Clickability

Wisdom of Crowds Reliability

2008-05-12T13:08:00.002-05:00

Something that's been bugging me lately is why we distrust the so called Wisdom of Crowds effect. To recap the wisdom of crowds effect (coined by James Surowiecki the author of the book with the same name), is that the crowd in aggregate is smarter than any one individual. He tells anecdotes of guessing the number of jellybeans in a jar and the fact that the average will be closer to the actual number than any one guess. Another example is from the popular game show Who Wants to Be a Millionaire? Ask the audience is the wisdom of the crowd, while Phone a friend (which fails more time than not) is the individual. We can also point to the success of Wikipedia which is self policed. Are people spammers? Not when it takes them a while to build their reputation. eBay members, Amazon members, and other such members value their reputations more than anything. Is it a few bad apples that ruin it for everyone else?
Can the Wikipedia model work for everything?

The self correcting nature of the wiki allows for people to police and to ban certain IPs and usernames. Further, the general consensus of the crowd is to create something that is useful for everyone. It is the few bad apples that do ruin it for all. The spammers, the Nigerian princes, the Viagra hawkers. Will the crowd out the spammers, I think so, comments anyone?

Infinite Information - Narrow Minds?

2008-05-06T08:46:00.002-05:00

We live in today's age of infinite information. Never before have we had the world at our fingertips. Google provides us with a portal into the World Wide Web. It's truly an amazing time. With all of this information, don't you think that we'd be more open to ideas?

Here's a reverse point of view on things though, that I'd like to throw out and see what you guys think. Do you think that with so much information and so many tools to wade through this information that we are actually providing ourselves with a more narrow mindset? After all, in college, weren't we encouraged to do everything? With our new Internet tools are we limiting ourselves? An example: Let's say that you were interested in news on the Yahoo - Microsoft merger. You input this into your Google Reader and now Google comes up with other news articles that fit the meta data with Yahoo and Microsoft. So other news items that come up deal with Google, Cisco, Oracle, and other such tech companies. Another example: Netflix and Amazon. You like tech books/movies and AMZN/NFLX provides you with these recommendations. Are you missing out on Shakespeare/Art house films that you might never come across because you've weeded them out with your preferences?

We can even look at a tool like Digg where the Digg community determines what is news. This news is then "dugg" to the top. What if this was the way that we determine what is important? (Note: some Europeans already think that American media is like this). So for example, the latest features on the newest iPhone is more important than the latest updates on the war in Iraq. The results of yesterday's Yankee game is more important than ..... To some yes, this is important.

This fragmentation of information is creating imperfect information. Are we missing out on some things? Do we still need portals to ensure that we have a shared experience? That we all know who won the Super Bowl, that we all know who won World War II, that we all know who the 32nd president of the US is.... (which by the way leads to another post about how we don't need to "store" information in our heads anymore).

Yes the long tail is a phenomenon that will not go away and the Internet will magnify this effect. But is the head of the tail dead? Will there truly be no more blockbusters? Ironically, the day the Long Tail was published Pirates of the Caribbean set all types of box office records. Are we living in a world where we all live in our own worlds? Is there value anymore in the front page of the New York Times, when we can all create our own?

Who Wins from the Long Tail?

2008-05-05T09:23:00.002-05:00

We've talked a lot about Chris Anderson's concept of the Long Tail and the democratization of content. Journalism, film, music and other such "artistic" endeavors are things that anyone can do. The crowd determines who has "talent" and then rewards them with mainstream publicity. And with mainstream publicity comes the ability to reap riches beyond your imaginable belief.

Fast forward to two years from now when the Long Tail is more prevalent than ever. Box office will remain flat, but less people will go see movies (it'll be $20 a ticket after all). CD sales will go the way of the cassette and iTunes will rule but only at 99 cents a track. Amazon will claim that 75% of their sales come from Long Tail books and blockbusters will gravitate more toward the body of the tail. TV...What's that? Everyone will watch "TV" on their laptops when and where they want.

So who wins? There's a glut of video content coming online with the latest being "GodTube" receiving $30 million. Let's assume that there is an effective monetization strategy whether that is pay per view (like JumpTV), pre roll, plinking, or some other strategy to turn this content into cash. Even then, are we giving up control to the power broker (i.e. Google)? That would be as if everytime TV Guide sent NBC a viewer they would get a cut. Hmmm. Are content owners slowly losing control?

With the long tail of content is there an effective monetization strategy that can allow the niche creator to make a living? We've seen with YouTube's monetization that the BreakALeg.TV received an 80 cent CPM. So who wins? Unfortunately (please don't deindex me, Google), it seems to be the broker which is shaping up to be more and more Google/YouTube.

Can Video Ever be Pay Per Click?

