Media Scrum

It's Not Always Easy to Do the Healthy Thing

2011-12-13T09:29:00.000-05:00

Inspired by a recent article about former golfing great Gary Player, I had decided to walk the ten flights of stairs to my office this morning. The Wall St. Journal article had cheekily indicated that Mr. Player was "more than 50 years old." Being a mere 5 years above that limit, I determined that I could take inspiration from Mr. Player, who was a good 20+ years above fifty! Among the items mentioned in his training regimen, he admonished the readers to take the stairs, even if they were on the 10th floor. Being on the 10th floor myself, I realized that he must be talking to ME (after all, everything is about ME)!

Armed with this new-found resolve, I zoomed past the security barriers in my office lobby and searched among the elevator banks for the stairs. Not seeing any (another sign of impending old age - the inability to find what you're looking for!), I asked the security guard who helpfully informed me that there were no stairs to be found. I protested that there must be stairs so that one could vacate the building in an emergency. Under the modern architectural concepts that guided the construction of this building, he reassured me (although not in those words) that there are stairs to come down to get out of the building, but no stairs to go up. I'm not quite sure how that would work - doesn't that violate some laws of physics: you can go down but not up; you can check in but you can never check out, etc.?

I guess that idea that some nutjob would try to take the stairs to his/her office rather than the elevator was not a very high priority for the designers of the building. Resignedly, I took the elevator to my floor and noticed that the elevator vestibule did not have any signs indicating a nearby staircase. I'll check out the stair situation later today - the saga continues!

By the way, I'm less excited about one of Gary Player's other health-oriented exhortations - giving up meat. Everyone who does so seems to indicate that they feel better, have more energy, and so on, but it certainly does not sound like very much fun. Maybe I'll try to think of it, not so much as giving up meat, but as eating more vegetables, which doesn't sound quite so ascetic. More self-deception at work!

Nominative Creativity - The Band Perry

2011-09-04T09:47:00.002-04:00

I love when people challenge convention in clever ways that cause me to look at things in a new and different approach. Not being much of a music person, I was totally unfamiliar with The Band Perry - in fact, I'm still unfamiliar with them in every way, except that I love their name!

I happened to catch their video on MTV's Top 20 Videos this morning, and I was entranced by the meta-existential name of the band, The Band Perry.

This all started when I heard their song on the show, and I asked my wife whose video she was watching.

She said, "The Band Perry."

I replied, in Who's-on-First fashion, "A band named 'Perry'?"

She said, "No, The Band Perry."

I of course responded, "That's what I said - a band named Perry."

At this point, having had enough of my dumb questions and wanting to watch the video instead, she pointed to the TV, whereupon I saw the title: "The Band Perry."

Since I was more interested in the creativity of their name than their music - although their music did sound quite lovely - here I am blogging about a band and a name that all of you are probably already familiar with. In any case, this is my first A Ha! moment of the day, which I thought I would share.

From the Blogger Victor

2011-04-25T17:37:00.001-04:00

Magazines for a New Generation

I would have titled this one, “A New Generation of Magazines.” After all, the topic was the evolution of the magazine, and its target audience still included those of us who grew up with magazines and who may have also had the privilege of participating in the magazine business back when it was a terrific place to be. It may still have a golden future, just not one that anyone expected late in the 20th Century, oh so long ago.

The event was “Magazines for a New Generation,” held by the Center for Communication and presented with The New School’s Department of Media Studies and Film. It took place during the evening of April 18 at the Theresa Lang Center at The New School, with an audience of perhaps two hundred, with about one-third being students.

Paul Hardart, Associate Professor in the Media Studies Department, introduced Catherine Williams, the executive director of the Center for Communication. Catherine, in turn, introduced the evening’s panel:

 Leigh Belz, senior features director of Teen Vogue;

 Ben Berentson, digital managing editor of Glamour;

 Jared Cocken, creative director of The Wonderfactory;

 Michael Hogan, executive digital editor of Vanity Fair; and

 Ben Williams, editorial director of NYMag.com, who also served as the panel’s moderator.

Ben (BW) started off the evening’s discussion by asking each panel member to discuss the context of the topic as it applied to his or her magazine – how the websites interacted with the content of the print publication.

In the case of his own magazine, New York, all of the magazine’s contents are published on the web for free. In the last five years, there had been a significant ramp-up of the title’s online efforts, with the digital editorial staff growing from 5 to 40. The site also hosted 5 blogs and published approximately 120 stories per day, a combination of aggregations and original content. It also has a search database of restaurants and bars, and a fashion site. In general, he said, the approach was to publish content all day every day and then put up the magazine in its entirety every week.

Leigh Belz (LB) said that Teen Vogue’s online efforts reflected everything that was in the magazine, with an emphasis on style and fashion. The site has 10 blogs, with 5 regarded as active. It has a small staff – 1 web editor supplemented by freelancers – so the print editors help out considerably. Her role is to help coordinate between print and online content.

Ben Berentson (BB) described the online activities of Glamour – that since 2008, it had been publishing about 50 pieces per day, all original, mostly in a blog format. It has 7 staff members with about 50 contributors. It launched its iPad app in August 2010 and has recently changed its app platform to improve the user experience.

Michael Hogan (MH) described how Vanity Fair “doubled down” on its online efforts in 2008. It underwent a redesign last year and is currently in the midst of doing another. It publishes a “fair” portion of the magazine. “VF Daily” publishes 5-10 pieces each day. It is moving into the mobile space and had two native iPhone apps – one on the Oscars and one on movie trivia. It was moving onto the same platform as other magazines, including Wired, Glamour and the New Yorker.

Jared Cockren (JC) was the lone non-publisher on the panel, although his firm’s clients included many publishers. He said the role of the Wonderfactory was to improve the visual experience provided by the publishers, especially the link between advertising and the content, for the benefit of the users.

BW: Since so many of the panelists’ magazines seemed to have built their online content strategy around the blog format, what have print magazines learned from their experiences with blogs?

MH: Blogs place an emphasis on speed and the quality of the writing, which is not heavily edited as in print publishing. It is important that blogs have a unique point of view – that they help interpret what is happening, as opposed to simply reporting on events.

BB agreed that blogging is a different skill set than print journalism with at least two clear distinctions:

 The relationship to the readers is different – both more personal and done in a way to solicit interactivity with the readers; and
 Keeping in mind the need for a well-indexed post in order to attract the search engines. The emphasis is less on clever wordplay and more on “serving the Google master.”

LB noted the importance of the interactivity. She mentioned that her blog posts had been getting views but not many comments. When she, apparently in desperation to meet her deadline and lacking inspiration for any other topics, mentioned the 10 songs to which she was currently listening on iPod, the tone of her blog shifted to being more personal and conversational, which generated significantly more reader comments and engagement. As a result of this happy accident, she suggested less focus on posts and more on generating comments.

BB noted that it was important to find the right mix between reporting and personal posts when writing a blog.

As a follow-up to the discussion about the importance of blogs thus far to magazine online efforts, BW asked about new developments in blogs.

JC pointed out that there had formerly been a larger architectural difference between content pages and blog pages with regard to their interaction with content management systems. Blog formats were easier to change than magazine templates so they emerged as the tool of choice for magazines’ online efforts. Now, the differences between articles and blogs are more those of tone than structure, with the focus on user experience. He cited the example of Comcast, which found itself unable to properly respond to customer service issues, which were apparently quite numerous, via its website. It therefore launched ComcastVoice to do what it was unable to do on its own website.

BW: How do they maintain a balance between personal content and journalism on their blogs?

BB: for the blogs, it is critical that the publications hire and train their bloggers to view themselves as representatives of their brand.

MH felt that blogging has become much more professionalized. As he put it, they were no longer simply dragooning an editorial assistant into the role of blogger out of a pressing need for content creation. This shift, however, also made the content less intimate, especially with the requirement that the content maintain the standards of the magazine that readers expect from the title.

BB also felt that a key element of blogging was the opportunity to “touch” their readers multiple times daily instead of being limited to the strictures of the monthly publication schedule.

BW characterized print magazines as an editor’s medium and the web as a reporter’s medium, due in large part to the lack of editing on the web. The online environment therefore placed more responsibility on bloggers – they were being asked to connect more directly with the readers while maintaining professional standards.

BB pointed out that, as bloggers were viewed by readers as representatives of their titles, they needed to be trained accordingly, even being prepared to respond to customer service inquiries having to do with subscriptions and other items not normally the province of the content creators.

BW then asked about features that drove traffic to their websites.

BB indicated that health-related articles generated traffic. LB cited celebrity and personal style features. She said that a section for which girls submitted photos of themselves showcasing their personal style was particularly popular.

MH said much of their content was slide show-driven, e.g., Oscar parties. By the same token, however, long-form content by heavyweight authors such as Professor Joseph Stiglitz of Columbia University and writer Michael Lewis were also big draws online.

BW inquired about the significance of mobile apps to their online strategies.

JC pointed out that it has been a year since the launch of the iPad. One major question for publishers has been whether to pursue digital editions of the print publications or to launch applications that were native to the mobile format. He felt that publishers were doing a good job of trying both approaches while experimenting and listening to the customer.

In 2009, the Wonderfactory created a video of a simulated table app for Sports Illustrated. Consumer reaction to the video varied by age – the younger demographic, perhaps unsurprisingly, wanted a unique experience that took full advantage of the capabilities of the new device. The older audience preferred an experience that was closer to that of the magazine itself.

Their findings also included several key factors:

 Esthetic – embedding signature branding items such as a publication’s readily identifiable fonts with the native applications enhanced the experience;
 Rich media – providing an experience for the user which print cannot match;
 Curation – a key factor that magazines do well and bring to the app world.

BW: given the many students in the audience, what are the key skill sets that should be acquired and honed by those interested in participating in the new media world?

JC: The key elements to understand in launching a career are:

 Strategy – what is the publisher doing and why?
 Experience – what is the user experience? what does the technology allow you to do?
 Platform – what technology is being used? how and where is the material being viewed – on the web, via HTML, in an app?
 Work flow – how is it different to create content for the web as opposed to print publications?

They also should gain experience with both editor-based articles and publishing in a more real-time environment.

Finally, they should recognize that material needs to adapt to screen sizes.

BW: will there be jobs out there for today’s students?

MH: There will always be a need for lots of quality writing – it will simply be of various types. For examples, Vanity Fair’s apps required someone to write 500 movie trivia questions and detailed descriptions of each Oscar nominee. He acknowledged, however, that most writers probably preferred to write long-form, most expository pieces.

He also said that they look for people who have multiple skills – Vanity Fair has a small online staff with lots of work to be done. For example, their photographers are often shooting video as well as still photos.

BB pointed out that bloggers are also photo editors – they review, select and place the photos for their posts. In addition, their editors had to re-lay every print page in the transition to the online format, which has added complexity to the composition of the print magazine.

LB said that behind-the-scenes photos and videos were enormously popular online, running the gamut from professionally shot photos and outtakes all the way to amateur-quality material.

BB indicated that it was important to be careful in choosing which content went where – that different levels of professionalism in photos and video were expected in different sections of their website.

MH spoke about the new platform on which VF was launching its May issue. He was also enthusiastic about how the magazine could deliver much deeper content online than in the magazine – he urged the audience to check out the shirtless pictures of Rob Lowe on the side that accompanied the cover story.

JC felt that photos are the most popular tool that publishers have.

BW asked about the difference between apps and online content.

BB felt that there was much greater potential for each piece of content in an app vs. online, whether audio, video, interactive, or slide show.

LB said that Teen Vogue was just dipping its toes into the app world. While they had tried an ad-driven app, they had not yet created an editorial-based app. This may have been due to the unique characteristics of their audience – while many of them had smartphones and there were probably iPads in their homes, teen readers apparently did not have much direct access to those iPads.

MH felt that iPads enabled magazines to take advantage of the lean forward/lean back experience. By holding the iPad more comfortably and in a more engaging way than is possible with a desktop computer, he felt that readers were able to spend more time with the magazine. He conceded, however, that these are still the super-early days of consumer experience with the device. As they move forward, he felt it was an advantage that the online experience was developed by the magazine’s own art department, and not by outside consultants, Jared Cocken and the Wonderfactory notwithstanding. Finally, he said that the magazine was still grappling to find the best solution for social sharing from inside the app – they want to provide their readers that capability, which also creates a viral element for their content, without giving away all of their material.

BW then asked about social media.

BB said that they are still trying to decide how to staff their social media efforts. In particular, they are aware that those engaging in social media are representing the brand, just like their bloggers.

LB felt that social media is very important to Teen Vogue, which has over 1 millions Likes and followers. They are trying to create a 360-degree experience for their users encompassing online, print and social media. They are also using social media such as their Facebook page to test editorial ideas.

MH said that social media is currently a group effort for Vanity Fair, with numerous participants and that it is not yet assigned specifically to any individuals.

JC expressed concern about Apple’s role as a gatekeeper for publishers and one that restricted sharing.

MH said that the absence of a paywall for Vanity Fair allowed them to embed a link so that at least a synopsis of the story could be shared with an exhortation for the recipient to purchase the magazine if the entire article itself was not freely available.

JC pointed out potential pitfalls, citing a blogger who had scraped all of the Daily’s story URLs and posted them to his own website, thereby making all of the content freely available, at least until caught and stopped.

BW asked the question that many students in the audience have probably asked of themselves – should students seek to go into journalism?

LB felt that there will always be a need for quality journalists, but that students needed to develop multiple skill sets and be very aware of the digital world.

BB agreed, pointing out that they needed to understand all of the tools for story-telling – being interactive and creating conversations. At the same time, there are things that only print can do, so the trick is bridging print and online.

MH echoed the point that print journalism is not going away.

BW opened the session up to questions. One was about the role of video and how publications obtained their video.

MH felt that publications who commissioned video were at a disadvantage to the army of amateur videographers. While the chances of any one of the amateurs capturing a great story were small, the sheer number of them made it likely that the most compelling video would be the product of those efforts rather than the result of deliberate efforts by the publications.

Yours truly asked about the impact of the mobile device as a gatekeeper – how do brands compete with all of the options available to users on mobile devices: games, videos, m-commerce and other content.

JC felt that the publications had be ubiquitous – be on all devices – as well as provide compelling information that was integral to their users’ lifestyle.

BB pointed to brand extensions, such as jewelry. LB pointed out that Teen Vogue has licensed bedding for their enthusiasts.

JC also felt that the smartphone market was wide open with several different competing operating systems. He felt that the tablet market was more constricted, and that the failure of the Xoom may have discouraged other hardware manufacturers.

The Invisible Gorilla - Why We're Not Nearly as Capable as We Think We Are

2010-08-22T12:47:00.002-04:00

One of the most fascinating, if rather eye-opening books, I've read recently is "The Invisible Gorilla," by Christopher Chabris of Union College and Daniel Simons of the University of Illinois. They illustrate how, in a number of areas, our cognitive skills are not only, not nearly as acute as we think they are, but that in a meta-sense, we are unaware of our limitations.

For anyone with an interest in these sorts of topics, i.e., how does the human brain actually work?, I would heartily recommend their book as well as their website which has additional material, especially videos, that have to be seen to be believed.

They refer to these areas of concern as "illusions," of which they enumerate and describe in detail six:

The illusion of attention - “our vivid visual experience masks a striking mental
blindness - we assume that visually distinctive or unusual objects will draw our
attention, but in reality they often go completely unnoticed.” In other words, the danger of talking on a cellphone while driving is not such much that we're using our hands, but that we're using our brain. The result is that we are not paying as much attention to our driving as when we are not on the phone, even with a hands-free headset. Even worse, we are not aware that we are impaired so we do not take any extra precautions and have few or no qualms about using cell phones while driving.

The other illusions, much better explained in the book than I gave justice to here, are:

The illusion of memory - that we do not remember events, items, people, etc. as well as we think we do. Furthermore, our memories change, and in keeping with the meta-quality of all of the illusions, we do not remember that our memories have changed.

The illusion of confidence - that we both are more confident in our abilities than is warranted, and that we interpret the confidence of others as reliable indicators of their capabilities.

The illusion of knowledge - that our understanding of the workings of the world around us are limited. We know how to use things; we do not necessarily know how they work. In Mark Twain's classic, A Connecticut Yankee in King Arthur's Court, a 19th-century American, upon being mysteriously transported to medieval times, brings the technology of his era to that society. I daresay that any of use, suddenly finding ourselves in a similar situation, would hardly be able to bring the basics of metallurgy, let alone the power of cell phones and automobiles, to King Arthur's or any other court.

The illusion of cause: that correlation is often confused with causation, in large part because the human mind seeks to understand causality, even if mistaken.

The illusion of potential: that the human mind does not have the proverbial 90% excess capacity and that task-specific cognitive training is often limited to the tasks for which the brain in trained. So much for Baby Einstein and for fending off age-related decline with Brain Games.

The essence of the book is to make us aware of our limitations and to make adjustments and compensate to create better outcomes in all areas - that we need to be careful when using a cellphone while driving, that the more confident leader is not necessarily the best leader, that we should carefully examine claims that vaccines cause autism - because how we view a situation has tremendous consequences.

I'm Always Expecting More from My Technology

2010-07-31T10:16:00.006-04:00

The phone function on my Palm Pre Plus (with which I am very happy, by the way) keeps track of my phone calls in reverse chronological order. This is often very handy as it allows me to review the calls that I have recently made, since I am keeping a separate phone log (I know, not terrifically efficient) in an Excel spreadsheet.

It would be lovely (not to mention more efficient) if I could also search in the reverse fashion – find a person in my contact list, then get the list of phone calls I have made to them. The contact list feeds the phone log; why can’t the phone log feed the contact list?

Instead, I have to scroll through the phone log on my Palm, saying to myself, “I know I called Santa Claus last week – why can’t I find the call so I can pin down the date of the call and make a note to myself to call him again before Christmas gets much closer?”

