Monday, November 13, 2006

Jack Myers on Advertising, via NY:MIEG

I've been attending the networking sessions launched this year called the New York Media and Information Exchange Group. It's hosted by my friend Bill Sobel, who seems to know everyone worth knowing. The sessions are attended by a great group of folks with some terrific speakers.

The last session, on November 9, featured Jack Myers, the editor and publisher of the Myers Report. It was a very insightful talk, centered on the question: audiences are ad-oriented, but where's the revenue?

Jack started with CBS sales and marketing for their TV stations. At the time, Teletext and videotext were expected to be the big revenue streams of the future. Cable was expected to be a small business since the prevailing use of cable at the time was merely to improve reception. Jack, however, saw much greater potential in cable and its proliferation of content, especially having grown up in Utica which had only one station in 1962.

He tried to convince stations to ally themselves with cable for news production. He also worked with UTV, which tried to create interactivity with TV stations via telephone for games and shopping, before moving into consulting for advertisers.

He now feels that the nature of change is itself changing: everyone now expects change; they are not resisting as they had in the past. Furthermore, changes are happening at an exponential rate.

First there are the incipient signs of change coming, then it happens quickly, as with the fall of the Berlin Wall, which was the culmination of many years of decline in the Soviet Bloc. Advertising last year declined at the networks by 3% and at the stations by 5%. While some of the decline may be due to lack of elections and the Olympics, advertising is no longer growing in line with GDP. Even the growth in online ad spending is declining to only 20% next year.

Instead, advertising dollars are going to smaller, unique applications such as movies and Wal-Mart’s TV network, which are considered to provide better ROI and be closer to the point of purchase.

In addition, search advertising has peaked, especially since click fraud will be a problem for the foreseeable future. Online video does not have enough inventory, while traditional media is over-supplied. Magazines, however, seem to be making a comeback, with Proctor & Gamble announcing that it is going back to magazine advertising.

In general, the old patterns and cycles will not repeat, and instead new patterns are emerging. This is the most disruption in advertising that he has seen in 25 years.

Virtual worlds are the next wave, as described in the recent New York Times article about Second Life: The next generation will view the Virtual World as real, such that he suggests referring to the Physical World rather than the Real World, to distinguish it from the Virtual World.

The measurement of advertising will also change, in this case away from mass audiences. The quality of the eyeballs will be more important. Currently, commercial ratings do not measure quality or engagement.

Cable CPM has leveled off at 60% of broadcast CPMs. The Internet has allowed itself to become commoditized at a $2 CPM. Furthermore, auction models are developing via web to sell mass market ads, causing further commoditization.

Jack is focusing on Emotional Connection Research. Broadcast TV is better than ever, in terms of creativity, production and technology. Advertisers, however, are still moving away from TV in order to be more targeted. Marketers want media to encourage relationships with consumers and are moving away from the mass market, industrial method. In keeping with that development, ad agencies will move from the siloed model to an integrated approach. New entrepreneurial shops will emerge.

The strongest brands will be multi-platform, whereby the brands can carry their audiences across multiple media.

Advertising and marketing is moving into a Relationship Age and away from the Industrial Age. As a result, corporate schizophrenia is developing due to the need to operate in both the Physical and Virtual Worlds, similarly to amphibians that needed to live in the sea and the air. Yet the Physical World constitutes 90-95% of the environment, while marketers need to invest in the 5-10% that is made up of the Virtual World despite Industrial Age pressures created by Physical World structures and Wall St.

Q: TV viewing on new devices.

Home PC equipment is in its early stages in comparison to TV viewing, but the direction seems clear. At this point, 32% of NBC's programs are on the Internet. Advertising is moving to new formats, such as 5, 10 and 15 second ads.

In general, the broadcast networks are responding better than had originally been expected. Going forward, the DVD windows for TV programs will become shorter, and networks will post shows on the Web even before broadcast.