2008-05-02T13:06:00.004-05:00

Can video ever be pay per click? Video is a strange beast online. Its not exactly free as YouTube quickly learned after they received their first Limelight bill. Google AdSense works because the cost to deliver these ads to the blogs that host them are so negligible as compared to bandwidth. However, when we begin to talk about video, the economics completely change. Let's take ABC.com as an example. It costs about 11-12 cents for an episode of Lost. ABC charges their advertiser about 25 cents to sponsor the entire episode (this equates to an astronomically high CPM of $250; although they do get to sponsor the whole 42 minute show). This nets ABC 12-13 cents per show. Guaranteed. At this high cost, ABC HAS to guarantee this revenue. Or do they?

Let's look at some other statistics. The average commission from an affiliate is let's say $10. This takes into account big purchases (laptops and ipods) and small purchases (books, CDs) and everything in between as well as the average split of anywhere from 5% to 10%. For a 42 minute episodic, ONE person out of 80 has to buy something in order to break even. 80*$0.12=$10. Add in some type of pay per click revenue at an average of let's say 50 cents per click (everything from a mortgage to a newsletter sign up) and there's a possibility to even pay for video production.

The economics look promising if the model works. Are people ready to purchase items within video? We don't know. But we do know this. YouTube is making $0 on all of those dog on a skateboard videos that we watch. And with HD coming out, the only one that will be laughing to the bank is Akamai and Limelight.

Long Tail Gets Longer

2008-04-17T08:40:00.004-05:00

Is there a way to monetize UGC? The YouTube reports came in and it seems that a popular show on YouTube Break a Leg, received a check for $1600 after 2 million views for an 80 cent CPM. What does this mean? It means that collectively all of our UGC might let someone eat lunch, but its not going to be the creator of that content. Just like Amazon who claims that the long tail exceeds the head of the tail in terms of revenue, the long tail of content probably does as well. But who wins there? Amazon does. By aggregating all of these pennies they are able to make a business. YouTube wins (sort of) by aggregating all of these videos. Is crossing over into traditional media the only way to earn a real living? Bloggers appear to have figured it out: Gawker, TMZ, Perez Hilton, although the latter two have crossed over into mainstream. Further, these are well trafficked blogs. The stars of Internet video (LonelyGirl guys) just got $5 million to continue to make shows. Well if you're an economist this could be a good trend. The monetization for content is creeping down the long tail toward the tail but its stalled in the middle.

Will the long tail ever become profitable for the content creator? Well by definition it means that its content serves a small niche. (sometimes a niche of one). The medical / scientific / engineering communities found a way to monetize this by charging more money for each research paper that you might want to read online. Trade journals are very expensive - $100 an issue. Not because they print on glossy paper but because they (like you) need to eat! And given this high price, most likely they have a highly targeted audience and thus, advertising will be most effective for niche products.

So going back to the long tail, will there be an effective way to monetize? I think so. But right now the Internet is all about scale. If we can cut through that and think about relevancy than I'll be able to continue to watch BreakALeg.tv....

What Do You Really Watch Online?

2008-04-16T09:19:00.002-05:00

PluggedIn launched today with most of the major music labels joining in. As TechCrunch puts it, its the Hulu for music video. The site is a great looking site as its powered by Move Networks - the same company that powers ABC.com and other high quality video sites. Investors include Will Smith and they hope to monetize through ancillary product sales (i.e. affiliate revenue).

I think that PluggedIn could possibly work but here's the catch: You need to take traffic from YouTube. And being that YouTube has a stronghold on the video community it will be hard to do. But what's even harder is the same problem that is plaguing Hulu. The content is NOT EXCLUSIVE! There's a major disconnect between Hulu, NBC.com, MySpaceTV, and the folks that place content on YouTube. Content creators have simply said that they'd like to spread their content in as many places as possible on the web even at the cost of a start up that they co-own. Simply put, if Hulu (or PluggedIn, for that matter) had exclusive access to the NBC/FOX library or to music video they would be hugely successful. Yet they don't. And further, if the content creators really want to have their content all over the place, why do they disable the embeds on YouTube...(yes this is right, see for yourself on Avril Lavigne's GirlFriends video).

What is the reason for this? I think folks are still trying to find an effective way to monetize video. Bandwidth now is a huge consideration and if YouTube is giving it away ... for free.... then that's a tough proposition. Broadcast TV had no marginal cost to deliver programming to every incremental household. Internet does. And when that's the case, you have to go with what you know: free delivery - i.e. YouTube. So until we can come up with a way to monetize more effectively, the answer to 'What do you really watch online?' is simple. We watch YouTube.

The Free World

2008-04-14T08:22:00.005-05:00

Chris Anderson's Wired Article about Free has really sparked many debates and discussions. This weekend I heard more than one viewpoint about free. It's time for a few quick points about it and my view:
[Right now the argument really surrounds music and the proliferation of music piracy.]