Visceral Media Launches Deeper.io's "Online Video Plus" for the PR/Marketing Industries

2010-07-15T15:32:00.004-04:00

Cutting-edge technology makes online videos more engaging and easier to view

White Plains, NY, July 14. Visceral Media, LLC announced today that it is implementing the Online Video Plus platform from Deeper.io for its video production and distribution services. Visceral Media, the strategic communications firm launched in 2006 by broadcast and PR veteran Lidj Lewis, is using Online Video Plus to enhance its clients’ videos as part of its integrated content distribution offerings. Visceral’s clients range from prominent corporations and their PR agencies to non-profit organizations, including the National Black MBA Association’s Westchester/Greater CT Chapter, which recognized Lewis as its 2010 Entrepreneur of the Year.

Online Video Plus from Deeper.io enables content owners to create an interactive table of contents for their online videos. Each item in the table of contents is a “deep tag” that, when clicked, takes the viewer instantly to that section of the video. Viewers therefore can preview the contents of the video before they start watching, and they can go directly to the sections of the video that interest them the most. They can also review sections of the video simply by clicking on the tags without having to use the less accurate video slider bar. A more complete explanation, including the Visceral Media event video below, can be seen here.

“We are very excited to have Visceral Media as our first marketing partner in the public relations industry,” said Victor Lee, CEO of Deeper.io, the company behind Online Video Plus. “Lidj and I worked together at Medialink,” Lee said, “so I know that Lidj is always looking for innovative media solutions. He pioneered radio and Internet content distribution at Medialink, and we are helping Visceral Media stay ahead of the pack with Online Video Plus. Furthermore, we wanted to be associated with Lidj because he is a recognized thought leader in the PR industry, serving as both a Board Member and Chair of the Website Committee of the Public Relations Society of America’s New York Chapter.”

“Online Video Plus is a game-changer,” said Lidj Lewis, President of Visceral Media. “With its interactive table of contents, it’s as easy to watch a long-form video as a short video because the control is entirely in the hands of the viewer. After all, that’s the fundamental principle of the Internet – control by the user.”

“I am proud to have Visceral Media be the first user of Online Video Plus in the PR market,” continued Lewis, “joining other market verticals using Online Video Plus, which include non-profit educational institutions, such as Jazz at Lincoln Center, and technology and event companies, such as Ultralight Startups.”

For more information on Visceral Media, please contact Lidj Lewis at 914-636-1654 and lewis@visceral-media.com.

For more information on Deeper.io and Online Video Plus, please contact Victor Lee at 914-261-8656 and victor@deeper.io.

We Don’t Know What We Want & We’re Unhappy When We Get It: “The Art of Choosing,” by Professor Sheena Iyengar

2010-03-28T09:12:00.053-04:00

I went back to my alma mater, Columbia University’s Graduate School of Business, on March 25, for a presentation by Sheena Iyengar, S. T. Lee Professor of Business, on her new book, “The Art of Choosing.” Her framework about choice and how we choose was thoughtful, insightful and, most importantly, clearly articulated several concepts that I had been grappling with recently.

My notes are below, with the caveats that they are my best rendition of the discussion, with no claim to accuracy; much of the discussion has been paraphrased, rather than being a direct quote of the participants; and I bring my own viewpoint and perspective to this discussion, which influences my perception of the discussion. I am sure that many of these studies and anecdotes are much more compellingly set forth in her book, which I have not yet read, and that I have hardly done them justice in my rendition of her presentation. I look forward to reading her book and attempting to more fully understand the fascinating work she has done.

Professor Iyengar was introduced by Eric J. Johnson, a founding co-director of the Center for Decision Sciences at Columbia Business School. Professor Johnson hailed Professor Iyengar for having introduced one of the most famous theses of decision research - too much choice.

Professor Iyengar began by discussing the broad general theme of making choices. She began her remarks by pointing out that if anyone in the audience had never made a choice, then her presentation would not be a relevant session. As expected, not a soul left the room.

We all have dreams about how our lives will unfold – she used to dream about becoming a pilot. After all, our schoolteachers said that we could be anything we set our minds to. Presumably at a fairly young age, she realized that she could not in actuality become pilot without her eyes – Professor Iyengar being blind.

In truth, we spend our lives struggling against our limitations. Sometimes we succeed, sometimes we don’t. As she traveled, she found that her lack of eyesight prompted unexpected reactions from local residents: in

Spain

, people gave her money for lottery tickets, while in

Japan

, people expected her to give them massages. [Caveat: these observations of hers are totally foreign (no pun intended) to me, so I can only hope that I heard them correctly, since they seem quite bizarre to me, culturally conditioned as I am.]

In general, people kept telling her what she couldn’t do due to her blindness, so she was constantly trying to understand her true limitations vs. those that were merely perceived. In her quest, she attended the Wharton School at the University of Pennsylvania where she confronted the question of what she could be when she grows up. [Note: the minefield of expectations (see later reference to the “Hurt Locker”) from which we choose is littered with false negatives and false positives – we are neither capable of “being anything we want to be” nor necessarily limited by outmoded stereotypes.]

She took a course on social psychology that changed her life. No one had ever said that a blind person couldn’t be an experimental psychologist [although I’m sure that it was not on the top of anyone’s suggested career list for blind students, even at Wharton] so she asked to be a lab assistant for the course. An experiment was created utilizing her somewhat unique situation that compared how subjects regarded feedback received from a blind person vs. that received from a sighted person. The experiment failed but had the pleasant outcome of launching her on her career path.

For one thing, it was the first time that her blindness was perceived as an asset. She chose [if you’ll pardon me for using that word] to become a researcher of the role that choice plays in our life.

In her view, choice is the tool we wield when we come up against our limitations. We want to choose our way to happiness, but in reality, choice isn’t everything.

She feels that she took advantage of the career choice that became available to her because she knew what her true limitations were. She didn’t have the same career choices as a sighted person, and, in that sense, it made her decision easier.

At the same time, she felt that her physical limitations placed a higher premium on her choice – she couldn’t afford to choose on a whim. The language of limitations, and presumably the how she coped with it, became second nature for her.

We Don’t Know What We Want:

Her thesis is that we can take the most advantage of our choices by acknowledging the limits of those choices. We believe that we’re experts in knowing what we want, so more choice is therefore better.

But do we know what we actually like? Do we even know whom we find attractive, a choice that would seem obvious, ingrained and immutable? She cited an experiment in which students had to select between two photos of reasonably comparably attractive people, such as:

Subsequently, the subjects were asked to explain their choices. The experimenters, however, had switched the pictures. In other words, a subject may have initially selected A over B, but later was told that they had selected B, whereupon they proceeded to explain why they had do so in preference to A, when in fact they had not. [Note: I think that the mark of an excellent presentation is one that answers lots of questions yet raises many more. (At least it helps keep me awake and engaged.) I would love to know what percentage of subjects couldn’t remember or were easily influenced into false memories, something that I am certain would never happen to any regular reader of this blog!]

Net net, we all [well, maybe you.] have trouble remembering and reconstructing our preferences after the fact, even on a very basic level, as in how we would like to continue to propagate our species.

Of course, as Professor Iyengar put it, this phenomenon also happens with “important” choices. In another experiment, she tracked college students during their graduation year. They were asked about their job preferences and attributes at several points during that year. She found that they kept changing their minds to the extent that the correlation of their choice at the beginning of the experiment in September to their choice at the end in May was 0.15. In other words, next to none. [Note: it would be interesting to have asked the students whether they recalled their earlier choices and whether they thought that they were being, inaccurately, consistent, or whether they recognized their changes in preference.]

If she is correct that we don’t actually know what we want [or it keeps changing even when we think our preferences are immutable] are we better off getting what we want or wanting what we get? [Note: perhaps her research points to the answer to that age-old musical lament: I Can’t Get No Satisfaction. Maybe Mr. Jagger should just be satisfied with what he has, which I’m sure is plenty, in any case.]

Professor’s Iyengar’s initial remarks implied that our choices are somewhat random or not well-grounded, even though we consider them to be the product of careful thought and deliberation. She next set forth a framework that, in my mind, showcases the human condition in an even less-flattering light.

We Let Others Decide for Us:

She shifted into a discussion about how choices reflect back on the person who made those choices. Our society, and by extension, each of us, associates choice with freedom – in other words, choosing is perceived as an act of freedom.

We therefore use choice as a means of self-definition: by asking ourselves what we want, we are asking: Who are we? What should I choose?

We try to express ourselves through our choices in order to assert our individuality and distinctiveness. But this self-expression can actually be an obligation rather than a freely selected “choice.” As an example, Professor Iyengar cited an episode involving her husband. She had gone to the Apple Store to purchase an iPhone for him. He was quite emphatic that he wanted a black one, allegedly due to certain characteristics of a black phone, such as being less likely to show dirt and scratches. While she was in line, he rushed into the store to find her and tell her that he had changed his mind to white. His rationale apparently was that everyone else is buying black; therefore he needed to purchase an iPhone of a different color.

She sees a similar phenomenon among patrons who order food and drink in restaurants – they do not want to be seen as copycats. Therefore, if someone else selects the item they had originally intended to order, they will often either change their original preference or feel the need to justify it on the basis of having made their decision prior to the other patron’s disclosure of their order. [Note: is our self-esteem so delicate that we would be considered feeble-minded to say about a fellow diner’s order, “Gee, that sounds good. I’ll have the same!”? Apparently so.]

Professor Iyengar characterized this behavior as the Drinker’s Dilemma – in situations where patrons at selected tables secretly wrote down beer orders, overlap often occurred among the orders, as would be expected. These patrons, however, were generally more satisfied with their beer-guzzling experience than patrons who had given their orders out loud. The exceptions among the publicly-announcing patrons were those who had ordered first.

In other words, if someone who orders before me selects the brand of beer I was planning to quaff, I will deliberately “choose” a sub-optimal outcome of a malt beverage of less preference simply to avoid the appearance of aping my fellow patron. Scary.

Please note the definition of “aping” in Merriam-Webster: “to copy closely but often clumsily and ineptly.” Well, of course, who would want to be accused of such behavior? It calls to mind the episode of “Seinfeld” in which our eponymous hero proclaims loudly, “I am not an animal!” Apparently, according to Professor Iyengar’s research, ordering the same beer as my drunken buddy constitutes disqualification from the Homo sapiens club!

Again, the question of choice seems to be less about what do I want and more about who am I and what do I know. We think of choice as a way to individuate ourselves. In this construct, we never choose alone. Choice is a means of communication, consciously or unconsciously. They constitute gestures that are interpreted by people around us.

In this process of self-definition and signaling to those around us, we want people to see us as unique individuals, but not as outcasts. [Note: this was one of the key insights of the evening. It’s obvious in retrospect, but that simply speaks to its insightfulness.]

Professor Iyengar, in conjunction with Professor Dan Ariely of Duke, had done a study of choices of baby names and neckties. In general, they fell into three categories: plain, a little unique and bizarre.

Preferences generally seemed to be for unique, with a general avoidance of bizarre. [Note: is this a tautology? Generally by definition, very few of us want to be viewed as “bizarre.” Similarly, behavior with which we would not want to be associated we would characterize as “bizarre.” Which comes first, the behaviorial chicken or the characterizational egg?]

When asked to characterize themselves and their choices, subjects saw themselves as having more of a preference for unique choices than other people. [Note: does this mean that we are all “special.”] But at the same time, they generally liked the same things as everyone else.

In summary, we all aspire to be unique – but we also want our choices to be understood by those around use. Achieving that societal positioning requires balancing the fine line between unique (“good”) and bizarre (“weird”).

In order to choose, we each have to answer for ourselves questions including: Who am I? What does that person want? What should that person choose? What would other people choose so as to be different, but not too different?

Professor Iyengar seemed to imply that these sorts of calculations often resulted in answers that differed from our “real” and unencumbered choices – presumably the choices we would have made if no one were watching? [Note: remember her earlier research that indicated we don’t actually know what we want, although we think we do.] This sort of dissonance can result in our choice of things we didn’t really want and ending up being dissatisfied [Note: but wasn’t that by our choice? About this time, I feel the need to choose an aspirin!]

[Note: I am reminded here of a characterization of winning in the stock market – the best choice of a stock is not the company that YOU think is the best;

it’s the company that you think EVERYONE ELSE thinks is the best!]

Summarizing the presentation so far: We don’t really know what we want, although we think we do. We are also willing to make choices that we think will impress or influence those who are aware (or even care!) about our choices. Could it get any worse?

Let's Add More Choices, Just Because We're So Good at Choosing

Of course, because Professor Iyengar went on to demonstrate that the process of choicing is further complicated by the explosion of choice. [Remember, since we think we are free-thinking actors and choice is an expression of our individuated special selves, more choice is better as it gives us more opportunity to express ourselves, especially in the purchase of items we didn’t need in the first place!]

She cited the exponential growth of the number of items in a typical grocery store from 3,700 to 45,000 [Note: sorry, I missed the time frame, but even such growth since the emergence of the modern supermarket would be pretty impressive.]

She apparently became interested in the implications of this sort of phenomenon during graduate school at Stanford University in northern California. She found herself going into a local grocery store with lots of choices in a variety of product categories, yet she noticed that she often came out empty-handed. She asked the manager if people were taking advantage of the multiplicity of choices and buying things, such as a selection from among the store’s 348 kinds of jam.

Professor Iyengar decided to use jam, an innocuous product, to test the impact of choice on consumer purchases. She and her team set up a tasting station near the entrance to stop customers on their way in to the store and offer them a selection of either 6 or 24 flavors of jam. They then tracked the proportion of incoming customers who stopped at their station to sample some jam and those who subsequently purchased jam, identified through special coupon designed to track sales.

The results were that more people stopped at the table if there was a higher selection - 60% of incoming customers decided to check out a sampling of 24 flavor, while only 40% of customers paused to inspect a selection of 6 flavors. [Note: obviously, customers were presented with one selection or the other as the contrasting sample sets were never presented simultaneously.]

The plethora of choices, while encouraging customers to stop, had the reverse effect on their propensity to purchase. When there were 24 choices – only 3% of customers subsequently bought jam while 30% of thosre presented with the relatively meager selection of 6 flavors ended up making a purchase.

In summary, while having more options is viewed by consumers as being initially more attractive, they are conversely more likely to choose from among a few selections than from a lot of options.

Professor Iyengar has hypothesized that our cognitive capabilities are overwhelmed when we have to do the math of comparing and contrasting numerous options. How many choices can we handle? According to a gentleman named George Miller (whose bona fides I did not catch), we are limited to what he calls The Magical Number: Seven plus or minus two. We are restricted by our limited capacity to store information in the DRAM active memory of our brain. As a result, when confronted with too many choices to easily process and from which to make a selection, we default to the “no choice” option and decline to choose at all.

She cited the example of declining participation in corporate 401(k) plans that directly correlate to the increased number of fund options – bonds, stocks, emerging markets, oil & gas industries, pharmaceuticals, junk bonds, etc., back in the day when people actually harbored a hope that they could provide for their retirement through prudent investing.

Regardless of domain, as the number of options increases, people delay or choose things that are worse for them. [Note: I suppose that, as the number of choices increases, the opportunity for sub-optimal selection increases even faster. If I have two choices, assume one is better than the other. If I now have 10 choices, I’ve increased my pool of options by 400%, but the number of sub-optimal choices has increased by 800% from one bad choice to nine potentially bad choices.]

Even when we make the “correct” choice, we are often less satisfied, presumably because we are fretting about whether a different choice would have been preferable.

So how do we deal with a situation in which we have to know ourselves and what we want, compounded with multiplicity of choices? Professor Iyengar posits that people get better at choosing with practice. For example, we can acclimate ourselves to choosing from a wide selection of options.

She cited the example of German car buyers who, on the plus side, are able to custom-design their own automobiles. On the negative side, that means making 67 separate decisions across the range of trim, engine, body paint, etc., with each decision having between 4 and 56 options each – such as a selection of audio options including satellite radio, in-dash CD player, 8-track tape player [OK, maybe not that one.], etc.

Her team did not change the substantive options themselves, but tested the impact of how the choices were structured. Their first approach was to “Start Deep” – begin with decisions requiring choosing from among many options (let’s say 56) and proceeding to decisions with fewer options, such as 4.

They also tested the reverse “Start Shallow” approach – start with a smaller number of choices and progress to decisions involving larger numbers of choices.

In each case, the number of total decisions and choices remained the same – they simply changed the order of presentation. Yet they found that the differing frameworks of choices had profoundly different impacts on ability of consumers to wend their way through the labyrinth of self-definition through personalized expression on the Autobahn.

Starting shallow seems to enable consumers to become acclimated to the process of sorting through choices and making decisions. By easing them into the process, the auto retailer was in effect teaching the consumers to get comfortable with forming preferences. As Professor Iyengar phrased it, “learning to figure out what I want.” [Note: how many of us will voluntarily admit in mixed company that, not only do we not know what we want, but that we don’t know how to figure out what we want?]

In other words, they experienced less decision fatigue than if they started deep with multiple choice decisions, in which case, decision fatigue kicked in sooner.

Not only that, but those who started shallow scored higher on every measure of satisfaction with the outcome. Net net, a more pleasant process and a perceived higher quality outcome.

Conclusions of this sort are not of interest only to pointed-headed academics (I’m just checking to see who’s reading this!). Armed with this knowledge, we can re-orient our behavior to conform with our heretofore unknown cognitive limitations and preferences. For example, Professor Iyengar felt that, when shopping, we tend to start with the stores that have the most options. We are probably better off starting with stores that have fewer options and working our way up to the more complicated stores – a tall Cinnamon Dolce Frappuccino Light Blended Coffee, anyone?

Another terrific coping mechanism she discussed was that of “categories” that enable our minds to differentiate sets of choices, presumably by grouping choices so that we are not necessarily making a multitude of individual choices but are filtering groups of choices instead.

