WEDNESDAY, APRIL 11, 2007
ADVERTISING IS CONTENT IN MEDIA 2.0 (Terry)
Garfield writes of a "post-apocalyptic media world substantially devoid of brand advertising as we have long known it." He speaks of "a world in which consumer engagement occurs without consumer interruption, in which listening trumps dictating, in which the internet is a dollar store for movies and series...in which marketing -- and even branding -- are conducted without much reliance on the 30-second spot or glossy spread."
Now, say hello to Pluto -- the suddenly former planet...
This is clearly not the business model of mass marketing, but as Garfield argues, new media is not about gathering masses, it's about interacting with people via niches, and that doesn't play well with big crowds.
People will always need to buy and sell, and the web is very good at facilitating that. Garfield relays the funny story of Jan Leth, executive creative director of OgilvyInteractive North America, regarding a buy for Six Flags.
"No photo shoot. No after-shoot drinks at Shutters," he adds, with faux regret. Then, with somewhat less irony: "Now, the trick is, how do you get paid?"
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GO TO ZELL: THE TRIBUNE COMPANY'S NEW OWNER DOESN'T UNDERSTAND GOOGLE (Steve)
Instead, Tribune got Sam Zell.
According to an article at Marketwatch, even before Zell has become the chairman, he's already taking on Google:
"If all of the newspapers in America did not allow Google to steal their content, how profitable would Google be?" Zell asked during a question-and-answer session late last week at Stanford University, according to a Washington Post report. "Not very."
First, this shows a breathtaking lack of understanding about Google, which was a hit long before it started Google News. Google would be profitable if it merely indexed the web and ignored the news completely. More importantly, this shows an ignorance of the importance of Google to Zell's new company and its media properties.
Google does not "steal" anyone's content. You search, it tells you where to find it. Then you go to the site that has the content. So it doesn't steal content or ad revenue. It builds pageviews and money for both parties. Zell doesn't seem to understand the web isn't a sum zero proposition. I have - as I am sure you have - had the experience of going to a news site, not being able to find the story I wanted, and going to Google to search for it. Google's search is still better than many news site searches.
Google does mean that Zell's properties do have to compete in the marketplace of ideas for my attention. His stories about Iraq are going to show up in the results with competitors' stories about Iraq. But if his papers are writing the best stuff, then I go to those stories. Through Google News I find stories in, say, the Chicago Tribune I might not have otherwise seen. I don't normally visit the sites of Zell's new properties - so having Tribune's stories available for Google search expands the potential audience.
Zell does like some aspects of the web -- those that make him money immediately.
From Marketwatch: Zell is particularly impressed with the CareerBuilder site in which Tribune holds a stake of more than 40%. "Anything that's growing at 25% certainly gets my attention," he said, according to the Los Angeles Times.
That's nice and all, but CareerBuilder is 1.0. It's a destination site, and in the 2.0 universe the users are the destinations and not the other way around. Zell needs to see beyond the "visit our website" model and think about how to spread out his content everywhere.
If I were at Tribune right now, I would humbly seek an audience with Sam Zell and try to help him understand why the web and search are our best allies. Thinking Google (and its many competitors) is somehow stealing from its newspapers will not restore ad sales to their former glory. That time has passed. Zell has to think forward or he will find his $8 billion investment in Tribune will be folly. <Permalink>
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GOOGLE IS AN ADVERTISING SYSTEM (Terry)
What Google really is is an advertising system. Just ask CEO Eric Schmidt. Wired Magazine did just that, and the interview is a wonderful and engaging insight into the business of Google. Schmidt agreed that the vast majority of their revenue comes from advertising, but added, "which is a business that a lot of other people would like to be in."
Schmidt: Think of it first as an advertising system. Then as an end-user system -- Google Apps. A third way to think of Google is as a giant supercomputer. And a fourth way is to think of it as a social phenomenon involving the company, the people, the brand, the mission, the values -- all that kind of stuff.
Schmidt: It’s a business negotiation. We’ve been negotiating with them, and I’m sure at some point we’ll negotiate with them some more.
Wired: Viacom’s argument is that you’re not working hard enough to keep infringing clips off of YouTube.
Schmidt: Well, if they would look at the law, they’d understand that under the Digital Millennium Copyright Act, there’s a shared responsibility. The law says that the copyright owner monitors -- and then we expeditiously remove -- offending clips. We’ve done that. In fact, YouTube’s traffic has grown since we did. So Viacom’s argument that YouTube is somehow built on stolen content is clearly false.
Wired: How could copyright law in the digital age be clearer?
Schmidt: The balance that was struck in the DMCA has worked pretty well, and I think it may be better for all of us to work within that framework for a while as we develop these new businesses. It’s the unintended consequences of new laws that always get you.
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THE 100 MILLIONTH IPOD SALE: A HATED TECHNOLOGY STARTED THE REVOLUTION (Steve)
I point this out, because the very foundation of this product was violently opposed by the record industry.
