Stop selling scarcity. Start selling relationships.

February 9, 2010 § Leave a comment

 

I posted a reply in Jeff Jarvis’ discussion over at BuzzMachine about “Selling Scarcity.” Uncharacteristically, I’ve disagreed with him. 

The link to Jeff’s thread is above. My reply is there and here, but there is a difference in the last sentance where, as an after-thought, I have chosen to be more emphatic here about the question of results vs. relationships. (I could not go back and edit my reply to Jeff.) Fundamentally, it has not been shown that results are more abundant online than off, though they can be, perhaps, measured with greater ease. Relationships, however, are far more abundant online. Therein lies the differentiator. We should be selling relationships.

Dear Jeff:

If I have followed your reasoning properly, then I have to say I disagree with it, certainly as far as the media and advertising portions of the argument go (which are the only portions I’m semi-qualified to address). I’m a fan and advocate along with you (and of you) in regards to the consumer driven information economy, but I believe strongly in the value it has created. My reading of this post is that the new media economy has, instead, wrecked value. Rupert Murdoch would agree; perhaps also Mel Karmazin. Not I.

Start with advertising. “Sell the outcome” is a pretty good summary statement of the points you make, for which we/you thank Max Kalehoff. From it, you admonish those in the media business to align with marketers if they are to have any hope of surviving the chaos of the new world. This is a bad idea, I believe, and poor recipe for survival. Why?

Relationships. You say that media “must become” about relationships. I say media has always been about relationships, and I’d say further that the exciting part about new media is how especially good at relationships it is relative to old media. It is substantially more personal and timely. It is more one-to-one.

The principal stakeholder in a media relationship, however, is the consumer, not the advertiser and the media must stay firmly aligned with consumers or perish. Google’s remarkable success with results was/is driven by value it creates for consumers, not advertisers. Google is in the results business, which is the same for all search engines – as it has been the same for the Yellow Pages and the same for classified section of newspapers (May they rest in peace). BuzzMachine is not in the results business except so far as when I show-up it better be interesting – as, indeed, it always is. Google doesn’t have to be interesting. Google has to be reliable results-wise. You, have to be reliable interesting-wise. You have the harder job. You should make more than Google on a pound-for-pound basis. But, that’s for another day.

I am clear about the primacy of the consumer as principal relationship holder with media in the way that I think you are a bit unclear about it. You say that Rupert Murdoch and others are playing a dangerous game when they propose to charge their “best customers – cutting off their richest relationships with a toll booth.” If you are right in this case (I think you are) it follows that you are wrong that media should align with marketers.

Unless I’m missing the point, which may be that media should be equally devoted to consumers and marketers serving as some sort of Den Mother between the two, as community builders, or Tupperware party organizers inviting advertisers to share coffee and donuts with the neighbors. I’d argue the idea lacks passion, which suits Demand Media and other content mills paying $20 an article just fine. They are not in the passion business. They are not in the relationship business. Coffee? Donuts? Warm bodies? Save a seat for them on the sectional.

…Which is where I get stuck again when you argue, “advertising is failure – it’s what you do when you don’t have a valued relationship.” Right, but then, ipso facto, advertising is not failure in the presence of valued relationships, the “richest” source of which is the media – the richest source of which today is the Internet, where I think we have always agreed consumers find more of what they care about.

Interestingly, this outcome still supports your overall premise to stop selling scarcity. Instead, sell abundance – of relationships. That’s what the old media world was missing: the fact that they could not produce and distribute content abundantly enough to satisfy the needs of all their consumers. The Los Angeles Times tried to serve an area the size of Ohio and failed. It could not afford so many relationships. Ditto the rest. If they are smart they will retreat to their interest-based borders and thrive on the meaningful relationships that result, way into the future. Profitable, only smaller, just as you say.

The Internet can afford countless relationships. It remains to be seen if marketers will harvest them. If we want to help the marketers, however, stop selling results and start selling relationships.

An iTunes for magazines?

November 25, 2009 § Leave a comment

Magazine publishers may now be looking at the iTunes model, which has been so successful at connecting with consumers on a paying basis, for help with the digital future. Thanks to the MediaBistro.com Daily Media News Feed, we are alerted to stories in the New York Observer and The Wrap (which has a nice summary of a few notable paid content initiatives out there right now) about the efforts of former Time Inc-er, John Squires, to rally magazine publishing companies to a new, sustainable, digital model.  iTunes is discussed in both places as the progenitor of what may result from such a collaboration. Whatever evolves, John Squires is quoted as saying in The New York Observer, “With magazines, the form has to change.” It appears he is out to re-design magazines for a digital world.

