog.  --Dennis

Open is King - The Future of Meida Beyond Control

... is the title of a lecture that Gerd Leonhard gave at the European Centre for the Experience Economy in Amsterdam earlier this month.  Lots of good stuff here.  Link:  Media Futurist [PDF].  --Dennis

Media economic woes

Diane Mermigas continues to write sobering posts about the media economy:

In Economic Woes Mean TV Ad Pullback, Media Shift, she writes:

The economic woes driving the stock market to new lows will impede spending by advertisers that are ambivalent about waning consumers and a transforming media market. The big unknown is TV ad dollars–how much will be held back and shifted to alternative media.  ¶  The answer will become evident in the coming months as formidable exceptional factors, from less original network programming and the continuing digital revolution to the paralyzing debt and credit crunch, play themselves out.  ¶  The four-month writers’ strike will wreak more havoc with broadcast television revenues in the first half of 2008 than it appears to have done in the fourth quarter.  Advertisers have been less likely to shift away from the broadcast networks or take a hard line on makegoods when the networks were running off their original series episodes last fall. ...

Link: MediaPost.

Also see Nowhere To Run: Trickle-Down Theory Impacts Advertising:

Amid the chaos and panic created by Wall Street and the Federal Reserve, ad-dependent companies are scrambling to determine just how impaired their financial lifeline will be in a troubled economy. Three words: trickle-down effect.  ¶  The broad-scale tumult is filtering down into the crevices of all media and advertising companies. They are making adjustments in spending as their costs, revenues and credit tighten. They are watching their stocks get hammered, and their ability to leverage assets or do deals is drying up–for now. ...

Link: MediaPost.

And, Strike, Recession: 2009 Media Outlook Is Grim:

Media, tech and Internet companies, and the Wall Street analysts who cover them, are looking beyond the current tumult to the rest of this year and into 2009. Unfortunately, many don’t like what they see.

Link: MediaPost.

Finally (for this post), Bottom-Line: Media Cos. Must Restructure Or Face Consequences:

Media companies are in a valuation nightmare. Their problem: being valued almost exclusively on old models and metrics, while not yet reaping the balance-sheet benefits of an unfolding digital nirvana. Their challenge: to accurately assess their stagnating traditional businesses and rising revenue streams while shaping growth prospects.  ¶  This inevitable valuation quandary is underscored by a spate of grim earnings forecasts for media and entertainment companies from Wall Street analysts, who are also wrestling with the complex assessment challenge. It is an issue for investors and deal-makers trying to project beyond the single-digit, even negative growth expected for more traditional TV, film and print. It is also an issue for labor and management, which are struggling to construct plans for future income.  ¶  Over the past four years, that digital interactivity has exploded on the scene, and the S&P Media Index has underperformed the broader S&P 500 by more than 40% due to continuing structural concerns about future growth, according to Bernstein analyst Michael Nathanson. These include the adverse impact of technology (DVRs, time-shifting devices), the shift of ad dollars to the Web, and the pressing need to completely reinvent traditional media models. The negative impact of slower economic growth on advertising and discretionary media spending is becoming more assured. This lethal combination has pushed earnings multiples for media stocks to historic lows. ...

Link: MediaPost.

But wait, there's more!  This chart from Joe Mandese, Optimism Declines Among Ad Execs, All Media Impacted, Even Online.  Click for larger image.  Link:  MediaPost.  Thanks to Terry Heaton for the tip on this one.    --Dennis

 

Key To Recession Survival: Master Consumer Media Habits

Diane Mermigas writes:

... According to the North American Technologies [Technographics®] Benchmark Survey published by Forrester Research, all adult consumers still devote more than twice as many hours in a typical week watching television as using the Internet.  Gen Yers 18-27 are moving toward parody [parity] in spending as many hours online as watching TV.  But they also spend nearly as much time watching DVDs–a hybrid activity on TVs, PCs and video-game consoles.  It suggests what other surveys also reflect: Young consumers move fluidly from one media-related activity to another (whether interactive or passive) because a screen is a screen is a screen.  ¶  However, as interactivity becomes more pervasive and all of television goes digital in a year, more Boomer consumers will follow suit.  So the increasing interactive attention and spending of consumers ages 42 to 62 is key.  These 78 million Boomers (the single largest demographic segment) already make a healthy showing in an array of interactive activities–from managing and printing personal photos to conducting finance and security checks.  The focus should be on how to increase maturing consumers’ routine use of interactive devises for potentially profitable social networking–e-commerce, entertainment and communications –not a comparison to younger early adopter habits. ...

