WEDNESDAY, APRIL 11, 2007

ADVERTISING IS CONTENT IN MEDIA 2.0 (Terry)
Bob GarfieldBob Garfield has written a new version of his Chaos Scenario for Advertising Age (if you never read the first one, you'll find it remarkably prescient, now two years later), and the subtitle is The Post Advertising Age. This isn't just some cute phrase; we're really moving into a time when ad supported anything is problematic.

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."

Perhaps you are already rolling your eyes. Perhaps you believe that vast structures on which vast societies and vast economies depend do not easily lose their primacy. Perhaps you believe that the TV commercial and magazine spread -- and radio spot and newspaper classified -- are forever and immutable, like the planets orbiting the sun. Good for you.

Now, say hello to Pluto -- the suddenly former planet...

I can tell you with certainty that we aren't rolling our eyes here in the Media 2.0 unit of AR&D. Garfield can write such things, because one of the fundamental truths of Media 2.0 is that advertising shifts from ancillary content to primary content. As a result, those of us in the local media business must shift from being companies that are "advertiser-supported" to companies that enable commerce.

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.

"They had a promotion for their 45th anniversary. They wanted to give away 45,000 tickets for opening day to drive traffic. So we got a brief to do whatever: ads, microsite, whatever. But our interactive creative director just went off and posted it on Craigslist. Five hours later, 45,000 tickets were spoken for.

"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?"

This article is filled with excellent facts and figures that really put the whole disruption into perspective, and I highly recommend reading it and passing it along. When advertising is content, the winners are those who make that content available to potential customers, and do so in an interesting and user-friendly way. In many ways, that's our mission for tomorrow.   <Permalink>

<<< >>>

GO TO ZELL: THE TRIBUNE COMPANY'S NEW OWNER DOESN'T UNDERSTAND GOOGLE (Steve)
Sam ZellTribune 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.

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>

<<< >>>

GOOGLE IS AN ADVERTISING SYSTEM (Terry)
One of the reasons Zell doesn't understand Google is that he -- like many others -- view the company through typical media eyes. I've heard it said on various panels that Google is a media company, but the thing is that Google doesn't make any content; they just aggregate everybody else's.

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."

Wired: How should we think about Google today?

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 also revealed plans to begin making ads available at YouTube, and he put the whole business with Viacom in its proper perspective:
Wired: In March, media giant Viacom sued Google, claiming that YouTube is stealing its video content. What made Viacom decide to go to court?

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.

Google's mission is to organize the world's information and make it universally accessible and useful. It's an interesting mission for an advertising system, but it's one we would all do well to emulate at the local level. Maybe one day we'll view ourselves as "advertising systems."   <Permalink>

<<< >>>

THE 100 MILLIONTH IPOD SALE: A HATED TECHNOLOGY STARTED THE REVOLUTION (Steve)
iPod NanoThis past week, Apple sold its 100 millionth iPod. According to TechCrunch, iTunes has sold 2.5 billion songs, 50 million TV shows and more than 1.3 million movies.

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>

<<< >>>

COZMO TV: EVERYBODY GETS PAID (Terry)
CozmoTVA simple new web video application has been quietly launched by CozmoTV that has the potential to lead the way in marrying professional video media organizations with J.D. Lasica's "personal media revolution (PMR)." I often use Gordon Borrell's wonderful line that "the deer now have guns" in describing the PMR, and his admonition that we need to get into the "ammunition business." Well, this CozmoTV application does just that, and it does so with a back end that splits revenue four ways: the content owner, the network distributing the content, the affiliate hosting the content and, of course, Cozmo TV.

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.

Cozmo's Widget

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:

1. CozmoTV inserts interstitial advertising within streamed channels (advertising insertions should begin within the next 3-6 months.) These advertisements can be watched and rated, clicked on for additional information, or simply skipped.

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.)

Cozmo has deals in the works with channel partners, affiliate partners and syndicators. If you want to participate, contact Alex.   <Permalink>

<<< >>>

REMINDER: FIND US AT RTNDA@NAB
Terry Heaton and Steve Safran are on panels at RTNDA@NAB again this year. We invite you to join them for lively discussions on the web, journalism and the future of media.

Terry Heaton:
Sunday, April 15, 4:00 - 5:30 pm
Opening Session: News 2.0: Leading and Succeeding in the New Journalism World
As consumers take command of their news options, newsrooms everywhere must transform the way they operate or risk being left behind. Join the leaders of this revolution in a strategic discussion of what we can learn from our audiences and what to expect as they become empowered with control. Learn how professional journalists can continue to be relevant voices in our markets and sustain a viable business. And discover ways that you can be that force of change inside your own organization, encouraging innovation now so we all will be relevant tomorrow.

Steve Safran:
Tuesday, April 17, 2:00 - 3:15 PM
"Redesign" Your Web Content with the Lost Remote Guys
Great web design is obviously important to the success of any website, but it’s only half the equation. Broadcasters have yet to truly focus on "redesigning" their web content. Too much emphasis has been put on redesigning new tools and the aesthetics of their websites. Content that works on air, more often than not, doesn't work as well online or on mobile devices. The Lost Remote Guys will use examples from around the web to show which content works best, which creates the most desirable advertising opportunities, how to produce web content more efficiently, how to keep people on your site longer, and how to better integrate community-generated content into your newsgathering operation. (Along with Cory Bergman and Stephen Warley from Lost Remote.)

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
Steve: ssafran@ar-d.com