She cited a wine store called Best Cellars. While it addresses the excess choice issue by only having 100 selections of wine, its true innovation seems to be in having created 8 categories of wine from which patrons can make their selections - fizzy, fresh, soft, etc. Once a category has been selected, one presumably then chooses a wine from among those that fit that category.

In broad terms, categorization enables you to learn more about yourself and what you want – in other words, it helps you to choose. [Note: an interesting circle – you choose in order to define yourself; knowing yourself helps you to choose.]

Meaningful Decisions (or, Maybe Hobson Was Right):

Professor Iyengar then switched gears entirely to a much more profound discussion about the concept of choice. She argued that we can’t or shouldn’t always want to choose, that there are some choices that we’re not prepared to make or would want to prepare ourselves to make. She felt that we may be confronted by what she called “choosing domains” – that an obligation to choose requires that we choose as often as possible. This issue was encapsulated by her question: if you had to make a life-altering choice where no options were desirable, would you want to have to make a choice?

She gave the example of a baby born with a cerebral hemorrhage. The choice to be made was to remove life-support from the infant, leading to death, or to wait. The outcome of the latter would range somewhere between death and life in a vegetative state.

She illustrated the perils of the implications of choosing by comparing parents in Paris and Chicago. In all cases, life support was removed and babies died. The difference in the framework of choice was that, in Paris, the doctors decided, while in the

U.S.

, the parents made the choice. [Note: again, I found her presentation compelling because it raised additional questions: haven’t the doctors essentially done the choosing in each case by the way they framed the question and making the choices so stark? If I give you the choice of bad option A or bad option B, which includes A with some worse stuff thrown in, I’ve basically guided you towards option A.]

The parents were the subject of a follow-up study six months later, and significantly different outcomes were found among the parents centered on the issue of who had made the life-or-death decision. The findings were that the American parents were more depressed than the French parents, who were more likely to have moved on with their lives, perhaps even to the extent of planning for other children.

In looking back at this experience, the study found that the French parents focused primarily on the experience of the baby and the place it held in their memories. The American parents’ memories were focused on the choice that they had been required to make. Under those circumstances, the French parents could understandably have taken some solace from the introduction of a new life into the world, albeit briefly, while there seems to have been little upside to American parents endlessly revisiting their choice of horrendous option A and even worse option B.

Interestingly, the parents were also asked their opinion of the framework of choice that they had experienced. When asked if they would have preferred about reversal of choosers, each set of parents felt that the appropriate parties had been given the responsibility of making the choice. The French parents felt that the doctors were in a better position to choose. They did not, however, seem eager to make the choice in any case. The American parents, on the other hand, felt that it was their duty to choose, but felt trapped by this choice.

If choosing is supposed to set us free, why do we allow ourselves to become slaves of choice?

As a society, we reject the language of limitations – we want to be able to choose, or at least, so we think. In viewing our lives as objectively as possible, we sometimes might be better off to say that we CAN’T choose. After all, not every opportunity to choose is an opportunity to improve our lives. [Note: that’s true, but everything is relative. Choosing between two negative outcomes is still an opportunity to improve the net quality of our lives. Living with the burden of having made that choice, however, can understandably outweigh the perceived benefit of choice and control.]

Choice is a powerful tool – it enables us to go from who we are to who we want to be. All the same, however, it doesn’t solve all of our problems or fulfill all of our needs. Sometimes it’s too much.

Another wonderful insight from Professor Iyengar: To get the most of out of choice, we have to get choosy about when we choose. [Note: the concept of meta-choice – choosing when we want to choose – therefore becomes a fundamental guiding principle of our lives.]

She played a brief clip from the Oscar-winning move “Hurt Locker” showing the protagonist dealing with a situation where he has to make lots of decisions and there are a multitude of choices among which to decide. The contrast she was illustrating was that the hero makes decision after decision with calm in

Iraq

when he is confronted with life-and-death situations. But upon his return to the

U.S.

, he is paralyzed by the choice of cereal in a grocery store. As a result, he apparently returns to

Iraq

to resume his earlier mission of defusing and destroying hidden bombs, in other words, to restore meaning to his choices.

We begin to believe that all of our choices are important to us. We must focus on the choices that really matter. In that way, we can balance our hopes and desires with clear eye on our limitations.

Questions from the audience:

Q: how do we let others choose? For example, Obama’s health-care insurance bill received Congressional approval this week. An issue seemed to be that of choosing between the government or insurance companies making decisions regarding our health.

A: In the West, we value our freedom. Under the status quo, we had the perceived freedom to choose our insurance company, who would then make choices about our health.

Q from me: her earlier example of students and career preferences indicated that students convinced themselves that they were happy with their choices, while the beer drinkers were less than happy because another tippler had ordered the brew which they actually preferred. When do we rationalize our choices and when do we grouse about them?

A: Her study indicated that students were happiest when they believed that what they got was what they wanted. She differentiated between maximizers, who seek more choices, and satisficers, who are more willing to be less thorough. Apparently, the students who were maximizers got more offers, as would be expected. The outcome, however, was that they were less happy with their ultimate choice, presumably due to concerns that a different choice would have been preferable.

Furthermore, even if one had such tendencies, it’s not practical to attempt to maximize on every decision with which we are confronted – there are simply too many decisions and choices. In many situations, we’re just going to have to be satisfied to be a satisficer.

Q: people own what they choose. People don’t resist change, they resist being changed.

A Going from zero choice to some choice is enormously powerful. Therefore, we don’t want to get rid of choice, we just need to manage it.

Author’s Summary: The act of choosing has a myriad of implications. It connotes freedom. It gives us an opportunity to define ourselves. At the same time, it is fraught with negative implications. I can’t choose because it’s too complicated. I can’t choose because the consequences are too severe? What if we make the wrong choice and I’m unhappy? Or people think we’re bizarre?

The good news is that we can train ourselves to both recognize the choice frameworks we are given and decide how, or even whether, we choose to choose. A trivial example: if I can’t decide between the ribs and the fish & chips, I might as well choose at random. It’s not likely that I’m going to get any additional information that will help me decide. And, what’s the worse than can happen? To the contrary, what’s the best that can happen – making the right choice is likely to only have minimal impact on my long-term well-being, so why expend what few neurons I have left agonizing. Furthermore, I am trying to train myself to live with that decision – even if the choice turns out poorly, let’s not have a nervous breakdown over it. It doesn’t really matter, and besides, the other choice could have been worse.

When I chatted with Professor Iyengar about this issue during the reception, she said that she allows her husband to make menu selections for her because, for whatever reason, it’s more important to him than it is to her.

Now, that’s a woman who knows how to choose!

Media Summit 2010: Interview with Arthur Sulzberger, Jr., and Janet Robinson, of the New York Times

2010-03-14T20:24:00.000-04:00

Paul Bascobart, the president of Bloomberg BusinessWeek, started off the second day of the 2010 Media Summit, Thursday, March 11, by indicating that today’s sessions were going to be more print-oriented, as opposed to yesterday, which had been more television and video-centric. He introduced James Ellis (henceforth to be referred to as E), the assistant managing editor of Bloomberg BusinessWeek, who was going to be interviewing Arthur O. Sulzberger, Jr. (referred to below as A), Chairman, The New York Times Company & Publisher, The New York Times, and Janet L. Robinson (noted below as J), President and Chief Executive Officer, The New York Times Company.

E: The New York Times is engaged in looking at new methods of delivery and involved in a search for a new business model. Among the media properties of the New York Times Company, the focus of the morning’s discussion would be on the challenges faced by the New York Times (NYT) - America’s premier media brand. In its160-year history, it has shown a tremendous ability to change, creating hope that it can do so again.

What does the NYT brand mean and how much of an advantage does it provide in dealing with the necessary changes?

A: He doesn’t believe that everything is changing, i.e., that up is down and vice versa. The challenge is converting what the NYT does so well to a whole new way of operating. This challenge goes beyond adapting to the new formats.

Instead, the real challenge is that of keeping the brand promise for all of its brands as they accelerate through the digital transition. Brand is critical as long as you don’t allow it to handcuff you. It’s not how people get info, but the quality of the news & info, and the integration of reporting into the social web.

E: The NYT brand is so closely associated with print – does that handcuff the brand?

J: It is an advantage to have the strength of the brand name. We can continue to endear ourselves to those who are loyal to the print product while developing loyalty with new users in the new formats.

The key to the NYT’s brand differentiation is its strong commitment to quality. People understand and applaud what they have done as we transition into a web format.

E: When people think about older brands on the web, they get tripped up on the distinction between journalism and content. Is it a more difficult challenge for a brand based on quality journalism to move into the content arena?

J: If we looked at the transition as simply to digital, as with a generic “newspaper.com,” then it would be a problem. The entire experience has to be extremely rich; it’s not just about transferring articles to a web format. The NYT invested early in the web, as far back as 1994-95; we embraced it as an opportunity, not a threat. There is no denying that it’s part of our future. Thanks to those efforts, we became the #1 newspaper website and the #5 overall news & info site early.

A: We recognized early that there was a lot that we didn’t know. J spearheaded the creation of a research & development department to provide a little more direction for the future.

E: When media companies refer to themselves as being platform-agnostic, it raises the ire of journalists.

A: That approach is positive because we can’t define ourselves by method of distribution. Otherwise, we would still be using pigeons. The New York Herald foresaw the death of newspapers in 1850 due to the advent of the telegraph.

We are platform-agnostic because we care about journalism, which creates a valued audience, which we sell to advertisers.

The iPad and the Kindle are critical parts of our future

E: How is the condition of the economy changing the need for the transition – is it making it faster?

J: The need for change is faster due to the economy, consumer trending and changing habits. As a result, the advertiser has become very careful in spending money. Lots of dollars were held back recently. More recently, people are recognizing an opportunity to capture market share, so there is an increased interest in getting their message out and choosing methods that work for them.

E: Is there a long-term decline in trend for ad spending?

J: There has to be a commercial marketplace. People have to get their messages out in order to sell goods and services. The speed of the ad recovery, however, is still to be determined, although we are starting to see people have strong interest in gaining share.

The history of recessions is that people who come out early can steal market share.

E: Historically, they have been investing during tough periods. Was this recession different?

J: We have continued to invest. We have done some cost restructuring also. We have invested in journalism, technology and our digital future.

The cost cutting was in the newspaper distribution and production side of the business. We needed to be a more productive and efficient operation. One could ask: Why not do that earlier? A crisis should not be wasted.

We also looked at our portfolio carefully and divested non-core properties.

E: Managers presumably understand cost cutting, but how about journalists? How do you communicate that message to the editorial side?

A: It wasn’t hard to communicate that because Bill Keller and the newsroom saw the painful work being done on the business side where the numbers shrank dramatically. Also, we are being selective in hiring but bringing in new people on the editorial side.

J: Newsrooms understand that there has to be a constant re-evaluation of resources. At the same time, quality journalism can’t be created without a healthy business operation.

Over all, the understanding between the editorial and the business sides is the best it’s ever been.

E: Did you think that digital would change the business this much and this quickly?

A: Everyone recognized the opportunity – get news and information out regardless of the location of the printing presses – we can now serve people at enormous distances.

The speed of the challenge, however, has moved faster than expected.

We are now moving into the secondary and tertiary phases – the social media phase. We are becoming parts of conversations happening all around us, not through us. This will require us to have a new mindset.

E: Is this a net plus?

A: It’s a net plus if you get it right

What are the best ways to keep a quality audience growing and keep them engaged with what we do? If it requires being on Facebook, then we have to be on Facebook.

E: The media is used to one-way conversations. The ability to have two-way conversations is exciting, but how do we preserve what is worthwhile to us and our advertisers?

A: The challenge is what to do about a two-way conversation that doesn’t include you. How do you make your information part of the conversation?

E: Let’s look at the old-media, traditional part of the business. Newspapers are challenged. Advertisers are looking at how they want to play the recovery. Will the end of the year look better for newspapers in general?

J: Everyone in our newspaper business has embraced the internet as a wonderful opportunity [Note: seems a little late.]

E: Who is your guide for managing through a bad economy?

J: Industries that restructured their traditional businesses in order to invest in new technology. Our peer group is still committed to quality – Washington Post, Financial Times, Conde Nast.

New companies like Facebook and Twitter are good at reading consumer trends.

E: Do we need to stop thinking about media so much as being ad-supported?

J: Yes. Our circulation revenue base has grown to 40% of total revenue.

Diversified revenue streams are good for the company in the long term. We put a lot of deliberation to our decision to go into a pay model for the website in 2011. We looked at lots of pay models in terms of their impact on our audience and our advertisers, and the willingness of consumers to pay for content.

We settled on a metered model – we think that we have found a balance for the appropriate amount of free and paid content. We feel there is an opportunity to gain a good deal of revenue from this pay model.

It takes this period of time to get everything right, so we had to announce this way before our launch date.

E: Lessons from Times Select?

A: People were willing to pay for content. Later, since digital advertising was skyrocketing, we took down the pay wall in order to take advantage of ad revenue opportunities.

The new pay wall is due to recent changes – it shows the power of testing and adapting. Will a pay wall be the right thing 10 years from now? Don’t know.

E: Murdoch and others are trying to deal with content aggregators. How do you feel about aggregators?

A: We can’t put all content aggregators in the same box. There’s a contrast between fair use and theft. Google is a powerful part of our ecosystem and we work with them well. Other sites lift content and don’t even link back to us – that’s theft.

E: How about new devices – are they trying to figure out the ad model so that ads work as well as on existing formats?

J: It’s early to predict the ad experience on the new devices. Ads will have an important role – it may be similar to web format or it may be comparatively different.

Media companies are working on making the content experience enjoyable – there is an opportunity for marketers to do the same for ad experiences. Advertisers have taken advantage of video and larger ad formats online.

The NYT R&D lab has been a useful place to bring advertising agencies and clients to show them future advertising opportunities. We had created the lab in order to be in the forefront of technology changes.

Furthermore, the NYT was the first company to integrate our print and digital efforts in both content and advertising.

E: Carlos Slim has a 6.5% ownership of the NYT Company. What about others who want to participate in ownership in this family-controlled company?

A: People who want to participate with the NYT can be shareholders [albeit of non-voting stock]. We are delighted to have Carlos as a major investor in the NYT Company. He believes in our mission and the quality of what we do [Note: sounds good, but who really believes this?]

E: Are you recruiting long-term investors?

A: Investors who don’t share our vision sell their shares. The Company is not going to be sold or split apart.

Audience Q: What is the most challenging aspect in serving a traditional base of customers and advertisers who are not as digitally connected?

J: Part of the rationale of the R&D lab is to show the effectiveness of the web to advertisers. Some advertisers very advanced, others are coming along. We also show advertisers what others are doing in their own space via the R&D lab.

The lab is a differentiating factor as is our journalism.

A: Print is not going away. We recently opened another print site – we have more print sites than we could have imagined.

The number of print subscribers who have been with us more than 2 years – who are generally considered lifetime customers – increased in the last several years from 650,000 up to 820,000.

Q: If the paid model doesn’t work, what are your options?

J: We would look at alternative models to adjust or diversify our revenue streams or create new revenue streams. For now, the metered model seemed best from a research perspective.

Q: How can we get ourselves and our clients to see the lab?

J: Call her.

Q: You are accustomed to a direct relationship with your customers – what happens in a device world where there are intermediaries between you and your customer?

A: The relationship with our customers is critical to our success – we will maintain that relationship.

J: A critical part of the analysis to understand how consumers use the paper and digital products – what’s the consumer behavior?

Q: It’s important for consumers to pay for content. But it is hard to change consumer behavior. How can you change the consumer propensity to get them to pay?

A: Focus on the ease of the consumer experience. It is not necessarily as hard as assumed to change consumer behavior. We expect that our core loyal audience will move over to the pay model.

J: We should give more credit to the consumer with regard to their judgment regarding quality. Consumers understand what is and is not quality. Also, consumers understand that quality journalism is expensive and has to be paid for. We will continue to invest in the experience – we will improve our product and add more goods and services.

Q: How much of your revenue is from digital?

J: 14% and expected to increase. A large group of advertisers buy both print and online, and that is why we integrated the newsrooms, sales and marketing.

Notes from 2010 Media Summit: Interview with Jonathan Klein, President, CNN/US

2010-03-14T10:40:00.002-04:00

The 2010 Media Summit opened on March 10, 2010 at the McGraw-Hill Building in Manhattan. My notes are below, with the caveats that they are my best rendition of the discussion, with no claim to accuracy; much of the discussion has been paraphrased, rather than being a direct quote of the participants; and I bring my own viewpoint and perspective to this discussion, which influences my perception of the discussion.

Introductory remarks were from Paul Bascobart, the president of Bloomberg BusinessWeek. He started out by saying that this was a particularly interesting year to review business models [Note: aren’t they all lately, and for the foreseeable future as well?] and predicted that the Summit’s sessions would include some “old-fashioned Italian fistfights.” He pointed out, as everyone in the audience presumably knew, that last year’s summit had been held in the midst of the financial crisis. The stock and ad markets were down, and iconic media brands were going out of business.

It was now three months since the acquisition of BusinessWeek magazine by Bloomberg. He proclaimed that they are on the cusp of the relaunch of an exciting new magazine. He said that it was going against the trends of the magazine business – there would be more stories with increased frequency of publication on thicker paper, an integrated newsroom with 2300 reporters, and on April 23, a new.businesweek.com.

He then introduced Josh Tyrangiel, who had joined Bloomberg BusinessWeek as Editor in November from Time, where he had been deputy managing editor at Time magazine and managing editor at Time.com. Josh (T) was to interview Jonathan Klein (K), the president of CNN/US since 2005 as the first event of the Summit.

T offered up a self-proclaimed softball question regarding the speed of change of the cable news business model. Is it feasible to have a non-partisan 24-hour cable news network?

K responded by pointing out that CNN had its most profitable year ever in 2009, concluding six years of double-digit growth. He attributed some of that growth to having about 20 different properties, including international, headline, online, airport, and a dozen or more countries. As for the benefits of this far-flung organization, he said that some of the first reporting on the Chile earthquake had been from CNN Chile.