Link:  MediaPost.  Link and corrections added.  --Dennis

Read All About It

Departing Wall Street Journal editor Paul E. Steiger tells it like it is for newspapers these days in a major front page article for this weekend's edition of that paper.  The article is a history of the past 40 years or so of print journalism, but is particularly valuable for its analysis of the decade or so since the Internet started eating print's lunch.  Unfortunately, while public television gets a mention, broadcast journalism's main U.S. practitioner, National Public Radio, doesn't.  Read All About It: How Newspapers Got Into a Fix, and Where they Go From Here.  Link:  Wall Street Journal.  Steiger is leaving to become president and editor-in-chief of ProPublica.  Thanks to NPR Foundation chairman and fellow NPR board of directors member Antoine van Agtmael for the reminder to read my paper.  --Dennis

Nokia: 25% of Entertainment by 2012 Will be Created and Consumed Within Peer Communities

From a Nokia release:

... Up to a quarter of the entertainment consumed by people in five years time will have been created, edited and shared within their peer circle rather than coming out of traditional media groups. This phenomenon, dubbed 'Circular Entertainment', has been identified by Nokia as a result of a global study into the future of entertainment.  ¶  The study, entitled 'A Glimpse of the Next Episode', carried out by The Future Laboratory, interviewed trend-setting consumers from 17 countries about their digital behaviors and lifestyles signposting emerging entertainment trends. Combining views from industry leading figures with Nokia's own research from its 900 million consumers around the world, Nokia has constructed a global picture of what it believes entertainment will look like over the next five years. ...

... Of the 9,000 consumers we surveyed:

    - 23% buy movies in digital format
    - 35% buy music on MP3 files
    - 25% buy music on mobile devices
    - 39% watch TV on the internet
    - 23% watch TV on mobile devices
    - 46% regularly use IM, 37% on a mobile device
    - 29% regularly blog
    - 28% regularly access social networking sites
    - 22% connect using technologies such as Skype
    - 17% take part in Multiplayer Online Role Playing Games
    - 17% upload to the internet from a mobile device

Link: PR Newswire via CNN Money.

Thanks for the tip to Terry Heaton who analyzes this in a post called Tracking the Rise of Personal Media.  Link:  Terry Heaton's PoMo Blog.  --Dennis

TV's Revenue Woes Reach Tipping Point

Diane Mermigas writes:

... Until now, flat-to-rising household TV usage was no real threat to earnings. “However, recent data points on TV viewing and HUT are more disturbing,” [Bear Stearns analyst Spencer] Wang said. In calendar 2007, HUT is down 1.2% from 2006 for the first time–without a change in the Nielsen measurement sample. TV’s core selling demographic (adults ages 18 to 49) has seen HUTs drop 2.5% from a year ago, even when adjusting for the new live, same-day and DVR ratings, that collectively underestimate the erosion. “We find it more than coincidental that declining TV usage is occurring in tandem with broadband Internet penetration reaching mass market levels” of more than half of U.S. homes, he said. ...

Link:  MediaPost.  --Dennis

Implications of the Writers' strike

Diane Mermigas has written three recent columns for MediaPost that are must-read analyses of the impact of the Writers' strike on television's economy:

TV Nets Stuck: Strike Ends With New Metrics, 12 December 2007

Strike Will Transfer Ad Power To Web, TV To Revamp, 18 December 2007

For TV, Crisis Is Catalyst For Change, 21 December 2007

Umair Haque looks at it in terms of how this relates to emerging business models for content:

... While writers and networks have been crippling each other with a simplistic - and totally obsolete - game of mutually assured destruction, Google is slowly but surely reinventing a better way for content to create value: one which doesn't need exactly the rigid contractual lockstep writers and networks are squabbling over.  ¶  See the point? Google is solving exactly the problem that core-focused players are paralyzed by; that's suddenly brought the existing value chain to a crashing, creaking halt. ...

Link:  Bubblegeneration.

Finally, read Paul Bond's article, [Bear Sterns] Report weighs ripple effect of writers strike on Street.  Link:  Hollywood Reporter.  --Dennis

The end of advertising as we know it

The IBM Institute for Business Value is out with a study with this title authored by Saul Berman, Bill Battino, Louisa Shipnuck and Andreas Neus.  The intro says:

Imagine an advertising world where… spending on interactive, one-to-one advertising formats surpasses traditional, one-to-many advertising vehicles, and a significant share of ad space is sold through auctions and exchanges. Advertisers know who viewed and acted on an ad, and pay based on real impact rather than estimated “impressions.” Consumers self-select which ads they watch and share preferred ads with peers. User-generated advertising is as prevalent (and appealing) as agency-created spots.  ¶  Based on IBM global surveys of more than 2,400 consumers and 80 advertising experts, we see four change drivers shifting control within the industry. ...

Link:  IBM (full report, executive summary PDFs).