With so many iPods sold and only 3 billion songs sold on iTunes - there must be another way that 20 GB hard drives are being filled.
I've learned that a long time ago there was a "tape tax" that helped to subsidize the music industry everytime you recorded a song off the radio (will that translate into an iPod tax?)
The Internet / Bit Torrent / even email has made it easier to "share" files.
Most kids/users don't believe its stealing. (The analogy of sneaking into a movie theater versus getting caught shoplifting.) If you're not taking something physical you're just sharing information, and that's free right?
Ad supported music? Look at what's happening with radio.

You get the picture as to the gloom that is happening with music.

Opponents argue that the music industry has been "ripping us off" for years with $20 CD's (will this happen to software? some argue that it has already).
Do 360 deals make sense to record labels? [this is when the label acts as manager and takes a cut of all entertainment related deals, including when the musician becomes an actor, sells t-shirts, etc] Look at P. Diddy and his Bad Boy outfit. I think only 20-30% of Bad Boy's revenues came from music. The rest was from Sean John, his vodka line, his TV show, etc. P. Diddy is selling a lifestyle and the music is his entree into showcasing it.
Label executives would argue that this works for the Radioheads of the world but what about unknowns? Would an Amie Street model work? Probably not for the labels (at least not now since whether you are a hit or not, you still have to eat). I've heard of the argument that the free period has conditioned us to see the computer as an entertainment center.

So these are the positions and the arguments from proponents on both sides. Will all digital media become free? There's no way. Hank Williams from Why Does Everything Suck blog made a good point. If you take MSFTs revenue and get rid of that, then figure out how to support all of that software with ads, you'll never be able to make up the difference. Never. Ever. Yet, we are conditioning ourselves to believe that digital media should be free. Why? Supply and demand. There's more supply than ever. Look at the hundreds of millions of posts on YouTube. The hundreds of cable channels out there.

To me, I think that this is more a question of psychology rather than economics. I remember what Strauss Zelnick once said about his consumption habits. To paraphrase: If I did it when I was 17 years old, I'm probably doing it now. College kids are ripping music off now, and when they're in that prime spending age, they'll still be doing it. Hank has a further point that companies like Google and VC's are helping to perpetrate this trend right now for land grab. Sure, some sites like Facebook should be free ....

Take a look at the current operating situation for cable. HBO charges you for content. But many people are happy to pay. Sure, you can probably get a bootleg version of Entourage off of Bit Torrent or something, but you've been getting a cable bill for x number of years. And that's a habit. Paid for email? Never!

Media as a broker of other goods and services? If this is the case, is media only good to try to sell you something physical? Do you watch "Lost" only to buy the Toyota that they'll sell you in the fourth ad block? Do you listen to Jay Z only to buy the Roc A Wear shirt he's wearing in the music video? Is that what its come to?
If so, we are in deep trouble.

Has radio and television conditioned us as the consumer to be "cheap?" Take an average feature film. $12 bucks to see it when it first comes out. Wait 2 months and get it on Netflix. Wait another 18 months and see it on pay cable. Another 18 months and get it on network for .... FREE!

Again its conditioning. This is how we grew up and this is what we are used to. Contrast this to things that people will pay for online.

A digital teddy bear on Facebook - $1
The right to customize your penguin on Club Penguin - $5.95 / month
Organize a meetup through Meetup.com - $18
Meet your soulmate through a number of dating sites - ~$25/month
Sell one of a kind items that you probably don't want on eBay - $0.01 - $100's

And the list goes on and on. Why is this relevant? Look at all of these things. They are all new forms of consumption. Why is this smart? Because this is the beginning of conditioning. If we're conditioned to pay for something, we're happy to do so. And if not, then we won't. (the whole, I got it for free before, why would i pay now?)

So, traditional media, unless you can change the mass psychology of millions, we're kind of - let's put in nicely - in a very bad place.

I'm Back But I'm Not Live

2008-04-11T08:25:00.003-05:00

Yes, after a long hiatus from writing this blog, I'm back. What I've been doing? We can talk about that later.....

One of the trends that I've noticed that is catching on like wildfire in the videospace is lifecasting. Made popular by Justin TV, YouTube, UStream and others are getting into it. Why? I don't know. We all know that YouTube's biggest expense (and the other video sharing sites that host their own content) is bandwidth and if you have very fickle users the cost of CDN's and such. (Although I learned last night, admittedly, that YouTube's new API really wants you to use their bandwidth). Now imagine live streaming. Costs for Flash media server. Cost for 24/7 live bandwidth. The number would be staggering. BUT from a business perspective...if you can make more money than that it would make sense.