The iTunes model will not do that for him on its own. iTunes has been wonderfully liberating to consumers not because songs only cost 99 cents, but because once upon a time in order to own a song it cost $14.00 for the CD or album. It wasn’t that consumers were unwilling to pay $14.00 for the one song they craved on an album, it was that it came with so many other songs for which they had no craving at all. CDs took a convenient step forward vs. albums by introducing advanced programmability – specifically, the ability to search for and play a desired song, skipping over the rest without having to get up and move the needle forward or back on a spinning turntable.  iTunes took it to the next level, making it possible to buy songs one at a time, with even more programmability.

This is not a remedy offering much hope to magazines. Fortunately, John Squires may understand that, at least per The Observer piece where he says, “Unlike books and music, I think [for magazines] it involves designing a new product in order for it to be something that consumers really love.”

What do consumers really love about magazines? They love discovery. Magazines delight readers with the unexpected things, which may be why it is so hard to translate the business opportunity into a cost-per-pleasing-new-fact-or-insight. The very thing that makes magazines innately desirable is the thing that is hard to put a price on. It is, in fact, all the “other stuff”, in contrast to what users sought on albums and CDs.

What is the price of this sort of serendipity? How does one bottle it in a digital world where there is so little peripheral vision – where it is all sharp angles and edges, and pointless searches down one rabbit hole after another?

People don’t pay for content. Perhaps this is why: it is not content they are buying. It is experience. It is the pleasing discovery of things they did not know they wanted to know, connected usually to their interests at heart. We will pay for personal enrichment. No wonder it appears the interest-based magazines that come into our house are thriving, but the general-interest based magazines we see elsewhere are not. Where our interests lie, so does our desire to be led (and our willingness to pay).

This means a struggle for all those magazines and – especially – newspapers that would charge for content online. And for magazines, John Squires says, “the form has to change.”

That should be interesting.

Aol.

November 23, 2009 § Leave a comment

The new Aol mark featuring lower case “o” and “l” and a dot at the end does a nice job of cracking open the brand for a new look. Watch the teaser spot first and then read the interview with Tim Armstrong at Paid Content.

Can Hulu rescue TV (for nothing)?

November 3, 2009 § Leave a comment

Online Media Daily reports that Needham & Co. analyst, Laura Martin, was dispensing doses of reality to a packed house at the OMMA Video conference in Los Angeles last week. Referring to Hulu, she observed that it’s not especially difficult to take $3 billion worth of product (meaning, programming from Hulu’s participating owners such as NBC, ABC and Fox) and give it away successfully online to the delight of millions of users. The question is how to make money from that give-away which, Laura Martin suggested, could take the industry 10 more years to answer.

Actually, we can probably answer the question right now: Hulu won’t make money – not, at least, TV kinds of money. Some money will be made, for sure, but not TV kinds of money. So, if that means Hulu will end up squandering the equity of major media brands by offering $3 billion in programming online for free, better cut and run.

Unless Hulu is really saving TV by being free.

Consider that Hulu attracts 38.5 million viewers according to the measurement service, comScore. With such large audience numbers the business instinct is to, 1) charge for content, or 2)  insert commercials in front of those 38.5 million viewers as many times as possible. Laura Martin has ideas for both, with content fees for archived programming the most easily accessible. Other options that charge for new or existing content and/or rely on the routine of television commercials are more problematic, and Martin thinks it may take 10 years to successfully introduce those options with the audience.

With regards to advertising, Laura Martin estimates that Hulu inserts four ads per hour on Hulu. That compares to 32 30-second spots that are shown every hour on television for the same programming. It’s not clear from the Online Media Daily report if we’re meant to think that 32 commercial breaks per hour represents the model for Hulu, but the delta between four commercials an hour and 32 per hour implies plenty of revenue upside if the Hulu people would just get on with selling more of it.

Sadly (or not), they can’t. While there is programming capacity online to absorb $3 billion worth of inventory it is highly questionable whether there is commercial capacity to absorb the equivalent of $65 billion in video TV advertising, or even some reasonable fraction thereof.

For one thing, as noted by the Online Media Daily story, the average Hulu viewer spent one hour and 17 minutes watching videos on the site in the month of August, which compares favorably to 3.7 minutes for online video consumption, per viewer, across the rest of the Internet. Elsewhere, Neilsen reported that online video consumption in total had climbed to over three hours. These metrics don’t add together, but between the three of them it seems clear that the average amount of time spent consuming online video per month is still not the thing dominating people’s schedules.

In contrast, according to the first number I could lay my browser on (which happened to be at CNN.com), in February the Neilsen Company reported television viewing at an all-time high of over 150 hours per viewer, per month which it attributed to the rise in the number of cable channels (“many, many more cable channels”) and DVR and TiVo devices.

In other words – as we’ve heard before – the introduction of more relevant programming combined with technology to avoid commercials is helping sustain and grow TV viewership. From this we could take it that 32 30-second commercials per hour is not the model, even where the model supposedly exists. People don’t like commercials. This is partly the reason they like Hulu.