In Digital Future: Ideas Wanted, Diane Mermigas provides a detailed analysis of the report.  Link:  MediaPost.  --Dennis

Internet Expands Reach, But Narrows Vision

Diane Mermigas writes:

All this talk about hyper-targeting, super search and selective networking could be a sign of trouble.  ¶  The Internet, a big black hole of infinite content and information, is being segmented by users into relevant byte-sized chunks. Some of the time spent sifting through tagged, blogged and bookmarked content was once used to make more spontaneous discoveries in newspapers, magazines and online. Our need to more efficiently manage digital’s cornucopia invariably reduces our time for random search and enlightenment. Plus, it’s possible that too little serendipity in cyberspace could produce a narcissistic populace well-versed in their own interests, but ignorant about the world at large.  ¶ Certainly the Internet allows users to delve deeper into their interest areas more frequently and effectively than any other platform in history. Instant interactivity promises us more time for other things. But as our online management tools become more pre-set and precise, we become less intent on random search and discovery. It’s a tradeoff that comes at a subtle but significant price. ...

Link:  MediaPost. 

Update 26 November 2007:
Be sure to also read John Proffitt's thoughtful comment to this post below, with which I agree.  --Dennis

Internet May Revitalize Net Ads, Content

Diane Mermigas writes:

... Although new and traditional media are slugging it out over tighter ad spend, the continued shift of dollars from television and print to the Internet is helping to maintain new media momentum. “Internet ad spending could still increase at a healthy rate of 11%, even in the face of an overall ad downturn. That’s due to the powerful effect of the adoption curve of advertisers switching their budgets online,” according to Bernstein Research analyst Jeffrey Lindsay. Even as the advertising sector overall grows at only 5% (or collapses to a flat line in the case of a severe economic downturn), online advertising can continue to grow at rates better than 25%. ...

Link:  MediaPost.  --Dennis

The Incomparable Umair Haque

Terry Heaton has a tribute to the very perceptive emerging media economist, Umair Haque, to whom you've been exposed if you're a regular reader of my blog or Terry's.  He includes a bunch of not-to-miss quotes, including:

So if you wanna think radically - here’s a (really) easy way. Take the dominant business model/strategy in your market space, and use a market, network, or community to invert it…like Wikipedia, Google, Myspace, Facebook, etc.
This doesn’t mean do something superficial, like a social net for hairdryers. Rather, it means using markets, networks, and communities to shift resources and capabilities from core to edge.

Link:  The PoMo Blog. 

But he didn't include Umair's Making Publishing Plastic, from which comes:

Plasticity is something I talk about a lot. It means the ability to remix stuff - to let it be unbundled and rebundled.  ¶  Plasticity is important because it's a new source of value creation in a world where older ones are decaying - it can lead players out of value plateaus, and to explosive productivity gains. ...

Link:  Bubblegeneration Strategy Lab.  It's very important to electronic media also.  --Dennis

Mechanism design theory and media's future

Diane Mermigas writes:

... At its core, mechanism design theory encourages systematic thinking about how a new playing field and new rules of play can be modified to improve outcomes. In the nearly 50 years since it was developed, the theory has been broadly applied to business matters as far-ranging as valuing software patents, matching donated kidneys to recipients, calculating taxes, and setting up complex auctions. Application of the theory to the Federal Communications Commission’s sale of radio spectrum assured the government the funds it sought, while assuring public and small business access. It has also been applied to the regulation of subscription television and the bundling and pricing of channels.  ¶  The initial objectives, per the economists, included the ability “to easily compare different models for selling goods” and provide enough economic incentives to ensure a win-win for all. Much of what the economists devised is relevant to media conundrums. Those include the redefining and re-pricing of advertising; content and services from static to interactive digital platforms; and recalculating the value of advertiser connections from mass eyeballs to individually targeted consumers with whom they can transact online. The social networking, blogging and instant messaging are a means to a commercial end for those hoping to profit from the Internet. ...

Link:  MediaPost. 

Also see this article on mechanism design in Wikipedia.  --Dennis

Diane Mermigas now at MediaPost

One of the most astute observers of today's electronic media is Diane Mermigas, the former columnist at The Hollywood Reporter.  However, I lost track of her when she left there, so thanks to Terry Heaton (himself also an astute observer) who noted in his blog that she's writing now for MediaPost.  Her column also has an RSS feed.  --Dennis

Radiohead and why P2P can be a hard habit to break

"Free as in free beer" is such a powerful impulse among us that even when something is offered free for voluntary payment, most people opt for not paying.  Gee, where have I learned that in my public broadcasting career?  The band, Radiohead, is the latest business to discover this as Nate Anderson writes:

Radiohead's innovative digital distribution arrangement for their new album, In Rainbows, lets people pay whatever they want for the music, including nothing at all. Despite that, BitTorrent swapping of the album has been on the level of other major releases. Are people really so cheap that they won't even register with the band in order to snag a free download? The answer appears to be yes. ...

... Once the album became available for download, though, it spilled immediately onto P2P networks, primarily BitTorrent. ...

Link:  Ars Technica. 