Small screens will suffice depending on the circumstances; mobile is just another video platform.

Q: Measurement across multiple platforms.

Sales are the best measure. Other techniques are in development: IAG Research is testing next day recall, and Jack has his Emotional Connections platform. The industry is probably 10 years away from good answers to these questions.

Q: Who has done well in the Relationship World?

L’Oreal is probably the most effective at integrating marketing across platforms. Within NeoPets, McDonald’s has successfully introduced French fries as the pets’ favorite foods. Pharmaceutical companies are been using iVillage effectively but have not extended their efforts beyond that. Media agencies are behind the curve – they are trying but they are not being compensated by their clients for developing new platforms.

Q: Valuations of new platforms.

Jack estimated a $1 billion price tag for Second Life. Venture capitalists are making mistakes, however. They are looking for technology in an environment where there is no protection for technology and investing in some companies who happened to get lucky. Similar to a vein of gold, the viral strains are subject to too much competition and will tap out. Venture capitalists are not investing in experience, content, consumers or an understanding of market dynamics. They are also not lining up with management due to their desire to maintain control. Jack feels that we are in a bubble in that venture capitalists are in the “hits” business rather than that of building infrastructure for the long term.

Q: How to help marketers find their audiences.

It’s best to build an audience and then take that audience to the appropriate marketers, as Daily Candy has done. Marketers are not interested in investing to build audiences.

Q: Impact of technology on advertising.

The old assembly-line model made it easy to buy mass audiences, and some of the new technology-based techniques, such as Ad Sense and Spot Runner, are further commoditizing ad buys. Google is actually becoming the largest traditional media company. Ad growth is flat, projected to be 6-7% this year and 4% next year. In general, it will grow with GDP.

Jack lamented the absence of today’s Ted Turner, Bill Paley and David Sarnoff – people who develop completely new concepts for marketers.

Thursday, August 31, 2006

Playtime is Over, Get Back to Work!

I had a momentary bit of peace, quiet and tranquility this morning - my children are back to school. Now I can make phone calls without being asked, "Who are you talking to?" "What are you talking about?" "Why?"

With great power, however, comes great responsibility - as Spider-man was told. Now that I have the potential for productivity, it's time to get serious about work.

By the same token, now that we're all enjoying ourselves watching wacky videos on the web - Mentos and Diet Coke, George Allen putting his foot in his mouth, an amorous couple trying to have sex on a (literally) hot stove - the web needs to get serious also. In this case, how to make money. Between now and the Christmas (excuse me, Holiday) season, video on the web will continue to grow exponentially and viable business models will begin to emerge. Partly, this will occur because those without business models will disappear.

Next week, the true fun begins!

Tuesday, August 01, 2006

How Many Idols Can We Have, Anyway?

I'm not a religious guy, but I seem to vaguely remember a Commandment about false idols (ok, so I googled "Ten Commandments"). But what about real idols? Let's see, we have American Idol, RockStar: SuperNova, So You Think You Can Dance, America's Got Talent (or not), and a couple of shows that ABC already cancelled. I thought American Idol was painful to watch; the others are worse, with their manufactured anguish and tension.

Some wit said that in the future, we will all have our 15 megabytes of fame. That's at least 14 megabytes too many.

Someone else had worried that our economy would devolve into us flipping burgers for each other. That will also not happen - instead, we will each be starring on a reality "talent" show while watching everyone else on other talent shows.

I love televison; I just can't stand what's on it.

Saturday, June 03, 2006

The Latest Media Device for Workaholics

I tend to be a multi-tasker on my PC and usually have at least six functions open simultaneously - Palm OS, Internet Explorer, Excel, Word, Adobe Acrobat and Visio - with multiple files open for each of those. Therefore, I spend a lot of time clicking back and forth between applications and files. Sometimes I am working on two or more screens simultaneously and have to constantly switch back and forth - cutting and pasting, referencing, etc. It used to drive me nuts - although I was probably already nuts.