Now let's look at that angle: Currently videos monetize by a few ways. Pre Rolls, Post rolls, interstitials and banners. Pre and Post rolls are hitting about $20 CPM on YouTube. OK. Let's give banners $10. So at these rates its all about the eyeballs. If we do some quick and dirty math (really dirty math from my last Amazon AWS bill) we can make an assumption that a GB of data costs about 18 cents and that each minute of video is about 10MB. SO... 100 minutes of video data is about 1GB (obviously depending on quality). But to keep it simple let's say that's the cost. So let's say you have a banner and an interstitial (its live so you can't have pre and or post rolls). $30 CPM (on a good day).
Some math:
($30/$0.18)*100minutes/60=~277 hours or 11.5 days.
To break even you need 1000 viewers every 11.5 days.

Doable? Maybe. But the thing that we all have to realize is that no matter how exciting Paris Hilton's lifestyle might be, we all sleep at least 6 hours a day (well some of us get 4!). Are we really going to put all of the video editors out of business? After all these are the folks that are getting us to the juicy parts of the content faster than ever. And what about those bookmarking tools like MotionBox and VeoTag? Do you really want to sit through and watch Justin sleeping (by himself, of course)?

In my mind the economics of live streaming don't make sense, but on a more base level, the entertainment aspect of live life casting is just plain boring. Some events are great live but with more and more life casters out there - its just going to make our Internet slower when we need to sit and watch more important things (like Round 1 NCAA games on Thursday and Friday!)

Customer Service is Your Most Important Marketing Tool

2007-09-04T08:09:00.000-05:00

This past weekend I tried to rent a car from a well known rental car chain that shall go unnamed. Being the savvy consumer that I am, I took a bus out to my hometown in NJ and saved $100 / day by renting in the place where everyone has a car and by returning to the place where almost no one has a car (NYC). Smart, huh? Well turns out they wouldn't accept my debit card. The one with the MasterCard logo. After explaining my situation the customer service rep only said that he couldn't rent me the car unless I brought in a credit card with my name on it. I told him that I wanted to speak to the manager. His name plate said that he was the manager. I've been able to rent cars from every other place in the entire world with the same MasterCard credit card and the one in my very own hometown would not let me rent. Amazing. I tried everything. I called the corporate office, I called reservations, I called everyone (including my dad, who drove me home, and we opened up junk mail which eventually led to my credit card). This just doesn't make any sense to me as to why this one car rental company needs to have a different policy from anyone else. But what really irked me was the customer service rep/manager's attitude. As marketing folks, we spend so much time and effort trying to figure out the best way to have good people buy our products and services only to have one negative experience destroy our career's work. Why do we treat our existing customers so poorly? Look at all of the great deals for cell phones for example. These are only applicable if you are a NEW customer. Think about all of the rewards and loyalty programs that rip you off if you forget to redeem. Enough about my rant, I think one of the things that we should always remember is that the customer is in control and a few flimsy free nights/rentals/whatevers is not enough to persuade that customer to stay especially if the face of the organization (the customer service rep) is rude.

DMCA

2007-08-16T08:14:00.000-05:00

The DMCA ruling is what is so far protecting YouTube from any of the copyright infringements that has been piling up against them. Blogger (disclosure: used for this blog) recently took down a "Facebook Secrets" blog that displayed the source code of Facebook. So - that being said, will people invoke the DMCA every time something goes up that is questionable and / or objectionable? Bolt.com couldn't continue to fight the battle with the DMCA with the mounting legal fees and is now officially dead.

Is an alternative Creative Commons? What's the difference between posting something to your own Web site versus posting to YouTube? Is there one? I think that the pending legislation around the DMCA is really going to change Web 2.0 and the direction that it goes.

My feelings? I think that copyright holders need to be more open and available with their intellectual property. My favorite example goes to the mash ups that were available when Lucas made some Star Wars clips available to fans. Zidane's head butt mash ups were the funniest thing I've ever seen, and probably did wonders for the sport that plays fourth (maybe fifth) here in the states.

It'll be interesting going forward and will change the models of a lot of businesses out there including Google and the other big digital players. We'll keep an eye on this space for you...

TV and the Long Tail

2007-08-10T08:25:00.000-05:00

It's anyone's guess as to whether the acquisition by JumpTV of CyclingTV makes sense. That being said CyclingTV actually has paying customers - $40 a year for 18,000 customers - about $720,000 in annual revenues. JumpTV recently raised $100 million in an IPO and is using its stock and cash fairly wisely (the Cycling deal was 50/50 about). But the disclosure about CyclingTV actually brings up a very interesting point. Are customers willing to pay for content that they really really really want?

I think the answer is YES they are. And maybe JumpTV has the answer - aggregation. The ability to bring the long tail into one market. After all, with only 18,000 paying viewers, how can you pay for anything else other than a basic infrastructure? But with aggregation and shared resources this could become profitable. Paid content surely prevents getting around the guys that sign the checks since there are few advertisements if any. The one thing I'm worried about is piracy for these guys. It's not too difficult for a disgruntled customer to take a stream of Cycling TV and repost it on YouTube. Or is it? I'm not a subscriber but I'd be interested to see what their DRM is....