Of course, as Radiohead is discovering, that's not to say that the collective economic impact of those who choose to pay isn't a sufficiently compelling business model.  Umair Haque calls this open pricing and points to this post in Valleywag (Radiohead estimates doom record labels):

... What nobody knew was whether fans would pay for a Radiohead album if they didn't have to. Certainly, the record labels had to be hoping they wouldn't. Too bad for the fat cats, because reports are that the average price paid for "In Rainbows" fell between $5 and $8. A low estimate of Radiohead's take in two days is $6 million. Sounds like bands with a following now have permission to skip labels.

Read Haque's analysis in Bubblegeneration, Research Note: Open Pricing and Revolutionizing Value Creation:

... open pricing is the most revolutionary innovation to hit the economy for a long time; how it will absolutely eviscerate massconomy business models; etc.

Also see his Research Note: Death of an Industry and Research Note: Why Radiohead Will Revolutionize Music, also in Bubblegeneration.

  --Dennis (the Dennis who frequently fast-forwards his DVR through commercials to avoid "paying" for what he's watching, but who does contribute to public broadcasting).

Media Conversations

Doug Kaye has started a new "channel" on The Conversations Network, a non-profit distributor of worthy audio and video programming.  The new channel is called Media Conversations and starts with three interviews by Ralph Simon with Glen Hiemstra and Gerd Leonhard (separately and together) on the future of media.  I'm a big fan of Leonhard's work in the audio space, but am less familiar with Hiemstra.  In any case, these interviews are well worth your time.  Link:  Media Conversations channel.  --Dennis

Accenture: ... How New Content and Technology are Redefining the Future of Media

Accenture has published a new paper by Jamyn Edis and Alexis Rose that's worth reading.  The executive summary:

Accenture’s Global Content Study 2007 surveyed more than 100 leaders and decision-makers in the media and entertainment sectors, including television, film, music, radio, video games, publishing,
interactive entertainment and advertising. The study solicited opinions from executives around the globe — across North America, Europe and Asia-Pacific — to gauge their views of where the greatest opportunities and challenges will come over the next five years. Key findings include:

• 62% of executives look to “new platforms” as being the most important key to growth, followed by 31% “new content” and 7% “geographic expansion” as the key growth lever.
• Of these new platforms, online and mobile dominated; a combined 43% viewed online as most important (of which 17% represented a distribution of content through online portals or entertainment/information sites, and a further 13% through social networking sites and 13% through eCommerce sites), while mobile drew 17% of responses.
• 53% of executives surveyed indicated that “short form content” offered the largest opportunity for “new content,” with “long form” or “full length” video content (greater than 60 minutes) garnering 11% of responses. In addition, “video gaming” was viewed as a key growth area, according to 13% of executives.
• Asked what they believed was a top threat to the business, over half of the executives (57%) identified “consumer-based competition” or “user-generated” content; 46% of respondents viewed “piracy or IP theft” as a top three issue.
• However, despite the perceived threat, 68% of respondents believe that they will be able to harness user-generated content to create revenue within one to three years.
• Nearly 80% of those surveyed believed that there was no bubble in the Web 2.0 space, with 70% of respondents also observing that social media was a natural, “evolutionary” progression for media (versus 25% calling social media “revolutionary” and 5% calling it “a fad”.) As a reflection of this upbeat perception, over 90% of the executives said that their companies would become involved in social media over the next 12 months.
• Half of executives indicated that advertising could grow to become the most prevalent business model in the industry within five years, with digital advertising driving growth.
• Content remains king (according to 37% of respondents), although the crown is under attack by technology companies (26%) and telecommunications players (9%).
• Critically important is the need for digital readiness and a future technology road map. Only by transforming their organization and capabilities can media and entertainment expect to maximize the opportunity that digital offers. This includes increasing reach (through multi-platform distribution), engagement (through social media and interactivity) and monetization (through digital advertising). ...

Link:  Accenture [PDF].

Thanks for the tip to Terry Heaton.  His comments on the report are at Accenture: Biggest Media Threat Is Consumer-Generated.  Link:  Terry Heaton's PoMo Blog.

Accenture's Gavin Mann has an overview of the report here.  --Dennis

Online radio from newspapers

Mark Ramsey has an interview with Ron James and Marc Balanky of the San Diego Union-Tribune, a newspaper which is building an online radio presence.  Link:  hear 2.0.

Reports of TV's Death Greatly Exaggerated ...

... says emerging media professional Jeremy Lockhorn.  In part 1, he says to go interactive:

... If you're a digital agency or a marketer who's significantly investing in online media, you're already aware of this. It's like expanding banner ads, but on TV. Simply by empowering consumers to interact with your ad, you increase the likelihood they'll remember what you're trying to tell them or take action. We've proven this with ads like the one we built for the launch of Levi's Redwire jeans. ...

Link:  ClickZ.