I came across a great little device to help me in my manic work style: the Tritton See2: It lets me connect a second monitor through a USB port. Since I am generally using 2 email accounts, I can open one email account on each monitor and just pass my cursor from one to the other. If I am working on a document and need to review reference materials, I open the main document on my laptop screen and the other documents on my auxiliary screen.

This is the best toy I've bought since my Treo 600. While it feeds my ADD tendencies - reading two screens simultaneously - I find that it 's a lot better than toggling among IE windows. I almost feel lost when I'm on the road with my laptop, bereft of my 2nd screen.

Wednesday, May 24, 2006

The Tivo Trojan Horse

The key to business success in the 21st Century is flexibility.

For a while, Tivo looked like it was going to be victim of the changing business environment. Just as the word "Tivo" was becoming generic, a la Kleenex and Xerox, the business was in danger of becoming extinct. Users seemed to love the functionality, but competitors figured out that Tivo was nothing more than a video-enabled hard drive, a model that was easily copied.

Cable MSOs, and particularly Tivo's "partner" DirectTV, realized that they could build DVRs - the new generic term - into their set-top boxes. Tivo looked like it was going to go the way of its former direct competitor Replay, which sank without a trace.

Now Tivo is trying to deliver proprietary content and functionality - downloading programming and becoming a bridge between the internet and the TV. If they can do that successfully, Tivo becomes more than just another box sitting in your TV console; it becomes THE BOX through which you receive all your non-linear programming. Of course, it still has to contend with the other boxes - Akimbo, Moviebeam, etc. - that are trying to make the same leap.

This battle is going to get ugly, and all I can say for sure is that not everyone will survive.

Monday, May 08, 2006

The Report from NAB 2006

The presentations at NAB2006 focused on the migrating of content to on-demand platforms, both television and web. There were three basic themes, intentional and otherwise:

I. The pace of technology change is accelerating, and the shift to on-demand is becoming more inevitable with every passing moment.
II. With regard to the attendees – TV and radio broadcasters – there was surprisingly little advice or direction as to how to cope with these developments.
III. There is still tremendous confusion as to how these developments will manifest themselves, with competing interests and therefore competing visions that will soon be joined in mortal combat.

The overall intention of MediaScrum is to pull all of this together and make sense out of the pieces, which seem to be increasing in number. For the discussion of NAB2006 and other purposes, let’s stipulate the following definitions:

IPTV – TV programming delivered via Internet protocol by the telcos to the TV in your home. Despite unique features enabled by IP, e.g., call waiting and multiple picture-in-picture screens, it is essentially digital cable/satellite TV on steroids. It is a closed-system, and programming is controlled by the telcos.
Internet TV – TV programming delivered over the public Internet and viewed on your PC. This includes all forms of online video, whether repurposed network programming or user-generated video on YouTube. I prefer to think of Internet TV as entertainment or news viewed on the PC as a substitute for watching similar programming on your TV. The fundamental consumer constraints are that you have to be sitting at your PC and view it through a browser.

This will all eventually merge. All programming will be digital and stored on a home video server – whether from the cable company or telco, whether downloaded from the internet or ingested from a DVD. The server will provide the video as you want it – to your TV to watch “Lost,” to your PC to watch news, to your cellphone to watch music videos while taking a walk, to your laptop to watch “Mission: Impossible III” on the airplane. Your content, when you want, where you want, how you want. This is Future 1.0.

Future 2.0 would provide all the content stored on central servers, not locally in the home. I could access any content from anywhere on any device at any time. This will take a long way to come about because it requires all of the content providers and distributors to have common protocols, business models, and revenue sharing. Maybe when I come back in my next life.

So, how did NAB2006 reflect the coming of Future 1.0?

IPTV was probably the most mainstream of the visions discussed. Microsoft’s view is that TV is where the PC was in the 1980s before the advent of the Internet. With the advent of IPTV, TV has now become a full-class citizen in the digital age.