For the naysayers out there....remember in 1985 (if you were alive back then) when someone asked you to start paying for TV (yes it was and still is free for SOME content). Well guess what that trend took off. Pay Internet TV? Maybe not such a bad idea.

The Bubble is Getting Bigger

2007-08-09T08:15:00.000-05:00

PaidContent just reported that NBC and News Corp's Clown Co, as dubbed by Google execs, video sharing site, received a $1 billion dollar valuation by receiving $100 million for 10 per cent. Earlier NBC Uni launched Didja.com a site where users can watch commercials (similar to TBS's VeryFunnyAds). This follows large VC investments in comedy video sharing sites, $30 million in Video Jug, and a boat load more in Veoh (which MTV exec Tom Freston joined in...hmmmm this could be interesting..).

Well, I hate to say it guys but this is the same exact scenario that happened in 1999 with ecommerce websites (although no lavish parties this time around). Sure, we all want to build the next YouTube but with no business model how can these valuations be sustained and which companies can absorb the loss (and potential lawsuits) of these resource intensive sites? Only a handful and Google is trying to make good on its first purchase.

We need to see a model that works in this space. There needs to be a way for producers to make money for advertisers to make money and for the user to...well the user always wins.

The Risks of Social Networks

2007-08-03T08:11:00.001-05:00

Reported today (via Mashable) was how Facebook lost Vodaphone as an advertiser because its skyscraper ads were placed on the same page as the British National Party (a far right party that wants to rid the UK of all non whites). On that same page were T-Mobile and Virgin Media which so far have not said anything. This is just another example of the difficulty with advertising on social networks. The message cannot be controlled. I cannot imagine actually having someone troll through each and every single page on Facebook to make sure that ads are placed exactly according to the criteria of the advertiser. Does ad placement make Vodophone guilty by association? Were these criteria even given to Facebook?

I think as brands we need to understand what is happening within the Internet and that we cannot control the message as much as we'd like. Look at what happened with GM and their viral video contest. It would be a different issue if Vodophone ONLY showed up on the BNP's page. Regardless, as brands we need to tell media outlets what we definitely do NOT want to be associated with. To have Facebook assume that they don't want to be on BNP's page is ridiculous. We are losing control whether you like it or not so we have to adjust ourselves for it. Provide media outlets with criteria that would cause you to pull your advertising; but don't try to ask them to read your minds...

The Penguin Eaten by the Mouse

2007-08-02T08:09:00.000-05:00

It's official! Club Penguin has been acquired by Disney for a whopping $350 million with bonuses and incentives that could be worth up to $350 million more. Supposedly Disney outmaneuvered AOL at the last moment. We talked a few months ago about how Sony was in talks with them at a valuation of $450 million. The site has 12 million users and 700,000 subscribers paying anywhere from $6 a month to $58 a year. The amazing thing about this site unlike many others that have been bought is that it is a cash cow. The site has margins of 50% with about $30 million in revenue. Talks with Sony and other media companies interested in buying it supposedly fell apart because the Penguin donates a substantial amount of profits to charity.

I think that Disney got a steal here. If you think about the MySpace acquisition about 3 years ago which Fox also stole at $580 million Disney will have a lock on the child market. And unlike Second Life, these are real paying users. I'm not sure how integrated the Penguin will be with other Disney properties and I don't know how good of an idea it will be to do that, but just the fact that you have the attention of 12 million people (I'm assuming mostly kids) is superb. Again, not to bash Second Life, or even Joost, or other download services, but it goes to show you how important it is to keep your product within the confines of the Web. Club Penguin is flash based. Kids don't need to worry about viruses or any other kind of malware and they are able to access their accounts from anywhere - versus any of the software based programs which force you to download onto the local computer. Viacom purchased Neopets in 2005 for $160 million (a very good deal, good job Sumner!) and now there appears to be a showdown between Disney and Nickelodeon for the kid market. What will happen? I'm not sure. But this space dominated by others like Webkinz and Habbo Hotel will be an area to watch.

Long Tail....Dead?

2007-08-01T08:33:00.000-05:00

A very interesting study was published by Chitika and the University of Texas saying that the top 50 blogs generated $50 million in revenue total (via TechCrunch). Not bad. That gives the average top 50 blog $1000 of annual revenue. Of course this number is skewed since Perez Hilton and Michael Arrington aren't really scraping by. Arrington points out that 15% of total blogs accounts for 90% of the revenue out there. That could be true. However, I do believe in the long tail although money might not be the best way to measure it. True, there are a lot of blogs out there that really mean nothing (a teenager's diary, personal notes, family photos) but there are other random blogs that discuss all types of obscure topics, ranging from Transformer toys, to a Shih Tzu's life, to life in Topeka, KS. Someone's gotta be reading these things! And the more niche the blog the better. You can sell toys, dog gear, and local services on the above mentioned blogs, respectively. Sure the big blogs will always work best for Coke and Pepsi type products, but we can now compare blogs and the target demographics to cable television....