T: Where’s the growth?

K: Online and mobile have enormous growth potential. The U.S. cable network is a growth area, since it has two fully-distributed networks – CNN & HLN.

T: There are very few independent media companies. What is an example of synergy from being part of Time Warner?

K: Synergy is driven by people. Some of CNN’s best joint efforts have been with HBO, for example, sharing talent, as with Fareed Zakaria on the Mumbai massacres. These efforts are driven by CNN’s relationship with HBO senior executives and can’t be simply mandated by Time Warner senior management. CNN Money is a successful joint effort with Time Inc.

T: Are these relationships a priority driven through the organization?

K: The business lunch should not be under-estimated. These relationships are best created in a non-pressured environment without reference to specific projects.

CNN also has 1000 affiliates, where they are fostering a climate of cooperation. CNN doubled its profit over the last 4 years due to working together with those affiliates. A premium is placed by Jim Walton, head of CNN Worldwide, to create such collaboration.

T: Does CNN employ people as access points between divisions?

K: CNN hadn’t done so previously. Now, however, CNN doing more in online video. There are two people pushing content from CNN into CNN.com, content that is not necessarily suited for TV.

T: CNN benefits from having two sources of revenue – subscribers and advertising. What about competitors who only have one stream?

K: Everyone in media is looking for multiple revenue streams. The model was created by Ted Turner and fostered by Phil Kent, head of Turner Broadcasting.

CNN is in the happy position of being indispensable at times, not always. That has
created a brand association desired by advertisers as well as cable & satellite providers.
CNN therefore has a focus on over-delivering in those situations because there are few
indispensable global brands.

T: With regard to competition, 24-hour cable news is like an umbrella. One can make a great umbrella or simply tell people it’s always raining. CNN ranks only 3rd in the 25-54 demographic, despite its profit in 2009. Is it a flaw to stick with quality?

K: Ratings are only one metric. CNN doesn’t sell any one show or daypart. Instead, it sells the overall reach of the network. The ways it gets ratings are more important than the ratings themselves. It over-delivers on real journalism.

As a result, CNN is number one in cumulative audience – the total number of people watching. In February 2010, CNN US had 100 million viewers, Fox had 91 million. Fox viewers stay longer, so that boosts their ratings. Also, ratings don’t count out-of-home, online, and mobile, further handicapping CNN.

T: Does it bother you to be in 3rd?

K: CNN thinks of itself as being in 1st place with more and higher quality viewers. It is number 1 in digital, both web and mobile, it is the #1 recognized name in international. Competitors, however, try to define cable news as primetime.

The real competition for CNN is actually social networking, especially at night, a phenomenon that has shifted from daytime as being primetime for the web. People on Facebook and Twitter are also sources of news. He wants CNN to be the most trusted source [Note: any recent studies seem to indicate that social networks are losing some credibility as sources of information. He is more worried about Facebook than about Fox.

T: Does he have a social media director?

K: CNN has a social media group, which is not segregated out as separate function. Instead, social media is integrated into everything.

He likened CNN’s move into social networking to the controversy he created as the first person at CBS News to put his email address on his business card. He feels that CNN similarly needs to be accessible and be part of the conversation. People crave information. Because it is easier to get, it creates its own demand. If CNN can solve the complexity, it can make information easier to access.

At the same time, he needs to keep an eye on expenses and quality/

T: What do people want on social networks?

K: People are looking for reliability – is the information true? They will spread nuggets of truth to their friends. Truth is the essential function among social networks. He doesn’t want to cloud CNN’s reliability with suspect partisanship. CNN is the number 1 source in digital due to its reliability.

CNN is the most dependable source of news.

T: Klein says that CNN is non-partisan. The Pew Research Foundation says that CNN’s audience skews Democratic while Fox skews Republican.

K: When you get a large audience, you get all kinds. [Note: this was a particularly non-responsive answer. T was asking about composition, not size, of the audience. Since this issue arises often with regard to CNN and Fox, Klein’s failure to have a more responsive, even if stock, answer, contributed to the sense that much of the discussion was based on the “party line.”]

Profitable businesses can be built around niches. CNN’s niche is people who crave reliable information about world. That niche is underserved due to the proliferation of partisan sources of information. Competitors get fringe audiences, and CNN gets the vast audience who wants dependable news.

T: What is the future of America if sources of news harden along ideological lines?

K: Changes prevent such hardening. Five years ago, there was no Facebook or Twitter. The constant is that people will want reliable sources of information, despite the growth of long tail interests. There needs to be at least some source seen as a non-partisan and straightforward source of information.

CNN has gained 50% more viewers than in the mid-1990s even with more competition. Competition forces you to be better as the audiences demand improvement. Then, the audience spreads the word about what’s good, as with the movie Paranormal Activity. He acknowledged that CNN had gotten criticism about its Iran election protest coverage and asserted that it had improved as a result.

T: CNN has to transition from being a logistics organization to being a reporting organization.

K: In the past, if there was no competition, just getting there to report the news is sufficient. CNN also benefited by airing news when no one else did.

Now, other news organizations can also provide the effect of being there. Depth of analysis is harder since more brainpower and creativity is required. That’s why they put Fareed Zakaria on the air. He would not have had a place on cable news 10 years ago since he’s not just about being there. Similarly, the rise of Ali Velshi is based on providing synthesis of information.

T: Isn’t synthesis similar to opinion?

K: There is a difference between someone who’s actually been somewhere vs. sitting in a cloistered environment and throwing bombs.

Many opinion leaders are informed but do not have the additional credibility of actual experience.

CNN anchors don’t advocate policy. Guests will advocate. He acknowledged that CNN is not perfect.

The best journalistic organizations rarely miss a step, citing 60 Minutes, the Wall St. Journal and Vanity Fair. They provide consistent, in-depth reporting and analysis.

T: Is such journalism possible?

K: The WSJ does it every day. CNN cancelled Crossfire because it had degenerated into mud-throwing. Anything that is around too long eventually becomes a caricature of itself, a circus [Note: Quite a generalization. What about 60 Minutes?]. The creation of the Situation Room program as an island of intelligent discussion resulted from CNN’s assessment of Crossfire.

T: What about stories regarding the balloon boy?

K: CNN always has to cover breaking news. After all, if the boy had been in the balloon, it would have been a disservice to not have covered the story. On the other hand, CNN moves off of a story when it veers into a speculative mode.

While CNN’s coverage included having the parents of balloon boy on Larry King with Wolf Blitzer that night, there was also no other major story competing for CNN’s attention.

In CNN’s defense, it dropped the story in general afterwards even though not everyone else did. Generally, cable news takes a story and speculates about it endlessly.

His experience from launching and running the FeedRoom is that Day 2 of almost any story drops off sharply with regard to audience interest. He is trying to bring that learning to cable news, that the audience tires of a story before the cable news networks do.

As an example, the Congressman Massa story is viewed as generally dead; the audience is already over it. Of course, an errant producer may cover the story anyway.

CNN’s tries to avoid speculative stories. Regarding Tiger Woods, CNN covered the automobile crash. “Once you get the picture, dial back.” CNN purposely did not get into the speculative phase with psychologists, sex addiction counselor, mistresses, etc. CNN tries not to feed that angle. It may be legitimate for other news outlets. CNN would interview Tiger Woods but not anyone who has anything to say about Tiger Woods.

TL: What is more important: good producers or good on-air talent?

K: Both. Producers tend to be deferential to talent. The key is having talent who understands news and producers who can help them achieve the desired quality. Examples include Jeff Zucker and Katie Couric at the Today Show. That symbiosis is why CNN hired Tom Bettag for Candy Crowley. At the same time, he wants viewers to have fun – he doesn’t want CNN to become CSPAN.

Too many producers and talent have been corrupted by the direction the business has gone toward less intelligent discussion and more fireworks. It was exciting when it started, but now everyone does it. There is an oversaturation of the meaningless and trivial. CNN has to deliver something more substantive and serious. By delivering that, CNN will build its audience as it did in 2009.

T: how’s the relationship between CNN and the White House?

K: It’s the way it was before. Some reporters [Note: presumably not at CNN] expected a golden age in White House – journalist relations. CNN pointed out to the news community that the White House is populated by hard-bitten politicians who will use journalists to accomplish their own ends.

Strangely, the White House is fixated on traditional journalistic outlets such mainstream broadcast, e.g. Sunday morning shows. The White House reverted to an old-fashioned media approach despite having won the presidency based on its facility with new media.

The White House mishandled its approach to Fox Networks by criticizing Fox but not attacking MSNBC, which supported them. It didn’t seem statesmanlike.

People are skeptical of authority, and reporters are supposed to do the same – hold the powerful accountable. For that reason, the Millenial generation and other like-minded skeptical audiences should love CNN.

T: How was CNN on the coverage of the financial crisis?

K: Ali Velshi is good at explaining the terminology. CNN could have done more on the issue of accountability for the crisis. The public is not clear on whose fault this is: Why did this happen? Who should we be angry at? CNN, however, doesn’t want to simply fan the flames to public resentment. It doesn’t want to just tap into public anger; it has to enlighten the audience.

TL: Do journalists understand the root causes of the financial crisis? Is that journalists don’t get it or that they can’t explain it?

K: Perhaps no one understands the root causes. The news media should at least set out theories about the causes and dissect and explain them in an intelligent way.

T: At the time of the crisis, should CNN have educated everyone?

K: CNN did launch summits to leverage the assets of Fortune and Money magazines. It had primetime discussions about the economy. But there needs to be significant frequency of programming before people realize you’re even making these sorts of efforts. Therefore, CNN’s new approach is in trying to do fewer things better, e.g., its new show with Ali Velshi.

T: Is there a ceiling on the ability of TV to explain complexity?

K: New technology allows more detailed explanations, such as John King’s electronic board during the 2008 election.

CNN did a study about consumer viewing habits. Consumers were asked about their favorite shows and how often they were viewed. On average, 15% of the episodes of their favorite shows were watched. The Sopranos has the highest score – 36.7% of the episodes were viewed

Therefore, networks have to be consistent due to lack of viewer frequency, and NPR is an example of a consistent news provider.

T: Was Lou Dobbs over the line with his commentaries on public policy?

K: CNN concluded that this is not what it wants to be about. It should let others engage in opinion to that extent.

Lou understood the difference of opinion with his approach. He wants to pursue advocacy journalism so he and CNN parted ways.

T: How does he feel about the depth of competition?

K: Fox fostered a culture of an Alamo-like environment: us against the world. CNN is more focused on all of the things that are changing in the competition for eyeballs. It prefers to engage in competition for quality of journalism, and on that score, feels that it is like the way the Yankees viewed the competition during their years of dominance.

T: What news asset do you most covet?

K: 60 minutes, due to its consistency over time. Executive Producer Jeff Fager updated a classic and took it up in quality, so he watches it all the time.

T: Would CNN do a magazine show?

K: Audiences may not want that format anymore. The preparation time can put you out of sync with the news cycle, even thought CNN does not want to just tell you what happened today.

In 2 years, there has been a 30% increase in the number of people getting their news digitally. To meet that growing demand, CNN will definitely provide additional news formats, such as investigative, long-form and documentaries.

T: Will there be a loss if evening network news shows go away?

K: No. We can’t cling to the forms and formats of the past. We have to question everything. CNN could decide to stay the course or evolve. It shouldn’t be like the ad agency depicted on MadMen, oblivious to the changes that are coming.

There would be no loss because there are so many sources of information. More sources mean that serious journalism is easier to do than before. Of course, journalists may not make the same amount of money as before. He doesn’t know anyone who gets into and stays in journalism for the money - it’s an obsession, not a profession.

SobelMedia: Uncorking Gary Vaynerchuk: an interview by Ellis Henican

2010-02-20T11:45:00.001-05:00

I attended SobelMedia’s latest event, an interview of Gary Vaynerchuk by journalist http://henican.com/ of Newsday and Fox News on the evening of February 17, 2010 at the Samsung Experience at the Time Warner Center.

Gary Vaynerchuk has become a leading online and social media celebrity with his outspoken personality, relentless promotion, and savvy use of the latest online and offline marketing platforms. These include Twitter, his Wine Library TV website, and his book, Crush It.

My notes are below, with the caveats that they are my best rendition of the discussion, with no claim to accuracy; much of the discussion has been paraphrased, rather than being a direct quote of the participants; and I bring my own viewpoint and perspective to this discussion, which influences my perception of the discussion.

Bill got the event started by reminiscing that he has began his breakfast events in June 2006 in a coffee shop hear Grand Central [with yours truly among those in attendance]. His efforts had grown into must-attend gatherings for those who want to stay abreast of the latest developments in media. While he had started with breakfast events, due to some feedback regarding the early morning start times for those events, he announced that he was now launching evening events, with this being the kickoff.

He thanked his sponsors, including Definition 6/Creative Bubble, Samsung, TrylonSMR and Sunshine Suites. He also mentioned the Levin Institute’s Jumpstart Program for entrepreneurs and startups and said that he enjoys being involved with their efforts. He also lauded Bouchon Bakery, who catered this evening’s event [the turkey sandwich was my favorite - even beat out my perennial preference: pastrami].

Bill announced his next event – a breakfast on March 18 discussing women in media and marketing – before turning the stage over for the introduction of the evening’s participants by Jeff Katz (JK), the president and COO of Definition 6, Bill’s colleague and primary sponsor.

JK started off by saying that he couldn’t think of three people with more passion than Bill Sobel, Ellis Henican & Gary Vaynerchuk. He pointed out that there were many ways to connect with Gary – you could read his book, find him on Facebook, follow him on Twitter, watch his online TV show, etc. Gary, who was born in Belarus and raised in New Jersey, had started by selling gas grills but realized that people didn’t actually buy grills, they bought the social experiences that were created by the grills – cookouts, barbecues and parties.

JK then introduced Ellis Henican (E), the moderator for tonight’s event.

E noted that he was from Louisiana and that he had given some advice to Harold Ford, Jr., the former Tennessee congressman expected to run for the U.S. Senate this year. E told Ford to not lose his Southern accent since it created low expectations and a vital advantage in his upcoming election campaign.

Turning to the evening’s guest, E pointed out that Gary Vaynerchuk (G) is a wine guy, first of all. E proclaimed him to be the first wine guru of the internet age. While Forbes had selected G as one of the 25 most influential people on the internet, E suggested that G should probably be in top 5. In large measure, E felt that G warranted this acclaim for having taken something in the real world and having found a new life for it in this new world.

E began by asking: would it have been possible to create such buzz in another retail line, or is it all about the wine as a unique product?

G attributed his success to his mother having brainwashed him into thinking that he was smartest and best-looking person in the world. He viewed his upbringing as the perfect storm – he grew up with nothing, and his mother gave him confidence. He is passionate about wine as well as being hungry and ambitious. In fact, he wants to buy the New York Jets. He also views himself as a born storyteller, and this new world allows him to tell any story he wants without any editor or agent. While everyone can step up to plate, not all of us will hit home runs. He views his success as having come from building his brand and then having celebrity come to him, as realized through his many media appearances, including with Conan O’Brien, Ellen Degeneres, and others.

What’s important is that we have the internet, which is only 15 years old. While we can’t yet wrap our head around it, that’s where the opportunity lies.

E: Is all of this due to the opportunity or his personality?

G: He “worked his ass off and executed.” His platform is video: ninety thousand people watch his wine show daily. Others may have other platforms that they can exploit, such as text or audio.

While his show is only four years old, he studied wine for 15 years before his first episode, so subject knowledge is important. He sees himself as being “over-the-top patient” in having developed his brand.

E agreed that G may be nuts, but he certainly cares about wine.

G amended that to argue that he really cares about people: “When you give a crap, the whole game changes.” He said that he originally spent 12 hours per day searching for, and responding to, wine-related questions on Twitter in building his brand.

We live in a day and age where we can care first. He said he is obsessed with customer service. His next book will be titled The Thank You Economy. His first book, Crush It, had been expected to flop since other social network books had failed. Since all of his original outreach had been free, he felt that people had bought his book in order to thank him.

E: The audience is probably asking: how can I use personal branding for myself?

G: Not everyone is meant to be a personal brand. If you don’t like people, you can’t be a brand in social media.

Truth is the most important thing, even if is negative. As a result, he estimated that 85% of people like him, but 15% find him too East Coast or too much energy. He seemed comfortable with that proportion since he feels that he knows himself and how he’s wired. His happiness is simplistic: he likes the climb. He said that when he was younger, he followed the Yankees and the Rangers until they won championships. After that, he lost interest because he is all about the process.

He proclaimed that he knew that his efforts would work because he really cares about people. His platform is shockingly transparent; there is no hiding. Even if he were to be viewed as a jerk, he said he would work hard enough to succeed.

E: In the dark night of his soul, what does he worry about?

G: The only thing that remotely scares him is the health of his family. He asserted that he definitely has “business chops” – he always knew how to make money, just as LeBron James & Tiger Woods clearly have superior skills in their respective sports. G said he knows how to sell and give customer service. He also said that he is also to foresee social trends, and that he provides value to consumer products companies by consulting with them on ways to extend their marketing campaigns beyond TV.

He knows what people say that they’re not going to do and that they do anyway, citing those, particularly in the audience, who had once said that they would never have Facebook pages or carry cellphones. He said that when he saw Twitter in 2006, while others dismissed it simply as a way to transmit the news about one’s lunch choices, he immediately recognized it as a word-of-mouth tool. Therefore, he went all in to take advantage of the platform. He said that he will now invest and make money when he sees similar things that he feels will catch on.

E: Traditional businesses are struggling in converting to new models. Are they doomed?

G: People don’t always see changes coming, and many bought horses before Henry Ford had his good idea. Are businesses doomed? Maybe. At the least, they are naïve if don’t see that things are changing.