And, in part 2, he talks about targeting:

... We've used advanced targeting techniques on the Web for years, and many advertisers have benefited from innovations in contextual and behavioral targeting. One of the more powerful targeting strategies is leveraging Atlas targeting capabilities to serve an extremely relevant ad based on what we know about an individual's relationship with the client. We might serve one ad to someone who's never been to a retail site, for example, and a different ad to someone who made a purchase, and yet another ad to a user who made multiple purchases. The process gets really interesting when you start layering dynamically generated creative assets, which can pull in the latest prices, react to such things as current weather conditions, and more.  ¶  The result? Hyper-relevant creative and no need to produce a ton of creative assets. Many of our clients currently employ these approaches for online banner ads. But what if you could apply the same basic thinking to video? ...

Link:  ClickZ.  --Dennis

Are people who pay for content just chumps?

It's been said many times that content wants to be free.  Or perhaps it's really that we want content to be free. 

Parents who lecture their children on not downloading illegal content are themselves tapping the mute or TiVo fast-forward buttons during commercials, thereby robbing advertisers of some part of the audience they're buying.  That describes my house pretty well.  Voluntary payments don't work very well either.   We pubcasters say that some nine in ten listeners or viewers do not contribute in a given year -- but actually that over-estimates the contributing percentage because the denominator is taken from weekly cume, while annual cume is a much greater number.

We've seen anti-DRM sentiments become an ideology among an influential segment of Internet and DVR users.  Mainstream file-sharers and commercial-skippers all have some personal justification for what they do:  Like, commercials are annoying -- time is precious and skipping saves me 20 minutes an hour -- record companies rip off their artists anyway -- the RIAA and MPAA are bullies -- I've already paid for it here, but want to use it there and their stupid DRM won't let me do that.  Young people generally just hear "blah-blah-blah" when parents warn about downloading movies or music.  You might as well be speaking Latvian. 

Are people who pay for content just chumps?

If so, there  are a lot of content professionals who are depending on those chumps to make a living -- a very few make a very nice living.  Unlike Andrew Keen, I think it's wonderful that amateur content can now be distributed so easily and I'm doing whatever I can to encourage that.  But for those of us in the content business, a way of encouraging both wide distribution and discovery of amateur content and at the same time providing an economic base for excellent professional content is the central problem of our industry today.

The best thing I've read in a long time from a content creator's point of view comes from singer-songwriter Jill Sobule -- though, frankly, I'd not heard of her before this.  She's a professional, but like all professionals, her work needs discovery also.  In an essay titled, Calling All Recording Gurus: I've Got Nothing to Prove, but I Still Need Your Help (See My Video!), she writes of the dilemma for artists like her:

... None of my musician friends are mourning the demise of the record industry. Most of us got crummy deals anyway and never saw a penny of royalties. My nephews expect really expensive birthday gifts from me, as they think that I must be rolling in dough, having been on MTV a few times. I always acquiesce, not wanting to tell them the truth.  ¶  For us, in this YouTube, long-tail, Kara-and-Walt world, it’s an exciting time. But it’s also confusing. How do I release my next recordings? Do I still put out a CD in the traditional way, or just go digital? Do I send demos one last time to the remaining majors or go indie (this time with a company that lasts longer than a year) and get a, say, 50/50 deal? Do I just finance the whole thing myself–musicians, studio, marketing, publicist, radio, promo, video, etc.? And where do I get the money? How do I pay the rent? How do I support my gambling and morphine habits? ...

Link:  All Things Digital.  Yes, watch her video there and go to her web site and download the (legitimately) free 90-minute live performance.  It's terrific!  --Dennis

Interview with Ashley Highfield, Director, BBC Future Media & Technology

Robert Andrews has a very interesting interview with Ashley Highfield covering such subjects as the (excessive) time it takes to greenlight emerging media projects, the iPlayer and the various complaints it's attracted, and online advertising.  There's a summary at this link (paidContent.org), at the bottom of which are links to the complete transcript and an audio version.  --Dennis

Online advertising vs. radio advertising

Fred and Paul Jacobs look back at two eye-opening presentations from Gordon Borrell and Jason Calcanis at last year's Jacobs Media Summit 11.  They're linked here and highly recommended regardless of whether you're in commercial or public broadcasting:

Gordon Borrell shared the raw correlation between the size of dedicated digital sales staffs and revenue generation (watch his presentation here).  And unfortunately, radio lags behind other media (especially newspaper) in both metrics.  Maybe this new report will spur our industry to begin investing in dedicated digital sales people.

At that same Summit, Jason Calacanis simply told radio people, "Surrender!" - and develop an entirely new model based on the inherent strengths of the medium.  While his comments made some uncomfortable, they were painfully true (watch his presentation here). His message was that radio needs to accept the reality that it is being overtaken by digital media.  But at the same time, he saw radio as perfectly positioned to profitably participate in the digital space for three simple reasons:

1. We know how to create outstanding audio content (compared to the weakly produced podcasts that proliferate today),
2. We know how to sell it,
3. We have the raw cume to drive consumers to our content

Link:  JacoBLOG.  --Dennis

TV explodes: The chain reaction hits critical mass

Jeff Jarvis writes:

Internet usage is now approaching TV usage — in the US, the UK, Australia, Germany, and Japan — according to an IBM study to which Om Malik points us. Note also that TV networks’ share of online TV viewing is only about 33 percent, below YouTube and barely ahead of Google and social networks in the U.S. — and the alternatives are only beginning (in the life of internet video, it’s only 1954). ...