While it may seem counter-intuitive, therefore, the brand equity impact of Hulu on the multi-billion dollar equity value of giant television media franchises may be very positive right now, and may go negative the more its caregivers try and transform Hulu into television by introducing more commercial messages.

As a way around some of these problems and possibilities, one can get the sense from talking to online video enthusiasts that they are waiting for the day when 150 hours of viewing time exists without regard to platform, Internet or television, and where screens are connected and become one. This is the “Eventually-the-Internet-will-become-television” argument in which Internet video strategy simply docks with television and its $65 billion in advertising review. It says that traveling at the vaunted speed of Internet time returns us to the spot from which we left. It’s a boring outcome, it ought to seem, for new media, and a rotten one, too, for consumers in a consumer-driven world.

For now, perhaps it’s better to think of the three-hours of time per month that viewers online devote to video as brand-reinforcing time. Contrary to the idea that $3 billion in free programming online is destructive, it may be that it is terribly important to driving programming loyalty and repeated use offline, on television, and to supporting a $65 billion business despite the corrosive effects of fragmentation and commercial-skipping technology.

Once again, new media provides for older generations.

New media, same as old, old media.

August 28, 2009 § 1 Comment

Nic Brisbourne, a partner at venture firm, DFJ Esprit, has an article in Paid Content talking about the future of news in a digital age. His view is that it will be, a) highly distributed, b) free, and c) forced into smaller packages. Says he:

“In the digital world, the news industry, like many others, will be radically smaller. This contraction is partly a consequence of much reduced distribution costs, but is also a reflection of the fact that the monopoly rents Fleet Street enjoyed in the last century are a thing of the past.”

A similar argument about the need for news (specifically, newspapers) to think small was made in this space earlier this spring.

In arguing that news will come (is coming) in well-distributed, niche packages Nic Brisbourne is setting-up his contention that a new sort of journalism will emerge to organize ongoing news and story-lines by curating the bits and pieces and providing insight and commentary on top. Huffington Post is mentioned as an example. So are TechCrunch and Perez Hilton.com.

Mark Cuban was recommending a similar deal to Rupert Murdoch recently, proposing that he aggregate News Corp content from around the world into custom packages if he really wants to try and charge for it. Nic Brisbourne isn’t persuaded that charging for content will work. But, still, there is a sort of consensus between them that aggregating and curating information unlocks value.

News has become abundant, Brisbourne says, at a cost of zero. Indeed, hasn’t all information? Music has become abundant. So has art, sports, travel, cooking (question: can there possibly be as many recipes in the world as appear available online? Answer: Of course.), pet care advice, child care advice, media and advertising advice, etc.

Information is abundant and free and Nic Brisbourne’s argument is that coallating the threads of its different parts becomes the scarce source of value.

Excellent. It may interest us all to know, now, that this was the premise of Time Magazine when it was founded. From the Time.com web site:

TIME, founded on the notion that a surplus of news existed which had to be licked into usable shape, felt no need to gather its own news until the 1930s.
From The Story Of An Experiment
Mar. 8, 1948

Aggregation was behind the great networks NBC and CBS when they got going thanks to the invention of radio. It is the premise of my favorite new magazine – one that actually seems to be working – The Week.

This means Nic Brisbourne is definitely on to something, which is that the future of news and information is largely the same as it has been. New media will evolve (is evolving) around the specialized aggregation of information and content (e.g. Huffington Post: breaking news and opinion; PerezHilton: celebrity gossip; TechCrunch: new Internet companies and technology).

This is different from the generalized aggregation of audience – as everyone with a portal model found out early into the Internet revolution. But don’t blame them for missing the point; they were mimicking what seemed like the successful model that main stream media had become. Wrong. Not successful. Almost impossible to sustain at super-size levels. Per Nic Brisbourne :

“The great tragedy of the newspaper industry in the late 20th Century was that, in the pursuit of profit, quality journalism became a dying art. Budgets were reduced, journalists were asked to write more stories per day and were given less time to check facts. At the same time, editors were instructed to avoid stories that might create controversy and the expense of lawsuits. The result was more and more bland articles recycled from paper to paper, more politically motivated editing and the collapse of public trust in the newspaper industry.”

When I think about media over the last 30 years I think about the gradual dumbing down of content in order to appeal to a lower and lower common denominator. Fundamentally, we may regard the Internet as a total re-boot to what it was when pamphleteers dotted the media landscape.

Will history repeat? One hopes that the vastness of the new media landscape and its minimum barriers to entry for would-be publishers will postpone that possiblity into the very, very distant future.

