Monday, November 24, 2008

Ad Softness

Amuso co-founder Barak Rabinowitz has a nice little column over at VentureBeat on how social networks fall flat when it comes to generating ad dollars.
Two questions he doesn't address that I'm thinking about:
a) So banner ad revs are soft. That's what happens when you have a lot of spare inventory, and can't figure out ways to make that real estate more valuable to advertisers. And when your traffic is being measured against ad rates normally paid for television. What about ad rates for online video? It's becoming increasingly clear that there are some early adopters willing to spend for online video spots.
b) What about ROI from the perspective of marketers that are actually reaching into social networks to represent their products? IE, engaging in conversations.
Two things I'll be digging into this week.

Wednesday, November 19, 2008

Only This Will Soften Our Pain and Disgust

Someone else gets it, too.
Monty Python. All their videos. A channel on YouTube. Higher quality.
Selling infinite goods for nothing, in order to sell scarce goods for something.
The freeware model in the age of Internet Television. Reloaded.
I've always loved these guys. I love them more now that they're codgers, and they still get it. Better than most.
Here's their announcement:

Tuesday, November 18, 2008

Denial is No Longer a Response

It's become pretty clear in the last week that we now have a President-Elect that gets it. By it, I mean the convergence of the internet, and online video.
Today, President-Elect Barack Obama released his second YouTube video -- this latest one a bit of a surprise to some -- and this time, on the topic of climate change.

This is significant on at least three levels:
a) He understands that releasing to YouTube first gives him a bully pulpit to express his views on national and international events to both a national and international audience.
b) He gets the time format. Heatmaps of online video consumption start to drop off after 3 minutes. He tucked this latest one in with a 3:43 runtime.
c) He clearly knows that by doing this, he's flanking the networks, and making them address the newscycle on his terms.
d) When was the last time you saw a President-Elect be this proactive in addressing issues prior to taking power? My first presidential election was Reagan in 1980. This certainly hasn't happened in my voting lifetime.
An intellectually curious president to-be that understands technology and media. What Reagan was to the television, Mr. Obama will be to the Internet. Just watch.

Monday, November 17, 2008

Meter Running

It's almost Thanksgiving, which brings us to the 1-year mark for Hulu, the joint-multi-million dollar investment by players like Fox, NBC, and Providence Equity Partners.

With another year to go. And as a Hulu fan, it doesn't look like it's 12 months away from being cash-flow positive. Or 24. Maybe 36 with some optimism. That's just my guess.

Here's why I'm handicapping them. I watch Hulu. What's interesting is how few ads there are that are filled by anything that could be realizing revenue for Fox and GE. Most of it's Ad Council, as you well know, assuming you're among the few, the proud, the Hulu-loyalists.

There's so many soft spots in the Hulu model, it feels sadistic to lay in to them. But let's review the state of the Web-As-We-Know-It, with respect to the sub-universe of television/movie availability via the Web.

[BTW, we need a term for this. IPTV is too IT. Rich media content sounds like a promo for a candy bar. Linear media content on the web (LMC-OTW) leads to an unsatisfying acronym that sounds like a union local.]

So, let's say I want to watch 30 Rock, the Emmy-award-winning sitcom from NBC, where Tina Fey of recent election fame is charming, funny, and executive producing the whole shebang. Let's say I'm a late arrival to the show, being male. Let's say I want to catch up on the past three seasons. I can go buy the DVDs ($75 or better), go to Hulu and catch five episodes, or go out into the wild and wooly web, and in about two minutes have access to all seasons, and every episode. This will no doubt lead to a massive personal productivity slump, but I'm saying, by way of example, that IF I'm NBC, and I OWN this content, then why in the name of something passing holy can't I watch every episode on Hulu?

It's not like NBC and FOX didn't put in a cool hundred million to get this thing off the ground. And it's not like they're being flanked by players in China (Youku, which sucks), Tudou (which is awesome) and Megavideo (which is neutral on the suck/awesome scale: sometimes it's awesome due to ubiquity; sometimes it sucks because of a confusing time-limit policy that seems unevenly enforced).

Point is, if I'm FOX or NBC, the idea that I'm not posting all of my content (time-delayed past broadcast time, perhaps -- or better, simulcast to TVs & the web -- a breakthrough yet to arrive), then I am either timid (must preserve precious bodily fluids, or content rights, whatever), or I have a complete deathwish.

Okay. Clue-time. Forgive, please, my cutting to the quick.