By 2009, IPTV penetration is estimated to grow to 20-30 million households worldwide. During this time, Microsoft expects that IPTV will dominate over Internet TV due to:

> Quality of the service, especially compared to Internet TV
> Structure, with $10 billion of capital expected to be invested
> Economic value to consumers, and consequently to all players in the value chain.

That is probably true, at least in the near to medium term.

AT&T discussed its approach to IPTV, which is taking the cable strategy one-step beyond. In another session, Cablevision talked about how it had pioneered the Triple Play – voice, TV and data. AT&T’s strategy is increased functionality within the bundle that will also enable interactions among the services: VDSL, fiber, wireless, wi-fi, home networking, IPTV.

AT&T is holding to their projection of initial deployment to 18 million households, with fiber to the premises or to the node, such that on average, fiber will be extended to within 3000 feet from the home, allowing speeds of 20-25 Mbps.

AT&T’s offering will provide:

> More than 200 channels
> Hundred of hours of VOD
> Multiple PIP with metadata of observed channels
> An interactive electronic program guide
> Search engine – actor / title / director / etc.

AT&T has placed a huge bet that its vision of the future is correct. Not all players are pinning their business plans on a particular view of the future but some are making similar bet-the-ranch, we’d-better-get-it-right-or else bets. For example, Intel kicked off the conference with its view of the digital home that is premised on it dominating the world of Future 1.0, which is less TV-centric.

Intel’s presentation set the stage with a discussion of the future impact of digital entertainment that was echoed by many, if not all, of the presenters who followed:

> Content business models change
> Media moves to multiple digital platforms
> Distribution model moves away from cable and satellite companies
> Portals are the next MSO as internet broadcasters and aggregators
> Consumers get more control

Now, Intel’s not-so-hidden agenda is that it wants the VIIV system to dominate the digital home just as the Centrino system has come to dominate wireless communications in laptops. The VIIV-enabled device is meant to connect the internet and the PC to the TV. Running Microsoft’s MediaCenter software, VIIV will power the home network.

Intel’s ambitions for VIIV run far beyond those that it had for Centrino. Where the latter needed the cooperation of laptop manufacturers and wireless providers, the “VIIV ecosystem,” as they put it, will involve:

> PC manufacturers;
> Consumer electronics manufacturers who will make the connected media devices – TVs, stereos, etc.; and
> Content partners

Distribution companies will presumably also be part of the mix.

Of course, you can start to see the outlines of the implications of the disaggregation of content and distribution. Cable and satellite companies become less important. What about television networks? Do they still have a role?

NBCUniversal hit it right on the head when it discussed expected changes in business models and partners:

> Business model challenge – NBC doesn’t want to replace a big business with a small business, and
> It wants change with minimal disruptions

Unfortunately for NBC, neither of those areas is under its control. The timing, direction and impact of change will happen with or without NBC’s cooperation.

New distribution models are evolving. For example, Moviebeam views itself as a “video store in a box” since:

> Its system distributes 10 fresh movies per week through datacasting, 100 movies total stored on hard drive;
> Movies can then be rented off the hard drive;
> Moviebeam will be introducing an IP connection into box to enable access to older titles that presumably will initially be trickled into the box during off hours; and
> The Moviebeam box will have a USB antenna to transmit content to other platforms in the house.

Interestingly, this model not only challenges NBC as being the distributor into the home, it potentially challenges Intel with regard to managing the content within the home. Once broadband enables instant downloads, Moviebeam’s business model of storing content locally could disappear, but if it has established itself as the de facto home entertainment server, it could maintain its hoped-for place of prominence in the home.

Let’s move over to Internet TV: video content on your PC. One name getting a lot of attention in this area is Brightcove. According to Jeremy Allaire, the potential benefits of Internet TV are:

> Open distribution, so anyone can create web content;
> Consumer choice that is as deep as the text web;
> Multiscreen delivery; and
> Content owner control.