Aggregation aggravation

August 12, 2009 § Leave a comment

MediaPost’s “Around the Net in online media” picked-up Mark Cuban’s open letter (blog?) to Rupert Murdoch with advice on how to sell content online. His advice has two parts: 1) create editorial scarcity by blocking the aggregators that point to News Corp content and, then, 2) reassemble and repackage News Corp content from around the world into useful bundles that might appeal to news junkies or sports freaks, etc. Essentially, Cuban says to Murdoch, aggregate your own content on your own terms; put the fact that you own a media empire to work for you and make the people pay for that value.

Mark Cuban’s unsolicited advice was presumably inspired by Murdoch’s assertion to the markets last week that News Corp will start charging for content in July 2010. He has that long to figure out how. If he heeds Cuban’s advice the time between now and then will go to weaning his media empire off its addiction to the aggregators in order to create the scarcity value for News Corp content. I’ve relied on a few aggregators just to get this far in this blog post – “Around the Net”, of course, plus Media Bistro (which led me to Time.com). As a drug, they are wonderful alternative to the real thing. The danger to News Corp and others, of course, is that without them reality may bite.

But there is something fundamentally positive in the talk about value and value creation online. The whole third-party aggregation thing is being scrutinized not just on the content side, but on the advertising sales side with the thought that it’s time to start kicking some of these habits. I don’t think many companies are going to be successful charging for content. Cuban talks about the Wall Street Journal as an exception and that may be true. But if companies can’t charge for their content they may want at least to ensure their exclusive rights to sell advertising against it.  

In that regard, we live in the ad network space here at Burst Media where there has been much gnashing of teeth over the last year among web publishers – principally branded publishers such as any of those in the News Corp stable – who are trying to cut down their reliance on third-party ad networks. We have mostly stayed out of the fray by avoiding relationships with publishers that aren’t willing to work with us transparently – meaning, fundamentally, all the brand publishers with their own sales forces. If today those publishers are plotting their escape from unwanted third-parties, we won’t have a dog in the fight and we can choose to root for the value the publishers may win back as result. (And why not root for value?)

Advertisers – mostly ad agencies – are also strung-out on the whole third-party aggregation thing and are devising 12 step programs of their own to get back in charge. At a glance, their goals appear different than the publishers that are engaged in cleansing their systems, but who should be surprised? It has always been thus. The torment affecting everyone online has been a lack of differentiation, and it is that demon causing all the aggravation over aggregation.

Content wants to be free. Advertising wants to be accountable. It’s a tough time to be a new media child.

June 4, 2009 § Leave a comment

The story in Daily Finance reporting on Jonathan Miller’sspeculation that one day Hulu may charge for content has ricocheted around the news forums and digests. Boy, I’ll tell you, every time media companies take a step or two towards the invisible fence line surrounding the free content playground online the dog collar starts spitting electrodes. Posters to the column on Daily Finance were quick to jump on Miller’s comments:

“The fact that executives are still trying to figure out a way to charge for content online is mind boggling to me. It doesn’t work. Hulu was an ingenious idea. Since people were watching shows online for free anyways, why not create create an online platform and shift power back to the networks.”

“Another exec with no clue. I love Hulu in its current incarnation, and would certainly abandon it if it wasn’t free. What an idiot.”

Most of the 60+ posts were like that. The first poster (above) linked to a survey on a related topic at EngadgetHDthat asked, “How much would you pay for HULU on your TV?” When I took the survey the score was pay “Nothing”, 4,590 (76.6%), to pay “Something” (there were a few options), 1,401 (23.3%). I was among the “nothing” crowd.

Michael Kinsley’s article eight years ago in Slate, “It’s not just the Internet”, is still the best thing that’s ever been written on the subject of content economics. It should be required reading for media professionals. The truth is, content for a consumer audience is free, offline and on. If it’s not for free, it’s for darn near nothing. It’s underwater. It’s in the red. It costs the producer, not the consumer of the information.

So, of course, advertising has foot the bill for content for 30 years, maybe more, and grew weary of it at the start.  Despite their carrying costs advertisers got no input into the editorial products, little input into the position of their messages, and only some insight into how much of their investment reached its target – which was maybe half. Advertising has wanted a little money back, too.

The Internet, consequently, has grown-up in the midst of a stormy relationship and the impact on its personality has been profound. If ever there was a child that needed a little play time, it has been the Internet.

Listen to the shrill voices of it’s guardians: Be accountable. Don’t skulk. Answer me! Act responsively. You get nothing until the work is done. Why can’t you behave like a grown-up? What’s it worth to you? What’s the matter with you? Why are you crying? Here, try this. Try this. Try this! 

Michael Kinsley said in his 2001 article, “Information has been free all along. It’s the Internet that wants to enslave it.” Funny how that statement rings true as it pertains to the other partner in the relationship, the advertiser. Do you hear the echo? It resonates through the whole matter.

It’s a tough time to be a media child. You really have to wonder about the parents.

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