On the flip side, everyone is acting like “teen-aged dudes” in that they are not taking the long-term perspective. There is a difference between “hooking up and marriage,” and too many players are too concerned about closing/hooking-up rather than on building relationships.

Ecosystems are built on word of mouth and relationships. In the past, new technologies enabled marketers to buy relationships through mass media. Now, as relationships depend on actual connections, they are finding that the new media does not enable them to buy friends.

E pointed out the seeming irony of G giving away his material on the new media platforms and making money by means of old media, such as books.

G: He is not romanced by or committed to any particular platform. Instead, he is simply obsessed with his message and getting it in front of people. He wrote a book because people still read books. Therefore, he doesn’t worry about adjusting to the new platforms because they can all be conduits for his message.

He doesn’t draw lines in the sand and instead adjusts to reality. You can’t bet on what you wish things to be instead of adjusting to what’s actually happening.

E: In getting your message out, should you be in all places?

G: As many as you can handle.

At this point, E threw the discussion open to questions from the audience. Many were prefaced by gushing kudos, which have been omitted in the interest of space [mild joke].

Q: Is he interested in investing internationally?

G: London has lot of interesting startups. His objective is to get into niches. He is obsessed with geolocation and feels that, while people do not yet understand the value of constantly “checking in” regarding their locations, marketers will make it worthwhile for consumers to do so. He is willing to look at companies worldwide in that space.

Q: Is the video image quality good enough for his episodic videos?

E: Google and Yahoo flew him out to their headquarters because they wanted to understand how he succeeded when his videos were 25 minutes long in contrast to most videos being only 3 minutes. Content is the “obnoxious king.” He concedes that his video quality is poor: done in one take with no microphone and bad lighting. He proclaimed himself to be in the ghetto of online video shows that do well.

He also felt that we are about to embark on a gold rush of online video because of smart TVs. When people can get online videos on TV, the economic leverage between the audience and the TV providers changes. He feels that there is a race between HDTV penetration into the households and HDTV on PCs and mobile.

Q: What does he think of Burger King and Starbucks partnering with their complementary brands?

E: He consults for entrepreneurs and Fortune 500 companies. Business development is attractive – defined as leveraging each others’ audiences – especially because entrepreneurs generally don’t already have their own audiences. Similarly, he is willing to use his brand equity to assist newer, less-developed brands, such as by granting interviews for unknown blogs to help them build their audiences.

Business development is the most under-rated thing right now. 4Square is ahead of Ooyala (where he is an investor?) because of their business development efforts at promoting themselves. Old-school brands need to leverage their brands while they still have value.

In many cases, such as HuffPo, Facebook and others, new media brands have caught up to old established brands and will surpass them.

He is fascinated by the question of brand equity and how it is leveraged. Most people are sales people, not marketers, returning to his earlier theme that people are generally not patient, looking to hookup rather than building relationships.

The question for new technology in building relationships should be: what’s our story?

Q: What tools does he use for Twitter?

G: He admitted to not being efficient despite the chaos of Twitter. He uses Tweetdeck and will try Seesmic. He pointed out that people, presumably including him, get stuck in habits. As an example, people often type in “Google” into a URL rather than using the on-screen search function in the upper right hand corner of Firefox.

Q: How does he feel about multimedia and the iPad?

G: The amount of work he does on the toilet is shocking [biggest laugh of the evening]. He has not yet used the iPad. The most interesting thing about the iPad is that consumers are trying to figure out why they’re going to use it. That means Apple has built a brand. He said that Apple could probably sell an iHammer even if people have no idea why they need it.

Similarly, people like television and won’t get away from it. Therefore, the entertainment industry will go upside down when all content becomes available immediately on demand on the television.

Q: What is his consulting business model?

G: When asked by clients how to measure success, his response was that he would feel it. He “massively dislikes” SEO and analytics. He feels it is important to “live his business.” He pointed out that billboard metrics are unreliable, being based on cars passing a display, and that magazines charge on number printed [as an alumnus of Time Inc., I must say that this comment is not true, but the actual metrics are not necessarily any more accurate].

When dealing with big brands looking for the ROI of new media, he points out that they hadn’t yet figured out the real ROI of old media.

At the same time, he feels that social media is the most measurable medium because it can create and measure a call to action. He is, however, not interested in convincing people about social media. He generated tremendous sales for his book Crush It without traditional media, so he is not interested in proving anything. He wants to simply do it and let other people catch up.

Q: How can someone create a tipping point with their content to generate audiences?

G: The first step is to care about the audience. Content is the smallest part of the equation. He attributes his success, not to the daily 25 minutes on TV, but to the 15 hours he spends each day creating the community.

Suggestions: go to other blogs, become part of the conversation. He says that he uses Search on Twitter and looks at and responds to @GaryV results every day. He responds to every item, in contrast to the 99% of people in business who don’t care about their customer.

He cited the example of Zappos, who succeeds because it cares about the customer. Success does not require complete and total care of the customer, just more than the standard that customers are used to.

These efforts to create a community via customer service will provide an umbrella of protection for the brand. This wouldn’t have mattered as much years ago before customers could communicate negative experiences easily. [An example that gained traction immediately after G’s interview: Kevin Smith’s treatment by Southwest Airlines – an item that would not have gotten as much traction without the immediacy of Twitter.]

Q: What should Obama do with social media?

G: Regardless of one’s political position, Obama should be using social media to make him as authentically real as possible. G feels that Obama “missed the boat.” While conceding that Obama can’t use all of the social media tools due to security and other concerns, he needs to be transparent and that people will accept anything under those circumstances.

He feels that Obama did a poor job during campaign because the campaign didn’t make it obvious that the Tweeting wasn’t done by him, and people thought it actually was him.

Q: Where is TV going?

G: It will make strides in interactive, 3D and video telephony. He is interested in the future of cable TV because they sell bundled services against the wishes of the consumers, which he considers communistic. While cable companies may own the internet for the moment by providing connectivity, wireless is the future.

People only look one step forward and have to really look at where things are going.

He expects that one of the cable companies will go a la carte and the whole cable business will crumple. Nobody wants to crumble their monopoly, and they do so only when they have to.

E: Will consumers pay?

G: Apps have created a culture that consumers will pay. They have changed the conversation from only getting things for free. The freemium model is also going strong.

Facebook made a mistake by allowing others to build app platforms for virtual goods. The should have kept control of that marketplace, as a South Korean platform did, and they could have been making billions on virtual currency instead of ceding that market to Zanga.

Twitter should have been a freemium model, and they could have gone from free to revenue.

The value is in capturing audience, which can always be monetized later.

Q: In developing startups, should the focus be on the customer or on making money?

G: The way you make real money is by focusing on real relationships.

As an aside, he thought it was fascinating when the markets crashed because he didn’t recognize how soft we really are. He was scornful of people who were crying simply because we could no longer buy as much stuff as before. His approach is to pull up your bootstraps, buy less stuff, and work hard.

VL: That’s a good sentiment for any day and age.

We See What We Want to See

2010-02-14T08:09:00.000-05:00

I have been on a potentially masochistic trend lately - reading about how humans are more irrational, less perceptive, and not nearly as clever as we believe ourselves to be. Of course, by "humans," I mean every living member of the species Homo Sapiens other than yours truly. I of course would never be fooled by mere parlor tricks, bamboozled by a grifter's flim-flam, and fail to apply anything other than the keenest of senses and intellect to every endeavor I deign to undertake.

Of course, it's Sunday, the day traditionally set aside, by Christians at least, as a day of rest in which we do not allow worldly concerns to sully our spiritual uplift. In any case, that's my excuse and I'm sticking to it.

I'm at the Minneapolis Airport, returning from a short trip, or at least what was intended as a short trip. I flew in Thursday, February 11, and made arrangements for a return trip today, February 14. Or that's what I thought I had done.

One of my cardinal rules is, if something seems wrong, it probably is. Not having bothered to check on my reservation last night, I wondered why I had not received a text message from American Airlines this morning informing me of the status of my flight. Oh well, I decided, I'll figure it out when I get to the airport. Of course, the airport was the site of my next bad indicator - the self-service check-in did not have my reservation.

I went to the counter, which was mercifully uncrowded, to discover that my return flight was scheduled not for February 14, as originally intended, but for March 14, as was CLEARLY STATED on my reservation confirmation. In other words, not only had I input my flight request incorrectly, I had failed to catch my error either on the PC screen or on my printout!

Fortunately, this story of sheer ridiculous ineptitude on my part has a happy ending. Thanks to wonderful customer service from the airline (is that an oxymoron?), not only was my error corrected, and at no cost, but my flight schedule was rearranged so that I may actually arrive back in New York much earlier than I had originally expected.

Okay, so what lessons can we draw from today's events, class? First, as Ronald Reagan said, trust, but verify. Try to look at everything with fresh eyes. It's probably impossible, and exhausting even if it were possible, but errors can creep up anywhere and anytime, and they probably do.,

Furthermore, it might actually be better to be dumb and lucky than smart. After all, if I had checked on my reservation last night and actually caught the error, I would have spent countless hours in a potentially futile effort to correct things. In this case, I was able to deal with the desk agent face-to-face - no virtual customer service here! - and it was resolved with dispatch. A final caveat however, while being dumb and lucky may occasionally work out to my benefit, I would not count on it as a strategy for life!

Authors Guild Panel: E-Rights + E-books = Turmoil

2010-01-26T09:26:00.001-05:00

The Authors Guild held an event at Scandinavia House January 18. I believe that the title was E-Rights + E-Books = Turmoil. I only know this because the person introducing the event mentioned it. There was no placard or handout announcing the event, as one usually finds at these sorts of events. I think that the emphasis was more on the substance of the discussion than the usual promotional elements. In any case, the title (as I understood it) seems to succinctly capture the tone of the evening, which gave no indication that the equation posited is anything but correct.

My notes are below, with the caveats that they are my best rendition of the discussion, with no claim to accuracy; much of the discussion has been paraphrased, rather than being a direct quote of the participants. I bring my own viewpoint and perspective to this discussion, which inevitably and inescapably influences my perception of the discussion. In other words, I am not contending that my write-up is “Fair & Balanced.”

The room looked to be able to accommodate about 200 people under normal circumstances. Given the gravity of the topic, especially to the author community, the room was filled to overflowing such that about 20 attendees were asked to sit on the stage, the steps were lined with people standing, and, I was told later, there were numerous people who were not able to get into the room at all.

This event was co-sponsored with the Association of Authors Representatives. Sidney Offit (spelling?), president of Authors Guild Foundation, opened the session. He introduced the moderator, Michael Cader (MC), of Cader Books.

The panel members were Jane Friedman (JF), CEO and Co-Founder of Open Road Integrated Media and former President and Chief Executive Officer of HarperCollins Publishers; John Sargent (JS), CEO of Macmillan; author Susan Cheever (SC) and literary agent Ira Silverberg (IS).

MC started the discussion by positing that the only problem with the session was that there were too many things to talk about. His primary intention, he said, was that the panel recognizes the need for meaningful conversation among publishers, authors & agents. We’re here to learn, not argue, he said, pointing out that this is not a tea party. (Note: two years ago, a “tea party” would have been a metaphor for a calm and civilized discussion. Now it means exactly the opposite.) MC also pointed out that the session was a public forum so that while the participants would try to be as candid as possible, they may nonetheless have constraints, especially since there are annoying people like myself taking notes and posting them publicly.

The first issue raised by MC was that the publishers’ position on E-books was not yet accepted by authors and agents.

JS began the discussion by voicing his concern that a proposal which Macmillan had sent to a small number of literary agents wound up being published in the New York Times. (Note: That seems in keeping in the moderator’s caveat about the public nature of this discussion in general.)

JS continued that the new formula was intended to get general agreement on a percentage of net proceeds of E-book revenues that would be returned by the publishers to the authors. They arrived at their preferred rate by examining their current royalty expense across all formats of printed books – trade, paperback, backlist, etc. – and found that it was 18.6% of net revenues attributable to those formats, which Macmillan then rounded up to 20%.

He admitted that he had heard that some publishers were paying up to 25% of net proceeds. Of course, antitrust law prevents him from discussing this issue outright with his nominal competitors. He recognized that Macmillan’s 20% was regarded “as less than satisfactory in the agent community.” He said that response had not convinced Macmillan to change its 20% rate in general, but that he understood that the marketplace is 25%. He also said that Macmillan would be willing to discuss the 25% royalty rate in every individual case.

He finished by arguing that the publishers agreements are better than the Google agreement. However, as he said, “We’re not at the end game, so we don’t yet know what the right number is.”

MC asked whether publishers are looking for a single rate for all varieties of E-books vs. the different rates that apply to books in different formats and at different points in their life cycles.

JS defended a single E-book rate by arguing that E-books are all a single product. Their rates are therefore different from book rates, which evolved from different formats. By the same token, however, he said that Macmillan has not negotiated any contract yet, implying that this discussion was somewhat theoretical at this point.

IS leapt into the fray. He argued that using the average royalty rate on print products is unfair, particularly given the different costs of E-book production. He also thought that an unlevel playing field was being created since JS had implied that the outcome of each negotiation depended on the clout of the particular author. Furthermore, he was concerned about locking in rates now when they could change in the future – “We‘re in transition.” He felt that since the business was being reinvented, he wanted to “play it straighter.”

JS defended the approach to negotiation by pointing out that different authors already get different contracts, including different rates, depending on their negotiating power.

IS, addressing the issue of a general rate for E-books, argued that backlist revenues could be pure profit to the publisher due to advances having been amortized and the lack of physical costs. The allocation of net proceeds for backlists was therefore different from issues regarding the frontlist revenue. Therefore, he contended, the largest share of net proceeds should go to the author.

The question arose as to whether E-books included books printed on demand, and JS affirmed that they did.

JF raised the broader issue: Do publishers have the rights for deep backlist? She felt that the issue of rights had to be addressed before the issue of royalty.

She was also concerned that it takes a long time to write a new contract, having been through that process herself. The contract developed at Random House in 1994 already referred to e-rights. Nonetheless, she felt that we are not in a transition or evolution; we’re in a revolution. It is therefore imperative to look at where the publishing community is headed. She was very concerned that, while books will continue to exist, that if the publishing industry does not embrace the digital revolution, it will be in big trouble.

MC therefore wondered about the pathway to resolution for these issues? Litigation?

JF said that she would like a friendly resolution. With regard to rights issues, they applied only to books from before 1992-1994. Afterwards, e-rights were in contracts. Nonetheless, this issue is very important to her company, Open Road, since it specializes in backlists because it wants to bring many now-neglected authors back to life.

SC felt that the question of e-rights will be settled, both in the courts and through negotiations. She felt that the broader issue is that we’re in the middle of a whirlwind that she likened to the invention of the printing press. (Note: this seems to be a common metaphor, having been raised in the discussion at last week’s Digital Breakfast as well.) She wondered whether the digital revolution will change the way we write and read. Will it change her relationship with her audience? For example, if technology allows her readers to purchase and read her books chapter by chapter, will she alter her approach to writing to do so chapter by chapter?

The discussion shifted to the respective roles of authors and publishers when MC posited that publishers look for authors to bring their audience to their work.

SC asked whether authors could now go directly to their audience without needing publisher, a role which the publisher had previously fulfilled.

JS argued that there is still a need for publishers in the digital age. He felt that they have acceded to the interests of the authors and have not exploited electronic rights unless authors want to - both frontlist and backlist. Furthermore, in the digital world, there would still be tremendous complexity involved in book publishing with regard to the multiplicity of digital platforms, DRM complexities, and so on. Furthermore, he argued that marketing would still necessary from publishers, perhaps even especially so if everyone goes directly to Amazon so as to stand out among the many choices available to readers.

JF also felt that a direct relationship between the author and their audience does not necessarily disintermediate the publisher. She took umbrage at having been called a “distributor” in an article in the New York Times. She adamantly maintained that she is a publisher, not a distributor.

She argued that the most important marketing tool for a book was word of mouth. Consequently, the biggest issue today is the ability of the publisher to market the author directly to consumers, especially in a world where consumers have short attention spans. She said that she does not want to lose a single sale. However, changes in demographics create changes in consumer behavior, and the publishing industry will have to adapt. For example, the youth audience wants books when they want it and how they want it. The publisher has to create the appropriate platform for this new environment.

SC pointed out that the author creates the thing that everyone is arguing about. Will there be a change the way people read, and by implication, the way that authors write?

IS was definitive that the reading experience will change. He cited a rendition of a David Foster Wallace novel in which the reader can click through to footnotes while in the body of the text. He also cited the Vook, which is adding audio and video components to books.

Also, publishers are important for marketing to retailers, which individual authors can not do. He therefore wants to be sure that authors are getting a fair piece of revenue, especially if authors bring new pieces or components to the equation as books evolve. He took publishers to task for not having adequately talked about the exciting components of changes in books.

What is next?

JS defended the actions of publishers by pointing out that there is a wide disparity of viewpoints among the various parties, which he compared to a complicated game of chess. He said that he is trying to get biggest piece of revenue possible for publisher/author in battle with the retail channels. He felt that, in the next 6 months, the foundations will be set for both retail prices and the publisher/author split of those prices.

In discussing developments made possible by E-books, he indicated that he was not enthusiastic about interactive video in the middle of a novel, preferring the traditional interaction between author and reader. He did concede that such functionality would be fine for DIY books such as yoga and cooking. In general, though, he was concerned about how to increase the connection between author and audience.

He also raised the concern that he is already seeing the shortening of books – as he said, he doesn’t want to see USA Today vs. New York Times. He also does not expect novels to be sold by the chapter. Authors are the creative force, so he is counting on them to come up with new ideas.

SC put it succinctly: What authors want is to get paid. If they write by the chapter, do they get paid that way?

JS felt that for non-fiction work, authors would be writing at least in chunks, as opposed to completed manuscripts. He said that overall payment would be based on net proceeds.