I think ad networks have yet to realize the power of the long tail, and until that happens you'll get these skewed numbers....

Whole Wild Forums

2007-07-19T08:11:00.000-05:00

By this time, you've probably heard about the fiasco with John Mackey's forum posting on Yahoo! Finance and other message boards. Using the pseudonym Rahodeb (backwards for his wife Deborah), he posted positive things about not only Whole Foods but about himself and negative things about Wild Oats (the company that they are purchasing). The SEC Chairman Harvey Pitt says that its "bizarre and ill-advised, even if it isn't illegal."

I'm sure this isn't the only time that a CEO has jumped onto the message boards to pump up their stock but I think the bigger issue is one that has plagued the Internet since its existence, Anonymity. As that famous cartoon said, "No one on the Internet knows that you're a dog." Anyone can be anyone else. And that I think was not only frustrating for someone like Mackey but a way to fight fire with fire. I'm sure he encountered many anonymous posters that said negative things about his company that had no basis.

What can we do about this? I think within a year a social network like MySpace will have dropped in value significantly because of all of the anonymous bands, movies, porn cameras, and fake profiles on it. On the other hand, Facebook will continue to grow because of the verification standards that it has and the networks that you have to join. (Don't change this, Mark!) If I recall correctly, eBay has immense value because it is difficult for you to change your screen name (so I can't go rip someone off and then re-open and then rip another person off, etc).

If you realize, the networks with the most value that people come back to time and again are the ones where you can really verify who you are. This minimizes spam, threats, violence, anything that will detract from the true goal of the site! Perhaps this means linking a credit card to your site (even if you are not charged!). This is a tactic that eBay employs. Have other people vouch for you (like LinkedIn or Facebook). But I really believe that the anonymity of the web has to be curbed otherwise the value there will really diminish. (I hope that I don't eat those words when I find an example otherwise!)

Could YouTube be in Big Big Trouble?

2007-07-18T08:10:00.001-05:00

The official numbers on YouTube's dominance in the video sharing space are out. Online video as a whole attracted 75% of US Internet users according to ComScore (via Mashable) that watched 158 million minutes of online video in May. The average stream is about 2.5 minutes. 35% of users use YouTube and YouTube accounted for over 20% of the online video stream total. Wow.

And now the bad news. Dailymotion a large French video sharing site was ordered by French courts to pay $32,000 in damages to a French director (along with the producer and distributor) who's CLIPS were on the site. After the clips were uploaded did Dailymotion begin to use Audible Magic which is seemingly becoming the standard in detecting copywritten clips. But what does this mean? Is this the end of the DMCA as we know it? (As an aside the DMCA stands for the Digital Millennium Copyright Act, and basically says that a Web site has no jurisdiction over what its users do, hence YouTube has been claiming as one of its defenses against Viacom). Will YouTube have to give up its users private information if they are caught infringing? Were all those Zidane Mashups from last summer considered copyright infringed?

We saw earlier this year how Digg went down with users posting the HD encryption key on its site. Will YouTube users also contribute to the backlash by posting copyrighted clips, causing massive lawsuits against YouTube and its parent, Google? And while $32,000 is small change for Dailymotion the video in question were clips. Was this fine some type of relative measure?

Lots of questions here. We're digging to get to the bottom of this and what this means for the future of online video sharing. But we do know one thing. Video sharing no matter what is here to stay.

Commercials as Entertainment

2007-07-17T08:22:00.000-05:00

AdAge's AdReview talks about the Sonic commercials and the well executed jokes and humor in them. The Sonic commercials are an example of commercials that you might not want to fast forward just because they are actually entertaining. (If you TiVo everything, then you might not know that..) But as I've been saying for a while now, the 30 second commercial is dead. So what do you do?

ABC.com allows one advertiser to purchase the entire ad portion during its commercial breaks. It really pains me when I see the advertiser using that time poorly, meaning it simply shows the same non engaging commercial every single commercial break. However, Fidelity had an interesting ad where they asked you very simple questions and showed a simple animation based on your answer. And thus you could do the same with your commercials. Depending on the ad time (still 30 seconds), why not shoot a variety of different commercials that all wove together into one story line?

Interruption advertising is no longer working. It could actually detract from the brand. However, we've all grown up watching commercials so we actually tolerate them. But our recollection is virtually zero. Don't think that commercials have to inform. Look at the buzz created by JJ Abrams new film tenatively titled Cloverfield. It didn't tell us anything about that film yet people are Googling and speculating about what it could be. Let the audience decide whether they are interested enough to find out more from the quick teaser that you give them. If we can make our commercial actually become water cooler talk we've done our jobs.