Once upon a time, there was this thing called broadcast television. It thrived on ubiquity. There were three or four great networks. And the point was, you had content, you sold ads to brands that wanted to reach the demos you commanded, they paid top dollar, and everyone went home happy and mildly-buzzed on Scotch that, had it been a student, would have been completing his or her doctorate. Or retiring. Depends on executive level.

Then Ted Turner prior to meeting Jane Fonda decided that he would personally make cable important, succeeded, married and divorced Fonda, and retreated to a Red State where he raises bison by way of compensation. That took us from a three-channel universe into an N-channel universe where N represents a random two-digit number.

By now you think I'm talking down to you. That's okay. I was just throat-clearing, like Neal Stephenson does for 1400 pages.

(Kidding, Neil! I loved Anathem! Also the Baroque Trilogy. And you're right, Churchill's Marlborough is four volumes of throat-clearing, larded with awesome history-changing battles, lots of politics, and meditations on the idea of isolation, something YOU, Winston, suffered while you were waiting for Chamberlain to soil his pants on the international scene. Thank god that happened as you foresaw.)

What I want to get to here is the idea of what broadcasting is in the Internet age. It's ubiquity, son. If you are a content provider, and you are NOT on YouTube, Hulu, Brightcove, and a million sites that seem to have more content than we do in the good old U.S.of A, all at once, then you're not playing. Or rather, you are. You're just not playing to win.

If you're doing LMC-OTW, right now, and you're not available everywhere, then there goes a percentage of your potential audience. Now, you execs are thinking, "but we don't know who these people are, so how can we sell the fact that they're watching our shit?"

This, my friends, is a failure to recognize the global marketplace for content. Sure, broadcast networks -- you may not have hit these people with your content before, and so you don't know how to sell it to the brands that have been your traditional backers. Fine.

That's just a failure to market a market you already own. That's money you left on the table. And gave to your competitors, who have one fifth the burn-rate, and AT BEST, one-tenth the staff.

Plus ambition. To eat your fucking lunch.

Wake up call: Be ubiquitous. Be available for everyone, even unanticipated markets. Be ready to market those audience to advertisers. Get your metrics together. With ubiquity, you're not broadcasting. You're microcasting. And the sooner to get to monetizing that, instead of giving away ad space to senseless Ad Council gibberish, the sooner you're going to make your silent partners willing to buy you another round. Scotch. Financing. It's your choice.

Be smart. Get your ad people on their feet. And stop letting China and Korea eat your lunch.
Not by being litigious assholes in legal systems overseas (the 'they can't haz our content' strategy. Real winner, there). But by being smarter.

You have awesome content: SNL, 24, and I'm sure a variety of other under-appreciated shows. Prison Break, perhaps. Are you going to make it ubiquitous with some shot at monetization, or are you going to spend money to slow the bleeding.

In the future, there's a third of your audience that will watch TV. And 2/3 of your audience that will take content via some pipe that pumps to a computer with a really awesome monitor.

Cable is dead except for connectivity points. Telcos are dead for the same reason. Commodity market. Content companies are the value-added.

And why did it take Andy Samberg to give NBC a content-syndication-web strategy. Chronicles of Narnia blew up. Andy's huge on the Web. But you've restricted what HE can put on his website, and you still don't have everything he's ever done for you on Hulu. Remember that $100 million platform you invested in? Um. Use it and squeeze every cent from it.

Seriously. Make Samberg a VP already. The path is blazed. He blazed it. You're still wandering through the triple-canopy with a poison dart in your thigh, and cannibals waiting in the bush.

Sunday, November 16, 2008

Change Up

I got out of the habit of blogging when I had daily deadlines. When you write for a living, personal writing takes on a back-burner status with which I am no longer content. My current ambition for this blog is to comment on evolving developments at the intersection set of social networking, and online video -- two subjects in which I have some passing expertise.

What's happening right now, as I see it, are a number of converging factors that are going to make life for companies and content creators a little more challenging than in the past.

Journalism, as a craft and a profession, is imploding -- owing to softness in the advertising market, media consolidation, and no small amount of ineffectual hand-wringing on the part of media companies that find themselves unable, or unwilling to adapt to changing market conditions.

This has hammered my colleagues and I, content creators all (we used to be called editors, reporters and producers), who now find that wages for their prior job descriptions have fallen off, as has availability of jobs.

Blogging -- professionally, or semi-professionally -- is not a substitute for a salaried position with benefits for all but a few.