JF took that broad view that this is the most exciting time in publishing she could remember. The right approach was not doom and gloom; instead, it is important to assess how people will read differently. The author would remain as the brand. New formats such as the Vook would create unique opportunities. Likewise, for marketing, it is important to use all forms of multimedia and social networks. Furthermore, at Open Road, they have a “movie eye” on all projects as a way to further exploit the intellectual properties.

She felt that there should be rejoicing among authors, who will be able to write what they want to write.

Audience Question: Authors spend their lives in isolation. If they are dissatisfied with their publisher, can they leave?

JS answered that the standard answer is: it depends on the contract, which is the result of a process of negotiation. He also pointed out that electronic rights will become a bigger piece of the business. Publishers had been more flexible about exploiting electronic rights when they were less important. Now, they are a larger piece of the revenue and will be taken into account in the calculation of and considered part of the author’s advance.

JF asked rhetorically, How much are electronic rights worth? Nobody knows. She cited an example from 10 years ago, that the industry had gotten excited about the Rocket Book, but nothing happened. With the number of devices coming out, what is the audience size? How big can it be? She thinks it’s enormous and wants to share it with the author.

In dividing up the economic pie, JS pointed to the costs incurred by publishers in the E-book world. Even though they do not have printing costs for E-books, they still have overhead from traditional publishing, such as warehouses, since they have “a foot in each world.” In addition, E-books have their own infrastructure - server farms, electricity and other digital overhead.

Underlying all of this discussion is the concern that the value to consumers of an E-book is settling in between $9.99 and $12.99.

IS was not particularly sympathetic to the issue of the publishers’ costs, pointing out that when McMillan shifted from typewriters to computers, they incurred new overhead costs, which he was presumably loathe to cover out of proceeds that would otherwise have gone to his clients.

Buttressing his concern about costs, JS pointed out that trade paperbook printing only saves $1 over the costs of a hardcover book, implying that reduction in consumer value and pricing is not necessarily reflected in equivalently reduced costs.

Returning to general themes, MC was concerned that the underpinning of trust between agents and publishers is eroding. In addition, authors are concerned about diminishing advances, which is an economic issue, not particularly a trust issue

SC reiterated her earlier comment that she does not want the parties involved to worry only about their own “trenches.” She argued that everyone needs to think about everything and keep in mind the health of the entire book ecosystem.

With regard to the issue of retailers intruding into the publishers’ domain, JS argued that large retailers have already done their own publishing, so he was not threatened by the development of Amazon going directly to authors. In contrast to MC, he does not think that publishers are “at loggerheads” with agents. Further, he does not feel discussions have been antagonistic. The difference in the dialogue is his example that agents disclosed his letter to the New York Times rather than responding directly to him.

With regard to Amazon’s role in the development of the E-book marketplace, IS wants publishers to protest retail sales at low prices.

JS defended publishers from taking such actions by pointing out again that antitrust prevents publishers from discussing retail prices.

JF also pointed out that publishers have always suggested retail prices, so everyone is accustomed to an environment in which publishers can’t force retail prices.

Audience Q: what will the function be for publishers?

JS felt that the more clutter that exists, the more publishers can do for authors. The clutter reduces the “signal-to-noise” ratio, and the publisher can help an author cut through that. He viewed the publisher’s function as that of looking through the universe of manuscripts and selecting those with commercial/literary merit and promoting them. He felt that authors need the publisher’s expertise in order to convert new marketing methods - social networks, etc. - into sales.

SC’s viewpoint was that the ultimate goal of the writer is to get people to read their work, not to get it published, which is simply a means to that end. Publishers are there to help authors to do that.

JF also agreed that publishers cut through the clutter. Furthermore, there is now more clutter than ever because there are more books. For example, last year, for the first time, there were more titles that were self-published than published by traditional publishers. She also felt that there will be lots of experimentation in the book publishing industry. Book reviews don’t really exist anymore, and the blogosphere is a cluttered environment - sometimes it brings books to the public’s attention, and sometimes it doesn’t.

JS said that publishers are working on backlists, digitizing books and optimizing search for those books, but that they are focusing their resources on frontlist books.

For precisely that reason, JF wants her new company to work with traditional publishers to market the deep backlist because traditional publishers are focused on frontlist, including print copies.

IS asked whether JF’s OpenRoad was in conflict with traditional publishers?

JF replied that the relationship should not be combative. She felt that there is a lack of understanding as to what her new company does. She wants to create relationships with traditional publishers and to do their emarketing. She was hoping to establish 50/50 partnerships with publishers.

Q: What deals are being done for E-books?

JS pointed out that all contracts now include electronic rights. Royalty rates are currently based on the list price of electronic books. The formula is shifting to a net proceeds model due to changes in splits between retailer and publisher. While the rates are not yet set, in his mind, literary agents are claiming that the market rate is 25% of net proceeds.

MC pointed out that there is often ambiguity over definitions and asked for clarity on the meaning of gross vs. net.

JS defined net proceeds as gross revenue minus returns.

Q: Aside from marketing, how could publishers help exploit the interactive potential of E-books?

JS asserted that publishers view themselves as part of the creative team. He therefore viewed that is a battle for competitive advantage among book publishers since he felt that there was an uneven level of quality among the editorial staff across the industry in terms of knowledge, ability and helpfulness.

Q: What will change?

JS projected that e-book revenue, now 4% of total revenue, will grow to 7-8% next year. It will be the fastest growing segment of book revenue, but will not yet be a profit generator. He also expected to invest a lot of resources in setting up retail relationships, creating electronic infrastructure, etc., because he felt that publishers need to have the new environment figured out when E-book revenue hits 15-20% in a couple of years.

JF was more aggressive, asserting that the industry needs to figure out the appropriate split sooner, and that the process won’t take several years.

JS felt that development of the industry would be hampered by the fact that it does not yet have the basic business model in place. For example, Google is using an agency model while Amazon is a retail model.

Furthermore, he felt that much will depend on how much consumers are willing to spend on a book. If they can not get a book at a fair price, he argued that they will steal it. Therefore, he wants to protect intellectual property at as high a price as possible that will maximize sales.

JF felt that turning away any sales of ebooks is bad. It is necessary for publishers to meet consumer demands when they want the book. In return, she feels that the consumer will pay more for the book they want.

Summary: The size and participation of the audience, the quality of the panel members, and the energy of the discussion all spoke clearly to the importance of this topic to all members of the book publishing industry, and, by extension, to all of their consumers and readers. Furthermore, developments in the ebook industry are likely to have ripple effects on creators of intellectual property in all media.

The environment is quite unsettled. Can the participants wait for the evolution of the industry to calm down and indicate the direction in which it’s headed, or will the pace of change, and therefore chaos, simply accelerate? There are no answers today on which all parties can agree. Consumers will continue to generate a demand for books and other authored material, regardless of how the industry participants choose to interact with each other. How will the industry address those issues? Let’s turn the page and proceed to the next chapter.

Cheap is in the Eye of the Beholder

2010-01-23T10:36:00.000-05:00

Lauren Weber's In Cheap We Trust is truly a book for these times. Her historical review of thrift makes it clear that we neither would be in this economic mess nor would we be condemning future generations to economic catastrophe if we had only had the clarity of mind to truly understand and maintain the virtue of thrift to which we thought we had pledged allegiance. Along with helping to shatter our historical myths about virtue, the book provides a terrific review of the state of thrift in America today - a little late, to be sure, but better than never.

Lauren's mix of personal observations, candid family anecdotes, and a wonderfully piquant writing style made me wish that she had discussed the subject for more than the thrifty 279 pages in which she covers this fascinating topic. Those wishing to see for themselves can go to: http://bit.ly/6FKCOv

Notes from the Digital Breakfast: Media Forecast 2010.

2010-01-18T09:20:00.000-05:00

I attended the January 14 Digital Breakfast: Media Forecast 2010, moderated by Lisa Davis (LD), partner at Frankfurt Kurnit Klein & Selz, with participants Andrew Edgecliffe-Johnson (AE), media editor, Financial Times, Mike Germano (MG), president and creative director, Carrot Creative, Mike Hudak (MH), co-founder, president & CEO, blip.tv, Steven Pamon (SP), VP & head of new business development, NFL, and Reed Phillips (RP), managing partner, DeSilva + Phillips. My notes are below, with the caveats that they are my best rendition of the discussion, with no claim to accuracy; much of the discussion has been paraphrased, rather than being a direct quote of the participants; and that I bring my own viewpoint and perspective to this discussion, which influences my perception of the discussion. In other words, I am not contending that my writeup is “Fair & Balanced.”

The panel represented a variety of viewpoints about the media landscape, both as representatives of different facets of the media industry as well as some divergent points of view, as was revealed during the discussion.

LD asked each of the panelists for a quick comment.

• RP said that, while 2009 had been a very difficult year for mergers and acquisitions among media companies, he saw activity picking up as 2010 developed.
• SP pointed out that media was a growing business for the NFL, both with the NFL Network and with NFL.com.
• MH stated that blip.tv viewed itself as a next-generation television network, with 50,000 independent content producers, for whom blip.tv provides “services of scale” including distribution online and, increasingly, on television.
• MG described Carrot Creative as a new media marketing agency to whom PR and advertising agencies turn to provide new media and social networking expertise. MG said he had demonstrated the power of social media during a successful run for public office earlier this decade, powered largely by social networks.
• AE pointed out that, contrary to general trends, the Financial Times had been able to grow its circulation recently and charge for its content.

LD kicked off the discussion by asking each panel member to predict a major challenge or opportunity which they expected to materialize in 2010.

• RP said that the challenge for traditional media was in changing their business model. Traditional media players have too much staff and are mired in old processes. He predicted that they will be acquiring digital media companies in order to bring new media expertise in-house.
• SP felt that the focus of the NFL would shift from supporting advertisers to supporting consumers. Interestingly, the question of the right consumer approach would be a significant topic of discussion later this morning.
• MH argued that media is shaped by technology. He contended that CBS, for example, has not changed since it began broadcasting television in 1941. Unfortunately, and perhaps as demonstrated by that example, he felt that it has been difficult for organizations to re-orient themselves to new business models.
• MG addressed that issue by pointing out that the media needs advertisers. While traditional ad agencies have been reluctant to refocus their efforts on new media, he felt that the agencies and media will change when the advertisers demand change. The fact that advertisers are moving portions of their budgets from traditional to new media will reinforce that change.
• AE pointed out that there are many competitors for consumers’ time and attention, and therefore many opportunities for advertising. He also noted that the news is increasingly driven by social media, readers’ commentary, etc. He felt that the emerging tablet computing format was exciting, at least on a long-term basis. With a combination of an attractive device and attractive content, he felt that media companies could be able to charge consumers for their products.

LD next asked who would be the 2010 victim of a revenue decline, with print having suffered a 25% drop in 2009.

• MH felt that the near-term change would be limited. New media, while a beneficiary of a shift in ad budgets, was still a small part of the total ad budget, and would probably remain so since clients and agencies do not really know how to make best use of the new media platforms. He felt that the print business had been impacted primarily by the economy, rather than a shift of ad dollars to new media.
• SP was concerned about the NFL’s customers (advertisers) spending less due to a decline in consumer spending, i.e., reductions in total ad budgets regardless of shifting allocation among media formats. He did feel that print was suffering due to a potential long-term systemic issue that consumers do not value print content.
• MH also argued that the advent of new media causes unit prices to decline, e.g., Gutenberg’s invention of movable type probably generated greater quantities and consequently lower prices for books. He also felt that media consumption was increasing but that consumer attention is finite so that demand has some limits. The solution for content providers, he posited, was for them to bring down costs of goods sold in keeping with the lower revenue potential.
• AE returned to the issue of consumer value: are there media experiences that consumers value? He questioned whether Jay Leno was still funny or whether he was stuck in an earlier decade. He felt that the possible solution was that newspapers, for example, could be made to look better, and argued that a more competitive national market for newspapers in the United Kingdom fostered better products and consequently expanded the market for multiple newspapers. His ABCD assessment of the media landscape: Agencies are dissatisfied by the state of the advertising business; Books are caught in a struggle for allocating their value among the industry participants in an e-reader world, with Amazon seeking 70% of the revenue for its contribution to the value chain; Cable is having difficulty adapting due to its historical monopoly position having caused its competitive muscles to atrophy; and DVDs have found that the market has declined.
• SP also pointed out that movie and television studios are threatened by the decline of the DVD market, which had historically been a major driver for them. Unfortunately, much of that demand had been driven by consumers building their content libraries, and that need has now been largely fulfilled.
• RP agreed that content is under-valued and that producers have suffered as a result. He cited the example of Demand Media, which has helped devalue content by paying low prices to its content providers. He also cited technological influences, such as Eric Schmidt of Google discussing a function that would allow a consumer to upload a picture of a building and thereby receive information about that building – an example where technology would essentially replace content. He agreed that consumers have limited time resources, and felt that would drive consumers to demand quality content.
• MH argued instead that the market sets the value for content. He felt that the means of content production have been democratized via technology, and that small groups have been empowered to participate in the content marketplace. The additional supply should therefore help the market reach the appropriate price.
• SP foresaw continued disruption in the marketplace. His view was that the costs of distribution and those of marketing are inversely correlated, and that “the lines haven’t yet crossed” to provide equilibrium. In the meantime, he felt that a settled marketplace was unlikely in the near term as each sector of the industry seemed to feel free to enter other sectors, viewing such entry as “easier than it is.”
• MG took a somewhat contrary view, arguing that the value is not in the content. Instead, he felt that the user experience is key. Digital formats let people decide how they want to consume the content and how they want it to come to them. He cited MLB.com as the leader among the sports leagues an example of both providing content in new and different ways, and in standardizing the user experiences at the various team websites through centralized control.
• SP pointed out that media strategies depended on which audience each participant was trying to satisfy. Not everyone in the media food chain viewed themselves as being responsible for the consumer experience.
• MH cited the example of the NHL, which had originally allowed each team to manage its own website but eventually moved to the centralized model under the control of the league, presumably to improve the consumer experience and make it more consistent.
• SP argued that the NFL focused its efforts where it felt the core consumer experience was most critical. For example, he cited the NFL Sunday Ticket program as a successful consumer service and said that the NFL would develop additional products and services as they perceived the development of consumer interest and demand. In keeping with his theme of selective innovation, he also argued that “Just because you can, doesn’t mean you should.” He brought up the example of ESPN, which tried developing new consumer experiences, such as ESPN Mobile, not all of which have been successful.
• AE projected that media companies would have to decide whether they have or can develop the necessary expertise and make the necessary investments in new media. If they cannot, they probably need to find partners.
• MH pointed out a distinction between west coast and east coast startups. He felt that the former viewed technology as the intended end or objective of the business. He argued that New York companies generally consider the user experience and value to be the key. Citing blip.tv, he said the company thinks of itself as a media company that is using technology, not as a technology company per se.
• MG thinks that the future of media companies will be subject to a generational shift with a greater comfort and facility with new media exhibited by the new generation. In addition, lower capital and other barriers to entry will enable more innovation, with consumers investing their time and attention into the most innovative companies.

LD finished the discussion portion by asking each of the participants for 3 predictions.

• AE expected more business failures to come as numerous weakened companies succumb to economic and other pressures. He also did not expect the tablet to become a mass-market product this year.
• RP predicted more M&A activity. In addition to the acquisition of digital companies by mainstream media, which he had mentioned earlier, he also foresaw consolidation among digital companies themselves.
• MG expected more business partnerships. In addition, he said that there would be significant cultural changes in the workplace environment in order to address the needs and desires of new media employees and to foster additional innovation.
• SP felt that 2010 would be the last year of the PC as the dominant consumer computing device, supplanted by laptops, phones and other powerful and more portable form factors.
• MH agreed that the PC would diminish in importance. He also pointed to the rise of televisions as part of the online experience, with the top 5 television manufacturers having models with Ethernet connectivity. That would also foster “over-the-top” consumer viewing of video from online sources instead of from cable or satellite providers.
• SP pointed out that the shift in video sourcing from cable/satellite to online would depend primarily on the valuation proposition for the consumer.
• MH felt that, in keeping with previous industry developments, independent OTT boxes such as Roku and Boxee would have their functionality eventually incorporated into the cable/satellite set-top boxes, much as at happened with Tivo and DVRs.

A question was raised from the audience – in a world with so much content from so many sources, what will serve as quality filters?

• MG felt that one’s friends would serve that function via social intersections such as the social networking sites. To validate these user-generated filters, users could make their preferences and friends public.
• MH predicted a network of filters, such as Tumblr, which seems to have supplanted the New York Times and Drudge for his news consumption.

Another question was about the opportunity for the monetization of websites in a world of disaggregated audiences.

• MH said that blip.tv is able to host shows with small audiences since they have essentially unlimited video inventory. The company provides these shows with monetization of their audiences by bundling the shows and creating scale for advertisers, in addition to targeting, which increases the value of even small audiences. He cited such aggregation in other media areas, such as regional networks of publishers.

All in all, it was a lively, engaging discussion. 2010 will both prove and disprove many of these predictions, but the most interesting events will be those that no one foresaw.

Trying to Help the Environment, But with Unintended Consequences?

2010-01-06T10:32:00.000-05:00

One of the wasteful and environmentally harmful everyday items is the disposable plastic grocery bag. I completely understand and agree that it is a wasteful use of scarce resources, that they last forever whether in a landfill or disposed of in an even less environmentally-sensitive way, and that it is dangerous to wildlife.

One solution that has been bruited about, and with which we often try to comply, is the non-disposable, reusable grocery bag. My only concern is that this solution has the potential to make things worse, not better. The primary issue is that the reusable bag itself is a consumer of many of the same resources that would otherwise go into making the disposable bags, and it certainly requires significantly more resources than the disposable bags.

Question #1 therefore is: how many times must a reusable bag be used instead of a disposable bag in order to break-even from a resource point of view, i.e., that the resources consumed from manufacturing one reusable bag is equal to or less than those consumed from the manufacture of the disposable bag it replaces? If, for example, a reusable bag requires 20 times the manufacturing resources as a disposable bag, then it needs to be used at least 20 times in order to have benefited the environment, manufacturing-wise.