Their business model seems to be predicated on enabling content owners of all stripes to port their content to the Web – traditional content providers such as Discovery Channel and amateurs like you and me – a scary prospect if there ever was one.

Since the heavy hand of government will be involved however the video world develops, three FCC commissioners were on hand to provide their views: Michael Copps, Jonathan Adelstein, and Sheila Tate. Given that it was a public forum, they didn’t have much to say that was controversial, but did provide some general direction and guidance with regard to their priorities.

Their general concerns regarding media were:

> Homeland security – the communications industry is unprepared for a natural disaster or a terrorist attack;
> Media consolidation; and
> The transition to digital TV

Commissioner Tate commented on her view of the FCC’s role in the telco IPTV world, saying that the FCC is taking a watchful approach for now as they consider the issues as to whether they should actively bring about a level playing field. In general, she felt that the role of the FCC was to encourage competition and investment.


In general, the world is moving toward on-demand content, but on separate platforms: closed networks such at IPTV and broadband video on the web. Their eventual convergence depends on linkage from PC to TV, with Intel trying to take control on the hardware side with VIIV.

There was very little discussion – at least in the public sessions – about how broadcasters, i.e., TV stations, should deal with this phenomenon. For example, there was no discussion about recent NBC or Fox deals in which the networks are trying to placate station affiliates concerned about content moving to the web, encouraging viewers to look elsewhere for network shows. The question left open is: What is the role of TV stations when content is on-demand?

On the other hand, as we move to on-demand content, there was also no discussion about difficulty of building new entertainment brands if all content is on-demand – will people rely on old brands, word-of-mouth, trusted sources? Even if consumers know what content that want to watch and have more choice, how do they navigate? In many ways, video on the web is like the Internet before search – how do you find what you want to watch?

Finally, there was little discussion of the practical technical hurdles. For example, Mike Shaw of ABC said earlier in April that the web infrastructure of the U.S. can only support about 400,000 simultaneous video streams. Not much of a mass audience there. Other little items that were mentioned only in passing: does there need to be reformatting of content for different devices and modalities – can content be published once and viewed many times, can it just be ported automatically from one device to another or does it need to be reformatted for aspect ratio, speed of streams, video format, etc. – some of which can probably be automated and some which probably can’t.

The road to Future 1.0 is still a long and bumpy one, so let’s all hang on!

Thursday, April 20, 2006

The Old Jargon Just Doesn't Fit Anymore

As we move into the brave new world of digital media, someone is going to have to come up with new jargon. For example, MediaScrum will be at NAB next week - that is, the show sponsored by the National Association of Broadcasters. Who are the members, you ask, of the NAB: why, radio and television stations. Those media upstarts - cable and satellite companies, other media organizations, international broadcasters, equipment manufacturers, and their ilk - are welcome to become Associate Members, otherwise known as the children's table at Thanksgiving.

NAB2006 bills itself as the World's Largest Electronic Media Show. I'm not yet quibbling with that description - I'll let you know what I think of it after spending next week with the Broadcasters and their Associate Members. "Electronic Media," however, encompasses more than just Broadcasters. Interestingly, last year, Electronic Media magazine went in the other direction - it changed its name to TV Week.

In any case, we'll have to come up with a new term for our new medium. "Broadcasting"? It implies an FCC license, Heaven forbid. Also, I thought the essence of the new medium was narrowcasting. "TV"? Too limiting. "Video"? No, sounds like my neighbor's Super-8 vacation film. Any suggestions out there?

Tuesday, April 11, 2006

Apple Is Disintermediated - Who Needs iTunes After All?

Disney has announced that it is making several of its hit shows available on the web, free of charge: It's been an interesting progression: Apple sells music on iTunes, Apple provides video on iTunes, video providers realize that people don't necessarily want to watch video on their iPod, video providers distribute content directly to their users via the web.