Link:  Buzz Machine.  Be sure to read Malik's comments in addition to Jarvis'.  --Dennis

A Longer Look at the Long Tail

In June, Bear Stearns issued a very useful report with this title authored by research analysts Spencer Wang, Shub Mukherjee and Stefan Anninger.  It displays lots of good data and, though it focuses on video content, it has a great deal of validity for audio content as well.  The authors write:

... Value Will Reside in the Middle of the Supply Chain.  If our thesis is correct, one major problem with infiinite choice is the potential for overwhelming confusion.  Said another way, how do consumers navigate a world of unlimited choice and find what they are looking for?  ¶  We think this conundrum (the "Paradox of Choice") will increase the value of "middlemen," or packagers of content that can appropriately filter out the noise and connect users with the content that appeals to their interests.  This can be done through strong brands, editorial discretion, technology, and harnessing user recommendations. ...

Link:  Bear Stearns.  Recommended, along with a complementary one from IBM to which I linked a week ago.  --Dennis

Goodbye to Newspapers?

One of my longest-running subscriptions, 35+ years, is to the New York Review of Books.  In the August 16th issue is an essay by long-time New York Times columnist Russell Baker with this title on the fate of newspapers in the wake of emerging media platforms and ownership influences by the likes of Rupert Murdoch.  Baker writes:

... Journalism was being whittled away by a Wall Street theory that profits can be maximized by minimizing the product. Papers everywhere felt relentless demands for improved stock performance. The resulting policy of slash-and-burn cost-cutting has left the landscape littered with frail, failing, or gravely wounded newspapers which are increasingly useless to any reader who cares about what is happening in the world, the country, and the local community. Cost-cutting has reduced the number of correspondents stationed abroad, shriveled or closed news bureaus in Washington, and crippled local reporting staffs which once kept an eye on governors, mayors, state legislatures, small-town rascals, crooks, and jury suborners. It has also shrunk the size of the typical newspaper page, cutting the cost of newsprint by cutting news content. ...

And on blogging:

... Blogging is a more interesting development, perhaps because bloggers are so passionate about it. It is a valuable restraint on careless and sloppy journalism, for the vigilance of the bloggers misses not the slightest error or the least omission, and the fury of their rage is terrible to bear. Committed bloggers insist that they are practicing journalism just as surely as a correspondent like John Burns is practicing journalism when reporting on the Iraq war from Baghdad for The New York Times. Anyone wishing to debate the point must be ready to argue all night and well into next week. What is indisputable is that practically every blogger can now be a columnist. With vast armies of columnists blogging away, it seems inevitable that a few may eventually produce something original, arresting, and refreshing and so breathe new life into this worn-out journalistic form. ...

I think that the NYRB eventually put s articles behind DRM, but this one is currently up and readable for free.  Link:  New York Review of Books.

I was reminded to post this to this blog by a commentary on Baker's essay by Peter Osnos of The Century Foundation (The Platform: "Goodbye to Newspapers?).  He writes:

... Of course, news delivered on paper is in trouble. The declines in advertising and circulation revenues are serious. The sale of Dow Jones to Rupert Murdoch has symbolic and business consequences and the loss of 1½ inches from the New York Times to save money on newsprint diminishes the size if not the stature of this pillar of journalism. All these are reflections of profound changes under way and not, it is widely assumed, for the better when it comes to the way we get news. The dismal statistics are combined with news peoples’ natural tendency—an essential component in the business—to favor bad news over good and to be skeptical of anyone at the helm. Nearly everyone in journalism reads Romenesko, the daily billboard of news about the news and in its comprehensive account of cuts and losses; the impression is unavoidable of inexorable decline.  ¶ But that story line, I believe, is only part of the story. Everything you’ve read about the travails of the newspaper business is true. Yet as we head towards Labor Day, a traditional time of renewal in news and business cycles, it is worth noting what else is happening to the art and science of gathering and delivering news that represents a future that is probably unavoidable and not necessarily bad. The fundamental reality is that newsprint is being supplanted and supplemented by digital technologies. ...

Link:  The Century Foundation.  Thanks to Antoine van Agtmael for the link to the Osnos commentary.  Antoine is chairman of Emerging Markets Management LLC and author of The Emerging Markets Century: How a New Breed of World-Class Companies Is Overtaking the World.  --Dennis

Navigating the Media Divide: Innovating and Enabling New Business Models - IBM report

The best "freebie" white paper I found last year relating to my electronic media responsibilities was IBM's The end of TV as we know it: A future industry perspective, to which I linked in January 2006.  It holds up well today.  So when David Leroy (thanks) pointed me at a pair of related new ones from the IBM Institute for Business Value and with two of t he same authors, I was hopeful.