If the bags, on average, are being used to that extent, that would be terrific, both for the environment and for helping change our mindset toward reuse instead of disposal. If, as I fear, that is not happening, then our good intentions of assisting the environment are resulting in negative consequences as we are causing net harm to the environment through the manufacture of the reusable (but insufficiently-used) grocery bags.

If that is indeed the case, that brings us to Question #2, which is: could we achieve much of the originally-desired objective simply by reusing the disposable bags. Granted, these bags have a much shorter life than the reusable bags, being less sturdy and more prone to ripping, tearing, etc. On the other hand, if we can reduce the usage of these bags by reusing otherwise disposable items, we can still provide a benefit to the environment.

Alternatively, we can mandate the use of reusable bags and prohibit the use of disposable bags, which some local governments have apparently done. That’s a good step, but I would certainly prefer to see a bottoms-up groundswell from the populace than a top-down imposed solution. After all, since the problem belongs to all of us, so should the solution. It’s similar to the reduction in smoking – I believe that the general societal disapproval of smoking has done more to reduce its incidence than the various legislative prohibitions, which seem to be following the public mood rather than leading it. Let’s take that approach here as well.

Top 10 for 2010 ...

2009-12-21T10:07:00.000-05:00

What will be the top 10 events of 2010? Give us your predictions!

1. The most expected political event of 2010 - passage of health care reform?
2. The most unexpected political event of 2010 - the failure to pass health care reform?
3. The next disruptive technology to follow Twitter and Facebook?
4. The biggest media deal of 2010?
5. The most important media deal of 2010?
6. The most unlikely media event of 2010, to parallel the Tiger Woods scandal of 2009?
7. The closing price for the Dow Jones Average at the end of 2010?
8. The biggest movie of 2010?
9. The most unlikely media celebrity of 2010?
10. The most unlikely political celebrity of 2010 (is that the same as #9, see Sarah Palin)?

Scheduled to Testify at the NYC Council Committee on Tech. about the Importance of Tech Companies to the City

2009-12-13T15:45:00.000-05:00

I am scheduled to testify at the hearing to be held on Wednesday, December 16, by the New York City Council Committee on Technology in Government. The Committee is seeking suggestions from the tech and business community as to how City government can foster the development of small technology start-ups. In turn, I am seeking suggestions from each of you.

My initial thoughts are that there are 3 key areas of development:

• Ease of creation of new companies. In the last few months, I have met with a lot of new companies and with budding entrepreneurs who want to start new companies, both because they have great new ideas or out of economic necessity. Anything that City government can do to make it easier to create new companies, especially in areas such as licensing, permitting and incorporating, will encourage more people to take the plunge.
• Increased employment opportunities. Many of these companies are one-person operations. They could definitely use more help, but hiring people is often a risky proposition. Anything that the City can do to make it easier to create in-house staff will create jobs. This is especially valuable because we want to encourage entrepreneurs to create new jobs, especially since their alternative is often to out-source functions, which pushes the work, and jobs, to other locations here in the U.S. or abroad. Furthermore, in-house development of technology is important to these fledgling companies so that they can have greater control over their technology and more flexibility with regard to its development.
• Support services. Every startup technology company needs an ecosystem of vendors and suppliers to enable its business – hosting, legal, accounting, advertising, etc. Making it easy for entrepreneurs to launch new technology companies will have spin-off benefits within the ecosystem of companies and agencies that spring up or staff up to service these new clients.

I am open to additional suggestions from the tech, entrepreneur and finance communities as to other items that any of you feel should be raised in this forum. Hopefully, the benefits of this inquiry by the City government will result in benefits to us all.

More information about the hearing is available here: http://bit.ly/8gg59b and the media alert is reproduced below:

Who: Council Committee on Technology in Government, Council Committee on Small Business, Technology Community, Entrepreneurs, and Developers

When: Wednesday, December 16, 2009 at 10 AM

What: Public Hearing on Tech start-ups, their benefits to NYC, and methods to encourage digital entrepreneurship

Where: Council Chambers, City Hall

(The Hearing will be webcasted through www.livestream.com/nycctechcomm and tweeted on www.twitter.com/nycctechcomm. More details below.)

New York, NY - On Wednesday, December 16, 2009 at 10 AM in the Council Chambers of City Hall, the New York City Council Committees on Technology in Government and Small Business will hold a joint public hearing to examine how small technology start-ups are surviving in this tough economy. This hearing will help the Council understand the dynamics behind successful firms as well as what options are available to the City in aiding these important businesses in their struggle to remain competitive and viable in a global environment.

City lawmakers are seeking ways to foster small business growth and boost New York City’s image as technology and digital media leader. Small businesses and information technology groups offer a myriad of job opportunities and ideas to the broader economy. Current incubators, venture capitalist funds, and industry consortiums help improve the economy and provide support for future entrepreneurs. By understanding the dynamics of how these firms operate, the City can help facilitate broader innovation and attract additional companies within knowledge-based industries.

The Committee on Technology in Government will be live twittering and webcasting this entire public hearing.

* You can follow us on twitter at www.twitter.com/nycctechcomm and use the tag #nycstartup if you have any comments, suggestions, and questions during the hearing. Wireless Internet is available to attendees to tweet this hearing.
* If you are unable to attend the hearing, you can view the live webcast at www.livestream.com/nycctechcomm. You may also use the chat function available on the site for comments, questions and suggestions.
* Furthermore, you can follow all of the Tech Committee’s activities on www.nycctechcomm.wordpress.com.

Studio One Networks Launches Venture Capital Operation

2009-09-10T07:37:00.000-04:00

STUDIO ONE NETWORKS LAUNCHES VENTURE CAPITAL OPERATION

Unique venture program will provide exposure for innovative content and media technology firms, and assist creators of groundbreaking programming and interactive services for the Internet and beyond.

NEW YORK, September 10, 2009 – Further strengthening its position as the leading Internet content syndication service worldwide by meeting the diverse needs of its rapidly expanding user base, Studio One Networks announced the launch of Studio One Networks Ventures, which will make equity investments in media and technology companies in exchange for inclusion and promotion in the award-winning programming of Studio One Networks.

Studio One Networks Ventures is unique in the marketplace because it serves as a content development studio, a network platform, and a venture capital program for entrepreneurs, start-up companies and independent innovators in the creation of groundbreaking interactive content and technology solutions. The Ventures division will focus on the delivery of new services, enhancement of existing products, entry or expansion into key strategic marketing and critical research and development activities. Selected companies will have access to Studio One’s market-leading syndication network and its 120 million monthly unique users. In return, Studio One Networks Ventures will receive an equity position in these companies, enabling it to share in their future success.

Andrew Susman, CEO of Studio One Networks, said, “This program will help ensure that we continuously re-define ‘state of the art’ in content and content enhancements. We developed Ventures to identify and provide an accelerator effect for entrepreneurs who are developing content and technologies that take advantage of the vast possibilities of the Internet and serve the needs of our audiences, media partners and supporting sponsors.

“The formation of Ventures also demonstrates Studio One’s commitment to the innovation community, which we’ve been a part of for more than a decade,” Mr. Susman continued. “We all remember people who believed in us early on and gave us an opportunity. We want Studio One Ventures to be that kind of entity.”

The Managing Director of Studio One Networks Ventures is Victor Lee, who was previously Director of Capital Cities Capital, a venture capital operation that invested in media and technology companies in exchange for providing access to the media assets of Capital Cities/ABC. Mr. Lee was also previously President of U.S. Broadcast Services for Medialink Worldwide, a leading broadcast public relations firm, and President of Brandstands International, a digital out-of-home video network.

Mr. Susman added, “Victor has the perfect background in finance and media to run this operation for us, based on his experience with a very similar program at Capital Cities Capital, as a private equity investor at the IBM pension fund and as head of strategic planning at Time Inc.”

About Studio One Networks

Established in 1998, Studio One Networks pioneered the discipline of Internet content syndication for megabrands and major media partners. Today, Studio One is the oldest, largest and most successful firm in the field. Studio One has amassed a loyal group of exclusive sponsors. Their programs include Iams (The Dog Daily), Symantec (Your Security Resource) and Bridgestone (Driving Today). Every day, Studio One reaches more than 112 million viewers globally through 500 syndication partners in 14 languages.

Julie & Julia: It's Not About the Food, It's About the Media

2009-08-10T10:51:00.000-04:00

"Julie & Julia" opened this weekend, a movie about Julia Child's rise as one of America's premier food mavens and a blogger's search for the meaning of life through the re-creation of each of the 540-some recipes in Julia's seminal tome, "Mastering the Art of French Cooking."

The two principals never meet, and the movie cuts back forth between their stories. Among the interesting contrasts between the two tales - in addition to period costumes and heavy (cigarette) smoking during Julia's time, especially during dinner time - is the stark difference in media and the opportunity for self-expression. For example, Julia and her co-conspirators set out to write the first cookbook explaining French cooking in English for the American housewife audience. That entails laboriously typing over 700 pages of manuscripts, with copies possible only through the use of carbon paper and onion-skin duplicates. The completed book must then be (snail) mailed to a publisher, who stands as the gatekeeper between the authors and their audience. The first prospective publisher rejects the book, but the second comes to the rescue. This gives Julia's book a much smoother ride to publication than that endured by many of today's most well-known authors, including J.K. Rowling and John Grisham, who apparently encountered double-digit rejections before reaching publication.

By contrast, Julie Powell, the intrepid blogger, has no such third-party obstacles. She is online within minutes (at least in movie time) of conceiving the idea of her blog. Of course, finding an audience (other than her mother) takes a little longer, but at least the audience (and media attention) she attracts is presumably a function of the quality of her writing, not dependent on the judging panel of a publisher that makes the American Idol crew seem promiscuous.

The moral of the story seems to be that, in this web 2.0, interconnected, user-generated world, anyone can be a writer. As one would expect, in that event, anyone will. Even me.

Nothing Is Truly Free - You Always End Up Paying Something

2009-07-13T16:46:00.000-04:00

I was reading the New York Times review of Chris Anderson's new book, "Free." The reviewer was Virginia Postrel, and her review certainly made the book sound very interesting. My interest was particularly piqued when she mentioned that the book was available free online until its publication date. Ms. Postrel pointed out that this "free" distribution of the book went to the book's core thesis, that one can create a lucrative business by giving away products so as to create demand for non-free products and services. Being the cheapskate that I am, I decided to check this out here on Scribd.

Immediately it became apparent that there are a few impediments to enjoying this book "freely," to coin a phrase. Let's start with its unavailability beyond the pub date. Okay, I thought, why don't I just download the book at read it as my leisure? No good - download function is disabled.

Alternatively, why don't I just print it out in a pdf? Oops, that's been disabled as well.

As a result, I am limited to reading the book in the Scribd reader. Given the ravages of age and its impact on my eyesight, I needed to enlarge the text, which no longer fit comfortably within the reader, such that each pair of adjoining pages could be read only by scrolling laterally and horizontally (If anyone knows of a way to ameliorate this, please let me know.).

While the content is "free," the time, effort and aggravation required for me to read the book in this format is a much higher "cost" than I am willing to bear. After all, the book is over 250 pages in length - that equates to 125 pairs of pages. Perhaps this too was part of the business plan - the book is nominally free, but it's so inconvenient to read that I'll be compelled to buy it instead. If so, it seems to have backfired. I'm now so annoyed at having been essentially "suckered" into thinking I was getting to read a book for free, that I'm just going to get it for free, for real, at my library. So there!

Are Online Videos Getting Shorter or Longer?

2009-07-12T12:42:00.000-04:00

While I realize that online video is still a nascent industry and that, as Yogi Berra said, it's difficult to make predictions, especially about the future, two sources last week seemed to point in exactly opposite directions, much like the Scarecrow in the Wizard of Oz.

The New York Times, on Sunday, July 5, claims that videos on the web are getting longer, lasting beyond the 2-3 minute limitations that producers thought were imposed by the outer reaches of their audience's attention spans: "TV networks get much of the credit for the longer-length viewing behavior ... making users accustomed to watching TV online for 20-plus minutes at a time."

By contrast, a recent survey by Frank N. Magid Associates indicates that viewers are moving away from TV broadcasts that are shown online, and that, in the words of MediaPost, "shorter online video -- done professionally -- has been found to be more entertaining than full-length TV shows on traditional TV sets among 37% of consumers."

To try to reconcile these two viewpoints, it would seem that TV viewing online is conditioning users to longer-form programming than previously, and that online video producers are taking advantage of this trend by lengthening their narratives as they increasing compete with TV programming for eyeballs. Thoughts?

100 Days ... Now What?

2009-04-30T11:41:00.000-04:00

President Obama held a news conference last night, essentially to commemorate the first 100 days of his administration. This was seem by presumably everyone in America who was not watching Fox, which declined to provide prime-time access for this event. Seems rather churlish to me - after all, where would sister network Fox News be if it weren't for the fodder provided by the President and his triumphs, foibles, failings, pet musings, and all the rest that passes for news these days.

Granted, 100 days is a rather meaningless, arbitrary benchmark, but it does at least provide an occasion for some level of reflection - as NYC Mayor Ed Koch used to say, "How'm I doin'?"

So, how do you think he's doin'? And what do you make of the fact that he is more popular than his policies? Does that mean that his personal qualities will help eventually sell his less-popular policies or do you think that his personal charm will wear off and the cold harsh reality of his policies and the public discomfort with them will prevail?

Peter Chernin, News Corp., on Innovation and Media

2008-11-08T15:09:00.000-05:00

Peter Chernin, President and Chief Operating Officer of News Corp., was the keynote interviewee at TelevisionWeek’s Innovation 360: The Game Changers conference last week in Manhattan. These are MediaScrum’s notes of his comments:

Innovation, the topic of the conference, is critically important to the success of all businesses, a sentiment with which hardly anyone would disagree. Successful innovation, however, requires clear insight and discipline, which is often lacking.

First of all, innovation must to be pursued constantly, during both good times and bad. It may be tempting to scale back on innovation, either because things are going well – who needs it? – or things are going poorly – we can’t afford it. Either path, however, will leave companies critically short of necessary innovation when it is most needed during times of major business disruption, which leads to the other element of required discipline.

The second element is to recognize that legacy businesses may well be reaching the end of their lifespan. Old businesses should be maximized, not defended. Only by applying resources to new opportunities, despite the decline of old businesses, can innovation drive the business forward.

Innovation’s critical importance can be seen in three major areas impacting the media business: motion pictures, the ongoing SAG labor dispute, and digital media.

Movies:

For motion pictures, quantum leaps in high-tech innovation have historically had a corresponding impact on the level of viewer interest in movies. The phenomenal success of “Titanic,” the highest-grossing move of all time, was driven in large part by the astonishing quality of the special effects.

The technologies that have such an impact are those that benefit the story-telling of the movie and the sense of wonder and astonishment of the audience. Technologies whose purpose is cost-cutting or more efficient delivery, such as digital projection, whose impact is transparent to the viewer, are important but not transcendent in the same way.

The next innovation to have a giant impact on moviemaking will be the mainstreaming of 3-D. James Cameron, the director of “Titanic,” together with Fox, has spent the last ten years developing “Avatar,” his showcase 3-D motion picture. While the concept and early efforts at 3-D movies began at least fifty years ago, it is only now that the technologies underlying production, editing and viewing have reached the stage that 3-D can be fully integrated into the storytelling, rather than merely being a interesting gimmick. Not only has it taken Cameron ten years to bring his movie to fruition, but he filmed several 3-D documentaries along the way in order to help perfect the technology.

“Avatar” and its progeny are expected to have a significant impact on the motion picture industry. IMAX’s 3-D movie versions have demonstrated the audience appetite for 3-D. Movies that are produced in native 3-D, with the narrative and other elements developed for that format, will be the next giant leap in movie technology.

Labor:

The Screen Actors’ Guild (SAG) is the only creative guild that has not reached an agreement with the television and movie production community. To compound matters, internal disputes within SAG, particularly as expressed in a recent election for Guild board members, have been quite prominent in recent news reports.

Comments on this topic have been the most heavily reported in the news media since the conference, often in a much harsher light than viewed by this observer. Whether Chernin’s comments were of the “iron fist in a velvet glove” variety or simply that the news media likes a good fight, was not clear.

In any event, the producers are in quite a strong position, with the solid backing of the business community. Furthermore, the creative community has, in general, made an uneasy peace with the future uncertainty, at least for now, and is probably unwilling to have the last participants – SAG – benefit from their efforts at reaching a entente with the producers – much as drivers don’t appreciate someone who tries to take a shortcut to the exit by bypassing the cars that have been patiently waiting their turn in the exit lane.

Digital:

MySpace has been key to News Corp.’s efforts in the digital arena, although not in the way that observers had expected. The conventional wisdom at the time of the MySpace purchase by News Corp. was that it would become “Fox-ified.” The true value of MySpace has been, however, to provide News Corp. a window into consumer needs and behavior in the online world.

In a world in which consumers have infinite choices for entertainment, media companies must provide vehicles that allow consumers to exercise that choice, rather than trying to restrict it, but in a profitable way.

Entertainment media is different from music, which has been devastated by the shift to digital distribution and is struggling to find a new business model. One of the underlying problems in the music business model is that it was predicated on the sale of entire albums, even when consumers only wanted to purchase certain songs – a restriction of consumer choice. Given the opportunity – legally or illegally – to obtain only the songs desired, consumers did so – record companies’ business model notwithstanding. Fortunately for movies, people tend to consume the entire product, not merely portions. Technological issues, such as bandwidth needs for bit-heavy video vs. audio and the length of movies vs. music, have prevented piracy from being as much of a problem for movie producers as it has been for the record companies, at least so far.