A lot of people are having their ox gored, but they are being polite about it for now: local stations and cable networks - who benefit from off-net syndicated programming; cable MSOs who want to capture the on-demand market through their cable systems. It remains to be seen whether all of the publicity surrounding Disney's latest move will generate additional interest in their programming - and create more value for their shows at every step of the value chain: DVDs, syndication, etc. - in the near- to medium-term. After all, I don't think that there is a very large audience for watching TV programs on your PC - yet - and there is also some work involved in finding the programs, etc., even if you could port the programs from your PC to your TV.

Nonetheless, it's one more significant step in revamping the old business model. Stay tuned - or logged in, as the case may be.

Monday, March 20, 2006

The Future Has Arrived: Ubiquitous Wireless Broadband

There are two things that people often forget when discussing a phenomenon: 1. What is see is not what you get. Any incarnation of a new idea is nothing more than version 1.0. Anyone smart will build on it, improve it, and eventually morph it into something that may not resemble the original at all. 2. There is most likely an endgame. Eventually, the rate of change decelerates, and we have reached the final stage of the product's evolution.

Take telecommunications. We started with writing on rocks, developed mail service, Samuel Morse invented the telegraph which sent encoded electronic signals, Bell turned those signals into voice, we now send data over those wires, etc., etc. There is continual evolution - phone lines carry DSL where once they were thought incapable of anything more than 56k. Cable provides even greater bandwidth.

But the market is eventually driven by customer needs. Portability is a big part of connectivity; not just annoyance with wires and having to rip up my house if I want to rewire. Think about where this will lead us - we can high-speed connectivity; we want portability, i.e., ubiquity. Wireless broadband.

The Wall St. Journal reported today that a system in Oklahoma is installing wireless: TV The next step: the endgame of connectivity.

Friday, March 17, 2006

More than 24 Hours a Day; If Only I Could Bill for It

With the proliferation of media, we are not far from the overdose level. Before, we could take the 24 hours in a day and divide them by usage: 8 for sleeping, 9 for working, 2 for commuting, 4 for consuming media, 1 hour for things we can't mention since this is a family-friendly blog, etc. With the advent of media multi-consumption, we can listen to our iPod while surfing the web with the TV on in the background as a truck with an advertising banner passes by our window. Therefore, we can consume an infinite amount of media during our 24 hours. There was a citation in the media recently that teenagers have effectively created a 38-hour day due to multi-consumption.

That would seem to be good news for marketers - more consumption of media usually means more opportunities for advertisers. Unfortunately for programmers and advertisers, most of it will be background noise of no greater impact than the hissing of my radiator. Engagement is becoming more important; that's probably important since our engagement seems to be going down.

Thursday, March 02, 2006

Content may be king, but not everyone gets to be the king

Yahoo announced yesterday that it will be scaling back its efforts to generate original content and will shift to content generated by others, particularly users: This is the latest step in the evolution of the web and illustrates a number of key rules that are generally applicable across businesses:

- Stick to what you know. Yahoo is terrific at aggregating audiences and enabling navigation through content. Trying to create new a content brand, i.e., competing with players such as Disney, ESPN, CBS News, etc., but leveraging its strengths to drive audience to its content is a tough challenge, especially when the web makes access to any and all content so easy.

- Don’t compete with your customers unless you’re going to win. Becoming a content provider makes you less attractive to other content providers. While that discussion is pushed to the end of the article and disclaimed by Yahoo, I think that it must have been a larger influence than Yahoo was willing to admit.

And finally, we seem to look at each new medium as if it were just a variation on the old one: TV is radio with pictures – early TV shows were studio shows of people clustered around a microphone. The web is interactive TV – let’s create TV programming for the web. Oops, maybe user-generated content is the key.

Let’s see where the web goes next.