In 1998, Rio, one of the first manufacturers of an MP3 player, was taken to court over its product. It seems whimsical now, but the Recording Industry Association of America wanted MP3 players banned, saying the devices were capable of distributing pirated music.
I had a Rio player that held all of 10 - 12 songs or so. For me it was a miracle - I could take a whole "mix-tape's worth" of songs with me. It was liberating. And it wasn't the least bit surprising the record industry didn't care for the thing. It gave me more control.
The record industry - just like the film and TV industry -- hates new technology. They follow our rules of how old media reacts to new media: 1. Deny it's a problem and point to the superiority of your product; 2. Try to sue the innovation out of existence; 3. Come up with an inferior competitor; 4. Partner with the true, popular product; 5. Claim the success was your idea all along.
The record industry didn't like us downloading and sharing music and, truth be told, still ain't thrilled with the fact we can buy songs one at a time. They would rather we buy 2.5 billion albums than pick and choose the songs we want. The TV networks hated the idea of putting their shows online, but at least they learned the lessons of file sharing and the music industry. Now you can watch network shows online for free or download them for a fee. The iTunes Music Store started selling TV shows in October 2005. Here we are less than 18 months later and they've sold 50 million shows. At about $2.99 a show that's about $150 million in revenue on previously created content. It's found money.
And the content creators will continue to find money - as long as they stop fighting progress. We keep looking at new technologies in terms of the old technologies; how will this "new thing" threaten my "established thing"? Badly, if you don't change. But if you adapt, the potential upside is huge. Networks are realizing they're not in broadcasting anymore - they're in the information and entertainment business. Their ability to create content in high demand gives them an attractive product. Local affiliates need to learn this lesson. They're still trying to define the web in terms of their newscast. It's something different. The web is still starving for fresh, original, local content and the affiliates have the capability to produce it.
The company that made Rio players stopped production in 2005, and the Rio became a victim of the iPod juggernaut. The iPod is an unquestionably huge hit. It is part of our culture. It's an accepted form of personal entertainment. And it's worth remembering that its roots are with a hated technology that gave unprecedented control to the public. <Permalink>
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COZMO TV: EVERYBODY GETS PAID (Terry)
Cozmo CEO Alex Rowland told me in an email that they're trying to create an Internet television network that is created, marketed, and distributed by consumers. "We eventually want to carry all the traditional channels (ABC, Comedy Central, etc.) that you would find on your cable system," he notes, "but in order to afford that content we must have distribution scale first."
So, we are essentially building a new television network from the ground up. Anyone can publish their own shows or create their own channels and anyone can act as a local 'broadcast' affiliate. And while 95% or consumers will simply watch channels of video at CozmoTV, the rest will be actively contributing to our channel lineup and our distribution reach.
The application is an embeddable Flash widget with a cool set of controls inside that allow the user to search for other videos. The application itself is fun, but the winner here is the back end ad platform. We tend to view citizens media (a.k.a. the pejorative "user-generated content") as an ego-driven group of people who'd like nothing more than to share their content with our users. This is quite absurd, of course, and the Cozmo model provides a simple way to pay anybody for their content. I think it's a natural for local media companies.
Rowland says their goal is to create a network that is compelling enough that people will eventually cancel their cable subscription. Big dreams, and he's trying to keep things in perspective. "We have a long way to go, but we are going to get there only with the consumer building the network along side us. But if we can grow to several million viewers I think we can generate enough ad revenue to attract major studio content to the network (I think Joost and others are starting to prove this model)."
The revenue split is what intrigues me, and here's how it works:
2. Advertising revenue is then split between the parties. The content owner receives a pro-rata split of ad revenue sold and watching in whatever channel they are carried. The channel owner receives a split of any ad revenue generated in their channels regardless of where these channels are syndicated. The affiliate owner earns a split on all advertising delivered through any channel they have aggregated.
3. Consumers who watch CozmoTV channels can then create their own channels for syndication or grab the network widget to embed on their own site to carry channels. This will all occur from the widget without someone ever needing to visit www.cozmo.tv. (Widget-level channel creation and syndication will be released in the next few weeks.)
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REMINDER: FIND US AT RTNDA@NAB
Terry Heaton:
Steve Safran:
If you can't make it to the panels but want to say hi to Steve and Terry, shoot them an email:
Terry: theaton@ar-d.com
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Bob Garfield has written a new version of his 
Tribune Company badly needed someone to come in, turn the place around, and start thinking new media. One of the big reasons the company ran into trouble was its inability to keep up with the changing marketplace. Tribune’s reluctance to embrace the changes in new media tore the company apart and put it up for sale. Anyone with a solid vision of what needs to be done with a modern media company could certainly take those strong assets and rebuild. Tribune needed that person.
This past week, Apple sold its 100 millionth iPod. According to 
A simple new web 