The Way Things Work

2007-07-16T08:41:00.000-05:00

Another wild weekend with things that we thought that worked not working and things that we thought would never work working. First off - Second Life is dying. At least in a corporate way. Corporations are leaving in droves because the CPM is just way too expensive. While there is a higher CTR the CPM is not justifiable. Secondly - The TiVo numbers are out. And...Direct response commercials are the least fast forwarded commercials out there. Strange. Thirdly - Why aren't people clicking on those Facebook ads?

So those three points are some interesting issues that are going on in today's tech beat. But I think the more interesting thing is the growth and spread of these networks like Second Life. (or un-growth). Why is Facebook so large and ConnectU the company suing Mark Zuckerberg not? So advertising as we know it is changing. Things aren't spreading the way we think they are. A virtual 2D world like Barbie has more users than a Second Life and will soon rival World of Warcraft.

A new world of thought has emerged that is rivaling Malcolm Gladwell's Tipping Point strategy of Influentials well influencing people. It's from Columbia Professor Duncan Watts who believes that its not the influentials but the easily influenced people that make a difference. BzzAgent utilizes this strategy as well. I think though that when it comes to viral marketing and the way that it works it really depends on what you are trying to market. If you are marketing Coke and Pepsi then sure, you should go with the Watts School of thought. After all, everyone needs to drink a soda every so often. And when you're thirsty do you really care if Paris Hilton is drinking a Coke (although you would care if she was drinking a Vitamin Water, which is arguably, a reason for its great rise)? I think fashionable products and name brands work better through Influentials (like Paris). Products where you can charge a premium because its the celebrity's choice, etc. That works. But I think when you are going after mass merchandising buzz (let's say you have a website that let's you create a profile and all you care about is number of profiles, all right let's just say you have MySpace) its a better deal to go after the lowest common denominator (hence the simple yet poor design of the site).

As we've seen before, we've been wrong, but we'll be keeping our eye out on how things grow in this new viral economy.

Jackson's Back - Fortune 500 Beware!

2007-07-12T08:40:00.000-05:00

Eric Jackson is back! He's the activist shareholder behind Yahoo! Plan B and perhaps one of the reasons that Terry Semel was ousted from office. His tools: MySpace, YouTube, a blog, a wiki and never ending energy. Now he's back and has set his sites on Motorola, the fledging cell phone manufacturer. He specifically states on his Motorola Plan B website that Ed Zander of Motorola has led to 13.5% returns for the stock versus 35% for the S&P and 37% for Nokia. Through another social media tool, youchoose.net, he's been able to aggregate 422,430 shares of stock so far (the campaign is 3 days old). Dominic Jones from IRWebReportDaily has some interesting insights into the evolution of the web and how Jackson is taking things to the next level. With low commission online brokerages popping up, ownership in stock has risen to all time highs. Similarly, the web has brought together like minded folks in a type of shareholder activism. However, while people like Jackson are targeting the tech savvy, Jones still believes that true power lies in the "soccer moms" that can pull money out of their mutual funds as the ones with the true power. He cites the Disney debacle a few years ago as the first and strongest of these showings.

Wow. From an IR perspective this could be a logistical nightmare. Before all we had to worry about were the few fund managers and maybe now a few hedge fund managers that owned our stock. Now how do we answer every question out there that every mom and pop shareholder want answered yesterday? While most of these individual investors are not Eric Jackson, we don't know who will be and that's scary. So what's the answer to this?

I think transparency is the key to effective communications with the public and especially to the masses. Apple did it with their defective iPod battery and folks realized that although Steve Jobs is sometimes a god, he's still human. Dell didn't do it with their firey laptop batteries and they paid the PR price. Yahoo didn't admit its mistakes in losing Google, then Facebook, and Semel paid the price. Is blogging the way to go? Perhaps. Johnathan Schwartz from Sun Microsystems keeps a blog that sometimes gets him into trouble.

I think the general public will accept mistakes but they won't accept dishonesty or cover up. Admit mistakes and let your investors know about them before they leak out and there's a PR nightmare....

Interruption Advertising

2007-07-11T08:28:00.000-05:00

There are just some moments in your life when for once, you just don't want to be marketed to. And for Greg Verdino its when he's updating his blog. In his marketing blog, he makes a good point about interruption advertising and how it sometimes brings about bad will to a given sponsor and media outlet.

We've seen that the most successful advertising and media company out there Google lets you choose when you want to be marketed to. And that is the model of the new millenium. With all of the tools that we have to bypass commercials (i.e. Tivo), with all of the conditioning to ignore that we've grown up with, we need to find times when people want to be interrupted with a certain ad.