Tuesday, February 28, 2006


CBS announced yesterday that it will begin providing news and alerts for entertainment programming to cellphones on a subscription basis -

One interesting aspect is how this reflects on what is often touted as one of the great strengths of the web – disintermediation. It is said that, with the web, there is no need for the middleman – everyone can deal directly with the source. Is that true? Would that be a good thing? Are we just replacing one set of middlemen (and –women) for another, resulting in re-dis-dis-intermediation?

At the McGraw-Hill Media Summit earlier this month, one participant discussed how Apple has positioned itself as intermediary par excellence via iTunes, yet content providers have realized that they can go directly to the consumer – disintermediation at work. In other words, cacophony in the making.

The CNET article discusses several models for direct and intermediary providers – CBS as direct, Verizon VCast as aggregator and intermediary, and the modern version of Tinkers to Evers to Chance – ABC to Real to Sprint. How do consumers navigate among a multitude of content providers?

Questions for another day: how much video are people consuming on cellphones? What do they really want to see on those devices? Who regulates that content and prevents children (and adults) from inappropriate content? Perhaps most critically in the long run, who controls the screen and the consumers’ choices?

Monday, February 20, 2006

One Ring Tone to Rule Them All

As we proceed down the road of our ever-connected society, it is becoming more difficult – not less – to keep in touch with those around us. I don’t mean that in our time-pressed lives that it is becoming ever-more challenging to make time for the person-to-person interactions that make us human – although that is certainly a problem in and of itself. What I am referring to is that it is getting more difficult to know how to reach someone, due to the multiplicity of electronic communications devices.

Here is the myriad of ways in which I am forced to try to get in touch with my wife, just to let her know what I will be home late for dinner:

> I can call her at home;
> I can call her on her cell phone;
> I can text her on her cell phone;
> I can send her an email to her personal email address;
> I can send her an email to her work email address; or
> I can attach a note to her carrier pigeon (I made this last one up).

Notice that each effort is actually not an attempt to communicate with her. I am actually communicating with a device that is a proxy for communicating with her. In the old days (I will leave the exact definition up to each of you), we communicated with places: you could send a telegram to a location, from which location is would be delivered. You could place a call to a telephone in a particular location. Hopefully your intended recipient was within shouting distance of that phone.

I suppose that the current system is an improvement: I communicate with a device in hopes that the device – being more portable than the telephone attached to your kitchen wall – is in your pocket, hand, purse, etc. Of course, there are multiple devices; some devices may be in a location where a call won’t go through, but text will; and I still have to use a hybrid model: I communicate to both devices and locations in hopes of finding the intended recipient of my earth-shattering message.

Now I realize that there are entrenched players in whose interest it is to continue this nutty system, e.g., the phone/DSL company who profits from every communication effort I listed above (except the pigeon). I’m fine with paying them. I just don’t want to pay them multiple times with no assurance that my message is getting through (I sound like an advertiser).

Maybe the answer is to implant a chip in each of us (the mark of the beast and all that) that will either enable us to reach each other or at least let us know that someone is calling. The endgame – I want to communicate with a person: why should I search numerous locations or, now, numerous devices, just to ask to keep dinner warm until I get home?

Friday, February 17, 2006

The Paradox of Choice

Are we headed toward the world once parodied by Quest in its television commercials: all content ever made available any time any where on any device? Everything will be wireless (p.s.,does anyone ever worry about the amount of electromagnetic radiation with which we are bombarding ourselves? Just asking.) Shall I watch Friends, the Godfather, a wine tasting video, or lectures from MIT? Shall I watch it on my PC, my laptop, my phone, or my big screen TV? Shall I order it from my phone company, my cable company, my electric company (broadband over power lines being right around the corner), the wireless phone provider, or the pizza delivery guy? Or should I just read a book?

One thing that the direct marketing people have learned is that too much choice can paralyze decisionmaking. Vanilla or chocolate? I’ll pick one. Fifty-two thousand flavors – I’m just confused. There is something very retro and passive about linear programming – just sit on the couch and see what programs the networks are pushing at me. The thought of having infinite choice is very seductive, but it also requires a lot of work. While the new world enables me to work 24 hours a day, seven days a week, I’m not so sure that I want to expend a lot of scarce neurons when it comes to deciding my entertainment/information for the evening.