The authors (Saul J. Berman, Steven Abraham, Bill Battino, Louisa Shipnuck and Andreas Neus -- Berman and Shipnuck being two of the authors on The end of TV...) didn't disappoint.  Navigating the Media Divide: Innovating and Enabling New Business Models and The fight ahead on media's main streets are, as the titles imply, about more than television -- but then last year's report was relevant beyond television also.

The papers explore issues around the familiar scenario framework that creates four quadrants with the X-axis being "Distribution and device platforms" ranging from "proprietary" to "open" and the Y-axis being "Content blend" ranging from "Produced by professionals" to "User/community contribution."  They view the upper and rightmost dimensions as being particularly disruptive amd posit that these four quadrants will be the four business models in use over the next 3-4 years.  The figure here (click for larger image) depicts these business models.

The authors provide ten specific recommendations for media companies some of which seem pretty obvious (e.g., "Put consumers at the center of your business and boardroom"), while others more insightful (e.g., "Give control to get share").

Link:  IBM: The fight ahead on media's mean streets.  IBM: Navigating the Media Divide: Innovating and Enabling New Business Models.

Also see Saul J. Berman, Adam R. Steinberg and Louisa A. Shipnuck, Beyond access: Raising the value of information in a cluttered environment.  Link:  IBM (pdf).

Interview with Rafat Ali

Terry Heaton has a very good interview with journalist Rafat Ali, founder of paidContent.org, mocoNews.net and a third news site dealing with digital content in India.  I've been reading paidContent and mocoNews since they began.  No one does a better job of following the money relating to mobile and digital content.  Link:  Terry Heaton's PoMo Blog.  --Dennis

The State of the Media Democracy - Deloitte & Touch report

Deloitte & Touche USA LLP has a report based on an online survey conducted by Harrison Group.  Here are survey highlights:

High Demand for User-Generated Content

• 40 percent of all survey respondents are making their own entertainment (editing movies, music and photos)
  • 25 percent of Matures
  • 56 percent of all Millennials; leading Millennials (18-24) participate more
• More than one in 10 Millennials are actively uploading their own videos on the Internet
• 51 percent of all survey respondents are watching/reading content created by others
• 71 percent of Millennials, 56 percent of Xers; Boomers/Mature participation is less, but noteworthy
• 53 percent of Millennials would download more videos if  connection speeds were faster
• One-third of online content viewing is done on user-generated sites
  • Almost ¼ for Matures, ½ for Millennials

Long Live Traditional Media!

• Favorite and promising new television shows beat the Web as the most frequent media conversation topics for all generations
  • Extensive amplification with the Millennials as they tell the most people about what they like
  • 52 percent of Xers are visiting television show Internet sites
• Printed magazines are an integral part of every generation’s life
  • 72 percent enjoy reading magazines over finding the same information online
  • 58 percent of Millennials agree magazines help them learn about what’s “in”
• Compared with online activities like surfing the Web and downloading music, all generations aspire to reading a book in the coming year

Advertising Insights

• 64 percent  tend to pay greater attention to print ads in magazines or newspapers than advertising on the Internet
• More than one-in-four would pay for online content vs. being exposed to ads
• Search engines and word of mouth are the most effective means for driving Web site traffic — 85 percent of Xers are influenced by someone’s recommendation
• 87 percent of respondents continually visit the same Web sites
• Generation Xers are a little more responsive to advertising

Future Products
Millennials are leading the way as far as embracing new technologies, games, entertainment platforms, user-generated content and communication tools:

• 64 percent want to easily connect their television to the Internet for viewing videos and downloading content to their television
• 60 percent want the ability to move their content to any device they own without any problems
• 57 percent want an entertainment and communication device that lets them do everything
• 49 percent want a computer or similar device that will be the center of their household media experience

You can download a PDF of select findings.   Link:  Deloitte.com.  --Dennis

People had 3 min./day more of a life in '06

The media investment company, Veronis Suhler Stevenson is out with a new report and forecast which, among other things says that the aggregate time people spend with media of all types dropped 0.5% in 2006 for the first time in a decade to an annual total of 3,530 hours (by comparison, the average person's work year is just over 2,000 hours).  From the press release:

... The drop in consumer media usage was driven by the continued migration of consumers to digital alternatives for news, information and entertainment, which require less time investment than their traditional media counterparts. For example, consumers typically watch broadcast or cable television at least 30 minutes per session while they spend as little as five to seven minutes viewing consumer-generated video clips online.  VSS expects consumer media usage to stabilize in 2007 and increase slightly through 2011, as out-of-home media and videogames will be the only major segments to achieve accelerating growth in the forecast period compared with the 2001-2006 timeframe. Overall consumer time spent with media will increase at a CAGR of 0.5% from 2006 to 2011, compared with 0.8% in the previous five-year period. ...