From the media company perspective, cutting costs -- adjusting to the current recessionary climate, plus ad market issues -- has led to sharp reductions in staffing, to say nothing of overseas bureaux, enterprise/investigative projects, and other "cost-centers."

This is a mistaken strategy, and I believe it exacerbates the death-spiral many media companies find themselves in today. Here's why. The value-added serious journalists provide to media companies is insight, context, and perspective. This is what distinguishes what I'll call commodity content (and by this I mean rewritten press releases, with one or two additional sources thrown in as a substitute for depth) from what I'll call real content (ie, something that leaves you wiser, and better informed than when you first loaded the page, opened the magazine, perused the newspaper, or turned on the television).

Commodity content has the advantage of being easy, and relatively cheap to produce. An intern could do it, and in some media organizations, is doing so as we speak. Even on a Sunday.

However, commodity content from the reader's/consumer's perspective is like a sugar-high -- momentarily interesting, but completely free of intellectual nutrition.

There are Web-based market dynamics that feed this tendency. Many news organizations have an atavistic theory that more stuff equals more traffic. It's a more-is-more idea, but it is fundamentally flawed when one considers the idea of reader retention, product differentiation, and the shift in reading habits that has happened over the last 6000 days (tip of the hat to Kevin Kelly's recent speech on this topic) since the advent of the Web.

In the old days, ie, 1993, people still had these things called subscriptions -- which viewed from the perspective of stickiness -- was a kind of guarantee for publishers and cable television: whether or not they watched the program, or opened the newspaper -- there was a presumption that if the person was paying for it, they were looking at the ads, which in turn gave the media companies a statistic they could use to sell ads.

Then those models were exported to the Web (WSJ, et. al.) where they largely failed completely, the WSJ being a somewhat notable exception. Salon flirted with subscriptions, then had to capitulate and adopt the daypass (watch an ad as a price of entry), then they capitulated further, and now readers can simply click through one interruptory screen.

So subscriptions have gone the way of the coelocanth (perhaps not extinct, but damned rare: the last one was found off the coast of Madagascar), and now we -- content creators and media companies -- operate in a sphere where readers/viewers are fickle and flighty, but also able to swarm over content that is genuinely good or interesting. So the relationship has been reversed. William Randolph Hearst once said "you give me the pictures, and I'll provide the war." In short, media companies were the kingmakers. Now readers and consumers make the hits, often to the complete surprise and befuddlement of media companies.

Andrew Sullivan recently remarked that this moment is the best time to blog. I'll disagree with him on one point in an otherwise fine article. He gets a salary for blogging. But the great mass of us do not. So yes, it's a wonderful time to become a subject-matter expert, blog ubiquitously about that, and use it to fuel your own career ambitions by any means possible.

For the media companies, however, it's yet another wakeup call, following a decade of howling alarms in a similar vein.

To adapt to this not-so-brave, not-so-new world, media companies have to get just three things right to survive.

1) Give up on the idea of being first. Just be best. Fretting over whether you broke news isn't as important anymore. Someone will get the story. In a cloud of bloggers, amateur content producers, and a world of interested citizens, someone will beat you. It's okay. Where you can add value is by digging in, and not losing the story through a kind of institutional ADD that seems to pervade many news organizations. Josh Micah Marshall's TalkingPointsMemo DID break the US Attorney scandal -- bully for them. But then they stuck with it until it became a major news meme. News organizations could have done the same thing -- even if they weren't first, they could have been better. But they were timid. And now Josh owns the story, and the blog wags the dog of the MSM.
Return to fundamentals. Digging into a story and owning it is what you do best. Engaging with your readership and airing their views and concerns by generating content around those passions is what you have done best since the dawn of the printing press, and the advent of radio.

2) When you focus on cost-cutting, look not to the newsroom unless you believe eating your seed corn is the best way to survive a long winter. Look instead to the advertising sales department. This department has failed you for better than a decade. That softness in the ad market comes from them, not from the buyers. They have failed to persuade your advertisers that an ad on your website, your podcast, or your web TV program is free from value. Persuading is their job. Creating market demand is their job. If they can't do it, fire at will.

3) Convince your investors that historical returns of 2-5 percent will have to do, or buy them out and find other, more patient investors. The double-digit return mania of the 1990s on the part of investors has served neither party well. It's time to file for divorce, or renegotiate the relationships. Some of the most stable newspapers and television stations have been family-owned, or owned by a small circle of people that cared about democratic values (ie, a well-informed electorate). It may well be time for a return to that model.