I realize that this is apostasy, but it’s food for thought. Now, let’s talk about your food choices ….

Tuesday, February 14, 2006

Observations from the Media Summit 2006

Media Scrum:
Observations from the 2006 Media Summit

These are highlights and my observations from McGraw-Hill’s 2006 Media Summit New York on February 8 and 9. I have tried to pick out interesting tidbits – items that one doesn’t see reported in the media a hundred times a day. I will not extrapolate any claims about the future and have saved those for my blog,
I also make no claims to being objective or thorough. For example, I have no interest in gaming (blame it on my demographic: almost fiftyish, Asian-American suburban male).

A theme of the Summit was that programming is going on-demand. We will henceforth refer to this as OD, because we are headed for a content overdose. One participant joked that the only area free of media is our sleep, and even that is probably threatened.

In addition to the media model changing from linear programming to OD, there is increasing volatility in business model lifecycles, content providers’ growth and decline, and devices and trends reaching critical mass – and potentially imploding – compared to the past. We have seen rapid adoption of blogs, Skype, and other phenomena at a rate previously unheard of, and others have crashed and burned just as quickly.

Consequently, everyone is making decisions and investments with incomplete information, lack of benchmarks, and very little assessment of causation vs. correlation. Comcast, at least, is leveraging its network to create additional revenue streams, e.g., OD and phone, and making multiple bets on the future of how people want to watch TV, e.g., continuing with linear programming. Verizon, on the other hand, is making a much bigger, and riskier, investment in its network infrastructure in hopes of consumer acceptance.

Some items about consumer behavior:

v People want more control over their media consumption;
v Consumers like the home theater experience; and
v They are willing to pay for access; but
v They are less willing to paying for content, except for material that is especially valuable, e.g., business-related or adult.

There is a resultant rush to capture the consumer market by:

v Providing the most interesting content;
v Being the content aggregator of choice; or
v Controlling the means of delivery – primarily cable or phone lines.

The pure content business models are driven by the multiplicity of consumer choices:

v Branding of content becomes more important; and
v Continual consumer engagement is critical to keep them viewing your content.

Advertising imperatives, however, may be different:

v Consumer engagement with content does not, ipso facto, mean engagement with advertising;
v It’s not clear that engagement with advertising leads to desired consumer behavior; and
v In any case, the ad sales market has not kept pace with the explosion of media, partly because of the business model of siloed advertising sellers or the career imperatives of short-term CMOs.

How did all these trends coalesce at the Summit? The presenters seemed to accept that DVR homes watch more TV, perhaps 20% more. Therefore, it seems that there is greater consumer engagement. If the consumers skip ads, however, their value to advertisers would seem to be reduced, and at least two Summit participants cited the statistic that DVR users skip 80% of ads. The true impact of this would depend on benchmark data that no one had: for how many ads do people leave the room or switch channels even without DVRs? Are the 20% of ads that are watched particularly relevant to those viewers – resulting in extremely effective advertising, or is the 20% made up of people who are too lazy to even skip the ads? It’s hard for the media providers, distributors or advertisers to know definitively what to do next.

Regulatory schemes have not kept pace with either technology or consumer behavior, yet the regulators are confronting entrenched and well-funded players on significant issues:

v What is fair use of content?
· When I buy music, what are the limits, if any, of my rights to listen, replicate, share (or distribute) that content?
· Who should enforce those limits: the content provider? The distributor who sold the music? The hardware manufacturers on whose devices I listen to the music – iPod, PC, car stereo?
v Who should regulate the content I can access over the web and then report on my activity: the Chinese government searching for dissidents? The French government searching for neo-Nazis? The U.S. government searching for terrorists?