The forecast also notes:

... consumers are also migrating away from advertising-supported media, such as broadcast TV and newspapers, to consumer-supported platforms, such as cable TV and videogames. Time spent with consumer-supported media grew at a CAGR of 19.8 percent from 2001 to 2006, while time spent with ad-supported media declined 6.3 percent in the period. ...

And spending patterns are shifting dramatically:

... The alternative advertising and marketing segments produced the strongest gains in the 2001-2006 period, as intensified competition for consumers’ time and attention amid a dizzying array of media choices prompted major brands to ratchet up their use of alternative media strategies. Spending on alternative advertising – including Internet, mobile, videogames and digital out-of-home, among others – grew 36.6 percent to $26.53 billion in 2006 and posted a CAGR of 23.9 percent from 2001 to 2006. Traditional advertising spending, however, grew only 2.4 percent to $183.21 billion in 2006 while producing a CAGR of 2.8 percent in the five-year period, hindered by slow growth in print-based newspapers, yellow pages and consumer magazines. Meanwhile, spending on alternative marketing – including branded entertainment, interactive marketing and e-custom publishing – increased 17.3 percent to $61.67 billion in 2006, and experienced a CAGR of 15.3 percent from 2001 to 2006. In contrast, spending on traditional marketing, such as direct mail and promotions, grew only 5.0 percent to $192.34 billion in 2006 and climbed at a CAGR of 4.5 percent from 2001 to 2006, according to the VSS Forecast. ...

Link  Veronis Suhler Stevenson press release.

Seth Sutel has the story on this forecast for the Associated Press.  See Study: More Time Spent With Paid Media.  Link:  Washington Post. 

What did you do with your three minutes?  --Dennis

The importance of "local"

In a post titled Jarvis Is A Local Yokel, Stowe Boyd takes on the received wisdom about local media content.  He writes:

... I think one reason the local newspapers are falling by the wayside, in a time of increased mobility and generations of growing mobility behind us is that people have less connections to the specific turf that they sleep in or work in. The social capital in the neighborhood continues to dwindle.  ¶  In its place is -- for some -- an increased sense of involvement with those most local in our non-geographic social networks.  ¶  Locality is changing. It is coming to mean those that we are close to, no matter where they reside, no matter their mother tongue, no matter where they lay their heads. ...

Link:  /Message.  --Dennis

The Anywhere Consumer

The Yankee Group's Boyd Peterson has written an interesting report around a term they've trademarked called the "anywhere consumer," "...an individual unfettered by the shackles of time and place, who connects to content, social and commercial interactions at any time from anywhere."  Link:  Yankee Group  (pdf).  --Dennis

CBS research chief Poltrack on hits, DVRs, Internet

Claude Brodessesr-Akner has an interesting summary of remarks by CBS Chief Research Officer David Poltrack to the Television Critics Association this week.  In summary, monster hits matter, don't fear the web or TiVo, YouTube won't replace the boob tube, DVR users sometimes notice ads, and prime time just got longer.  Link:  Advertising Age.  --Dennis

Citizen Media: A Progress Report

Dan Gillmor gave this topic as a keynote at the Citizen Reporters' Forum in Seoul in June.  He's posted much of the talk, which begins:

... We’ve come a long way. There’s a growing recognition and appreciation of why citizen journalism matters. Investments, from media organizations and others, are fueling experiments of various kinds. Revenue models are taking early shape. And, most important, there’s a flood of great ideas.  ¶  But we have a long, long way to go. We need much more experimentation in journalism and community information projects. The business models are, at best, uncertain — and some notable failures are discouraging. Dealing with the issues of trust, credibility and ethics is essential; as are more tools and training, including a dramatically updated notion of media literacy. ...

Here are the headlines for what follows:

1. Recognition of Citizen Media
2. Traditional Media Get It Now
3. Backlash
4. Tools and Ideas
5. Business Issues
6. Experimentation Is Cheap
7. Some Experiments to Pursue
8. Ethics, Reliability, Civility
9. Assisting Trust
10. Media Literacy

Link:  Center for Citizen Media Blog.  Recommended reading.  --Dennis

The Future is Niche Media

I always look forward to Terry Heaton's wise essays in a series he entitles "TV News in a Postmodern World" (though I'll confess that I don't know what postmodern means in this context, and the points he makes are valid well beyond TV news).  His new one, with the title above, is well worth your time.  Link:  Terry Heaton's PoMo Blog.

WKRN's web woes

A lot of us have held up WKRN, Nashville's ABC affiliate, as an example of a station that really got it.  Former GM Mike Sechrist hired the best consultants -- Gordon Borrell, Terry Heaton and Michael Rosenblum -- and put together innovative local news and community-centric web entries.  However, Mike and some of the other architects of this exemplary effort are now out, casting a shadow over these innovations.  Michael Malone has the story.  Link:  Broadcasting & Cable.  --Dennis

Fading to Irrelevance - Joost and Microsoft

Umair Haque advises looking at the value cha