That being said, the advent of digital distribution of entertainment content has been challenging to other parts of the media business. Hulu, the video portal co-owned by NBC and Fox, for example, has been a reasonable success since its launch earlier this year. Online viewing of full-length episodes of broadcast television programming has apparently been used by consumers to replace viewing of reruns, but not of network first-run programming. Players in the media food chain dependent on rerun viewing, or even off-net syndication, may find themselves being squeezed by the new business model, just as record stores were collateral damage in the woes suffered by the record companies.

Advertising, however, has of course been under pressure from the changes in technology across the media landscape, and this has a direct impact on media companies such as News Corp. Experiments with new ad models for the digital world are still a work in progress.

Fortunately, News Corp. will continue to feed the public interest in consuming media, no matter the distribution channel. For example, News Corp. views MySpace and Hulu as social “media” outlets which encourage peer reviewing and sharing of content. Facebook is seen as more social “networking” with greater emphasis on interpersonal relationships.

Eventually, traditional media will develop the advertising models for digital platforms.

The interview can be seen at: http://www.tvweek.com/news/2008/10/video_chernin_on_the_challenge.php

Re: Obama, The New Yorker Displays Its New Yorky-ness

2008-07-15T07:12:00.000-04:00

Amid all the brouhaha over the New Yorker's latest cover, which depicts Barack and Michelle Obama as America-hating, flag-burning, big-haired, terrorist-loving armed black militants, the argument seems to boil down to whether the cover is offensive or it's let's-not-take-ourselves-so-seriously satire. The crux of the matter is that it boils down to context, audience and timing.

This being MediaScrum, this imbroglio is certainly a scrum and it's being played in, and about, the media. If this is indeed satire, the New Yorker is assuming everyone gets the joke - we all know that Barack is not a Muslim, loves our country, the fist bump is not a coded terrorist signal, etc. But let's face, this is New York, where some apocryphal dowager expressed disbelief in the election of Nixon (or Reagan, depending on who's telling the story) by exclaiming, "How could he have won? I don't know anyone who voted for him!" In other words, of course, everyone is in on the joke - or are they?

What percentage of the American voting public is not going to purchase the New Yorker but simply see the cover displayed on television and in the press and therefore have it confirm existing prejudices or raise lingering questions about Obama's patriotism, trustworthiness and so on? There was an excellent op-ed in the New York Times on June 27, "Your Brain Lies to You": http://www.nytimes.com/2008/06/27/opinion/27aamodt.html?_r=1&scp=1&sq=aamodt&st=nyt&oref=slogin. A pair of neuroscience experts points out that over time, you forget where you first learned about a false statement, and you may eventually forget that it is false. Therefore, the key is not refuting a false statement; it's preventing the false statement from being made in the first place. A quote attributed to Churchill summed this up nicely, "A lie can travel halfway around the world before the truth can put on its shoes." In six weeks, a substantial (and scary) percentage of the public will swear up and down that they saw a photo that proves Barack and Michelle are Muslim terrorists!

If the New Yorker wanted to satirize misperceptions about Obama, it should have done so AFTER the election. Then we could all have had a good laugh - we're so dumb we elected a Muslim terrorist as our president, ha, ha! Doing it now feeds the confusion of an electorate so misguided that voters are opposed to Obama both because he is Muslim AND because of his nut-job Christian minister! Talk about cognitive dissonance!

“How Publishers Are Taking Back Control of Their Brands with Scalable and Profitable Online Advertising Strategies”

2008-07-13T11:34:00.000-04:00

On Thursday, July 9, I had the opportunity to listen to a panel assembled by ContextWeb, the primary ad network for our StoneHorse online publishing sites. The event was:

“How Publishers Are Taking Back Control of Their Brands with Scalable and Profitable Online Advertising Strategies,” with Wenda Harris Millard co-CEO and President of Media, Martha Stewart Living Omnimedia; Sean Muzzy Senior Partner, Media Director;
Ari Brandt General Manager - Digital Media, Conde Nast Business Media Group; and
William Morrison Partner, Sr. Internet Analyst, ThinkPanmure; with Randall Rothenberg President, IAB, as moderator.

With the disclaimer that my notes should not be considered a full, or even particularly accurate, record of the opinions, facts, fables and other thoughts expressed by the participants, let’s begin!

Anand Subramanian, CEO of ContextWeb, opened the event. He tried to reconcile the seemingly contradictory situations of advertisers complaining that there is not enough available online ad inventory while publishers complain that they cannot fill their inventory. The conclusion Anand reached was that there is not enough of the right inventory and there is, unfortunately, too much of the inventory that no advertisers want. Closing this gap was the main theme of the discussion that followed.

Randall Rothenberg, CEO of the IAB, viewed the macro problem as a conflict between advertisers’ desire for scale, most likely a habit ingrained from many years of reliance on television, and their desire for the targeted relevance of the ad placements made especially possible by online advertising.

The question he posed to the panel: Are online ad networks the solution? If so, how should we deal with the struggle between branded online publications and online ad networks?

Wenda Harris Millard, the chair of the IAB along with being the co-CEO of Martha Stewart Omnimedia, characterized the conflict as being between “pork bellies and diamonds.” In her view, the ad networks started as the equivalent of retail outlet centers, dealing in commoditized distressed and remnant inventory and based primarily on price – “pork bellies” – as opposed to the “diamonds” of premium branded online content. She felt, however, that ad networks are evolving into the online equivalent of luxury shopping centers – essentially multi-branded upscale retail destinations. So to her, the question is how far along the path have they come?

[Note: Ms. Millard’s discussion on topics covered at this seminar and other issues can be viewed in an interview with Kara Swisher of D: All Things Digital on the ContextWeb site: http://blog.contextweb.com/contextual/wenda-harris-millard-featured-on-allthingsdcom.]

Bill Morrison, an analyst at the Think Panmure boutique investment bank, attributed the growth of ad networks to the fragmentation of media, particularly online. His research showed that there are 160 million websites, of which 50 to 60 million are active, and approximately 1% are being monetized. Even at those low levels of activity, that still leaves 1.6 million websites contending for dollars, largely advertising.

The ad networks, in Bill’s view, grew in response to publishers’ need for revenue and advertisers’ inability to deal directly with the plethora of websites. The number of ad networks has grown in response to this marketplace need: there are now over 300 ad networks, compared to only 100 in 2003.

As the market has grown, networks have begun specializing beyond simple commodity sales. Bill felt, however, that there is yet no effective market for what he calls "premium secondary" inventory.

Multiple vertical ad networks aggregate sites with similar content. Through such aggregation, these networks are challenging the content leaders who seek to garner premium rates for their inventory on the strength of their brand and depth of their content.

ContextWeb, the host of the morning’s event, has a slightly different model, having constructed what are in effect “synthetic networks” of pages of related content, regardless of the editorial direction of the underlying sites.

Bill argued that the networks addressed other challenges faced by publishers beyond simply a means to garner advertising which they might not otherwise have the resources to reach. Another issue could be what Bill referred to as “inventory bursting,” i.e., volatility of traffic that is hard to predict and could prevent the matching of inventory to traffic.

Wenda raised what seems to be the key issue among branded publishers – that ad networks can create the commodization of online ad inventory: it's all about price, like TV. I was a little surprised at that last comment, as it had always seemed to me that television inventory, at least at the network level, avoided commodization by differentiating itself by quality of programming, demographic targeting, and buzz in general, such as premium pricing for events like the Super Bowl and the Oscars. Furthermore, if television is unable to avoid commoditized pricing, online probably stands even less of a chance, unless targeting or other techniques can demonstrate superior ROI to TV.

Ari Brandt, the general manager of Portfolio.com, took a different tack. He contended that his property is not competing on scale. It wasn’t clear whether this was an actual strategy or simply making a virtue out of necessity, with properties such as CNN/Money being clear leaders in the financial news and analysis categories. Ari viewed the mission of Portfolio.com to be that of empowering business leaders with online tools, although he did not go into much detail. He also said that Portfolio.com took a lighter approach to news, which would seem to be similar to that of the magazine itself.

All in all, he professed to be very satisfied with success of Portfolio.com, having 3 million unique visitors and 8 million page views monthly 15 months after launch, with a heavily male and affluent audience.

After the brief comments by each of the panelists, Randy Rothenberg asked: why are people replicating television metrics in their efforts to assess online advertising, such as reach and frequency?

Wenda agreed with the underlying premise of Randy’s question and said that her efforts at IAB included resisting the wholesale transfer of metrics from other media to online. Furthermore, as scale will continue to be a key objective of advertisers, she felt that television is becoming less important every year. She argued that digital media will eventually replace television, as magazines, which previously might have been a contender, can not provide the scale advertisers require.

For online, leveraging its unique strengths such as behavioral targeting combined with contextual relevance is key. She compared the online advantages to the mass “spray and pray” approach of television.

Bill Morrison commented that audience composition is as important as scale, another factor that would seem to favor online, particularly with regard to upscale audiences.

I asked the publishers on the panel about the importance of integrated marketing, particularly as a way to avoid the commoditization of online advertising through the creation of custom and multimedia packages not easily sold via a network. Wenda contended that advertisers were looking for true value creation in partnership with the publishers and that pricing was often the last concern, not the first. She also indicated that it was an advantage to have multiple media distribution channels, such as print, TV, radio, and the others available to MSO, as opposed to the online-only limitations at Yahoo!, her previous employer.

Randy next asked whether branded networks are an ad play or a content play. Wenda said that her objective is to serve her customers, particularly with regard to the branded network created under the Martha Stewart brand. She pointed out that MSO alone can not provide all of the content that their customers want, and that the Martha network enables them to extend their content reach. She cautioned the audience, however, that it is important to properly "curate" one’s network sites to guarantee the quality, both for advertisers and customers, and that not all networks do so.

When Randy asked about the relative values of new versus old branded networks, Bill seemed to indicate that it was not a critical distinction. He cited the example of Glam, which built a vertical ad network first, then built an owned-and-operated content site. In other words, it did the exact reverse of the MSO strategy.

Along the lines of extending content reach to provide quality inventory to advertisers, Randy cited the recent purchase by CBS of CNET which was done to expand its group of sites and build out its network of content, not just for ads.

Bill indicated that having such qualified content under a publisher’s umbrella was important in that IAB publishers, generally the largest publishers, accounted for 80% to 90% of total online ad revenue. The ad networks, on the other hand, while holding a market share of 10% to 15%, are growing much faster than the publishers, at a 30% annual clip.

A member of the audience asked about the widgetizing of content as a distribution channel, with or without ads. Ari seemed to view that as a likely further development, and cited Google Gadgets – a business travel widget – that has been syndicated across the Google platform.

Randy summed up the morning by saying that the keys to maintaining price include having trusted brands, providing a good consumer experience, and generating big ideas that create results. Hard to argue with that.

comScore's Top 50 U.S. Web Properties for May 2008

2008-07-11T16:27:00.000-04:00

comScore announced the top 50 U.S. web properties for May, based on the Media Metrix data: http://www.comscore.com/press/release.asp?press=2270

Nielsen Releases Report on 3-Screen Usage

2008-07-11T15:55:00.000-04:00

Nielsen has released its latest report on media consumption: "Television, Internet and Mobile Usage in the U.S." The 4-page report can be found at: http://www.nielsen.com/pdf/3_Screen_Report_May08_FINAL.pdf

Skate to Where the Puck Is, Not Where It Used to Be

2007-10-21T11:55:00.001-04:00

Wayne Gretzky supposedly attributed his success to ordinary players “skating to where the puck is” while he “skated to where the puck is going.” (A tip of the hat to one of my favorite professors, John Greening of Medill) Of course, if it were that easy, we’d all be in the Hockey Hall of Fame. Fortunately, sometimes it isn’t even that complicated.

If everyone else is skating to where the puck used to be, then all you have to do is skate to where it is now. I realize that this sounds absurd, but look at the state of marketing today.

You would think (hope? expect? assume?) that marketing dollars follow consumer behavior. But, no. Changes in marketing spending seem to be a lagging indicator, not a leading indicator or even a current indicator. A recent Booz Allen Hamilton study for the Association of National Advertisers found that the 80% of Americans who are online spend as much time on the Web as they do television, yet marketers spend only 5%-10% of their ad budget on digital media.

Their plan to snap into action is to increase their digital marketing spending by 2010 – most of them, anyway. One hopes that despite the wording of the question, they are planning to increase their spending in 2008 and 2009, and not wait until 2010.

This inertia has been noticed elsewhere. A Forrester study released last week found that business-to-business marketers also indicated that they are responding to the behavioral shift of their customers to the internet with less than alacrity. Fortunately, that is not always the case: Intel was quoted in the New York Times that it is shifting ad dollars to the web because “We’re going where the consumers have gone.”

I would expect two things to happen as a result: marketers who are early to the web will gain market share which they may be able to hold against latecomers and the shifting of ad dollars will greatly accelerate the revenue growth rate of ad-oriented websites. Let’s see if this happens, and I’m also assuming that advertising on the web is effective, but that’s a topic for another day.

VNRs Under the Gun (Again)

2007-10-09T17:23:00.000-04:00

Successful industries go through phases during their lives, just as human beings do. An industry can be innovative and successful at the outset. Eventually, however, the environment may change significantly, and the business must adapt or perish.

The video news release (VNR), a tool in the broadcast PR or electronic publicity business, has been increasingly threatened due to a tightening regulatory environment. The legal underpinnings of the VNR business are based on a Congressional mandate requiring news outlets to disclose the origin of third-party material, with a limited-or-no disclosure exception for material provided to news outlets at no charge.

Continuing controversy over the nuances of these restrictions has resulted, in the latest instance, in the Federal Communications Commission proposing to fine Comcast $4,000 for airing a VNR without appropriate disclosure. The FCC claims that there was “too much focus on the product or brand name in the programming.” Wasn’t that the point of the VNR in the first place?

The VNR industry, in the form of the National Association of Broadcast Communicators (NABC), is reduced to arguing “against requiring disclosure,” which is a policy-oriented position. After all, there is nothing to prevent Congress from changing the law to require disclosure in all circumstances.

The continuing efforts of the Center for Media and Democracy (CMD) and Free Press ensure that this issue will not go away. CMD claims to have identified 140 additional instances of disclosure violations, and there is speculation that the FCC’s move against Comcast are the first of many pending actions, including possible disclosure of product placements. After all, Nielsen proclaimed Coke the top product placement of the first half of 2007 with 3,054 occurrences. The second-ranked Pussycat Dolls Lounge Nightclub recorded a mere 750 mentions. Sounds like fertile ground for an FCC investigation.

The VNR industry must either win in the court of public opinion or find alternate ways to meet the needs of its clients.

No Soup for You!

2007-10-05T13:25:00.000-04:00

So, I'm wrapping up a 9-day road trip during which I've gone to the InterBike (I have no idea what that name means!) bicycle trade show in Las Vegas, the Podcasting and New Media Conference in Ontario, California (for which I drove 50 miles out of my way to claim a $40 webcam I won in a sweepstakes), the TurnPRon conference in San Francisco, and assorted other meetings. Enough is enough; it's time to go home.

After a long trip, I just want to get something to eat during the 2 hours I'm waiting for my flight at San Francisco airport. Eureka! I spot a little Japanese restaurant as I'm walking to security. I've had a craving for udon soup on this trip - I tried a bowl in Las Vegas and another one in LA. This will round out my epicurean sampling.

I have said from the very beginning that airports are funny animals. There are lots of reasons for this, and one big reason is security, which rears its ugly head and interferes with my culinary journey. Flash of unpleasant insight! Soup is a liquid, at least the last time I checked. I confirm this gustatory tidbit with the helpful clerk - soup is not allowed through security. Someone must have said that Japanese soup can be explosively hot, and TSA took them at their word. On the other hand, the clerk said that sauces are okay. I just won't tell security that the teriyaki tofu is dynamite!

Jack Myers on Advertising, via NY:MIEG

2006-11-13T06:38:00.000-05:00

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: http://query.nytimes.com/gst/fullpage.html?sec=travel&res=9F06E3D8133FF930A35752C1A9609C8B63. 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.

Playtime is Over, Get Back to Work!

2006-08-31T09:17:00.000-04:00

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!

How Many Idols Can We Have, Anyway?

2006-08-01T08:18:00.000-04:00

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.

The Latest Media Device for Workaholics

2006-06-03T08:57:00.000-04:00

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:
http://www.trittontechnologies.com/products/TRIUV100.htm#Description. 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.

The Tivo Trojan Horse

2006-05-24T06:28:00.000-04:00

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.

The Report from NAB 2006

2006-05-08T08:56:00.000-04:00

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.

Summary

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!

The Old Jargon Just Doesn't Fit Anymore

2006-04-20T17:41:00.000-04:00

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?

Apple Is Disintermediated - Who Needs iTunes After All?

2006-04-11T06:48:00.000-04:00

Disney has announced that it is making several of its hit shows available on the web, free of charge: http://online.wsj.com/article/SB114471866760022484.html?mod=mm_media_marketing_hs_left. 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.

The Future Has Arrived: Ubiquitous Wireless Broadband

2006-03-20T13:48:00.000-05:00

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: TVhttp://online.wsj.com/article/SB114282577797602754.html?mod=djemMM. The next step: the endgame of connectivity.

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

2006-03-17T07:05:00.000-05:00

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.

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

2006-03-02T09:50:00.000-05:00

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: http://www.nytimes.com/2006/03/02/technology/02yahoo.html. 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.

Re-dis-dis-intermediation

2006-02-28T05:19:00.000-05:00

CBS announced yesterday that it will begin providing news and alerts for entertainment programming to cellphones on a subscription basis - http://news.com.com/CBS+to+offer+subscription+video+for+phones/2100-1026_3-6043583.html.

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?

One Ring Tone to Rule Them All

2006-02-20T08:53:00.000-05:00

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?

The Paradox of Choice

2006-02-17T08:42:00.000-05:00

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 ….

Observations from the Media Summit 2006

2006-02-14T09:06:00.000-05:00

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, http://mediascrum.blogspot.com.
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?