A tool that I saw last night is really cool. It's called UpNext and right now only works in Manhattan. But its Google Maps on steroids and while it basically launched last night, it is addictive. I surfed around the virtual streets and buildings of Manhattan for a few hours last night looking at all of the buildings and finding out all of the restaurants and bars that I never knew about in my neighborhood. I was happy to entertain that there was a Cuban restaurant a few blocks from my apartment and actually clicked on it to learn more.

Interruption advertising doesn't work. It's an annoyance. If we click on it, its an accident. I read an AdAge article this morning about relevance. Why is Netflix blanketing the world with its pop ups? Sure everyone watches movies, but don't you think real movie buffs would want the 10 discs at a time plan? Why not advertise on IMDB, Yahoo! Movies and other relevant sites? As this blogger said, its virtually riskless in this online space where there's lower production costs and media buys are not as expensive as television. Take a risk, go out there and find a niche and appeal to them. Or else feel the result....Since by now we already know about Netflix and as they continue to interrupt folks like Greg Verdino, they may lose more and more subscribers.

Death to the Page View

2007-07-10T08:30:00.000-05:00

How do you track the popularity of web pages? It used to be that every page that was loaded into the system would be counted as a "view." From here, the sites with the most "views" would be counted as the most popular. However, with new technology like Ajax (think Google Maps, where you are not reloading the page) and streaming video, the page view is no longer accurate. Nielsen/NetRatings one of the bigger ratings agencies online is changing its metric from the page view to time spent on the site (via PaidContent). Right off the bat, we know that Google known for redirecting other people to the sites that they want will drop in ranking. Yahoo with its Ajax filled pages will rise and MySpace will most likely fall as well (poor HTML design forces users to visit new pages). Video sharing sites where users are spending a whopping amount of time will likely increase and crack the top 10.

What does this new measurement mean for marketers? Well, sites are able to use these new metrics to increase their CPM. However, I think we will all know which tactics work best given our demographic. The new measures also don't take into account widgets, which I think given Facebook's API opening will be essential for marketers to know (although technically we could go by number of subscriptions). So once again measurement is all over the place.

Google is going to continue to drop in terms of time spent at least with their flagship search product but I still think that contextual search and SEM are the best ways to bring folks into your online store and convert them (since they are looking for you anyway). We all know the addictiveness of social networks and email but if you leave your email open all day (as Mashable suggested) are you really engaged with the banners on there as well? Does Yahoo or Gmail have the right to charge more for these pages? Similarly we also know that sites like YouTube will rank higher but is anyone watching the ads?

I don't think the new metrics are going to tell us anything that we don't know already. It may give media companies a way to charge us a higher CPM, but I think that we know (hopefully) the ways that our target demographics use the Internet. Whether its through banners, Facebook widgets, etc, I think the best way to measure is by ROI ....

When You Pay For Something That's Free

2007-07-09T08:27:00.000-05:00

There's been a lot of techie hype over Kevin Rose's lastest start up. (Kevin Rose is the founder of Digg). Pownce is a P2P way to send "messages, files, links, and events" to your friends. But outside of this, is the fact that Pownce is still in Beta. Not much different than other Web 2.0 companies and to limit their testers Pownce is only letting folks with invites join. Again, not much different. What is different is the artificial marketplace that has surfaced because of this. Remember Gmail? Gmail invites at one point were hitting $200 on eBay. Now Pownce invites are ranging from a starting bid of 1 cent to a buy it now of $9.99.

I'm not sure who is posting these invites for sale, but could it be Pownce's own team? While Pownce cannot charge (it would be against the Internet's business model), folks with invites can create an artificial market and therefore make each free invite somewhat valuable. If they can do this demand is going to outstrip supply, which will create a buzz around this "free" product.

I don't think that Pownce has the name recognition that Gmail did at this same point for it to work. Also, how many people are willing to pay for this? It's not the same as Gmail which is interoperable with other email addresses. Right now there were 3 bids for Pownce invites and other sites like Mashable and Techcrunch give these invites away for free.

We'll see how this strategy works, I wouldn't be surprised if it backfired, although some blogs have picked up on the artificial marketplace....

Piracy Crackdown

2007-07-06T08:41:00.000-05:00

Yesterday in New York City, Kalidou Diallo was arrested under the city's new anti-piracy laws when he was caught recording the Transformers on his handheld camera. It's definitely a move in the right direction to protect copyright but is it enough? Lawrence Lessig has been moving towards a copyright free world with his Creative Commons effort and in the Internet world it appears that this is the only way to enforce things: by not enforcing things.

Diallo was caught recording the Transformers and his plan was most likely to sell the "bootleg" on the street for 100% profit. His business model would have him, the retailer, winning, you, the consumer, winning (because you would pay a reduced price to see the film), and the producer, Dreamworks, losing (they don't get to collect a fee for entrance). In essence this equation is shifting power toward the retailer. But if we think about traditional television the equation is also changing. Previously it was: the user pays (with his time), to watch commercials that the sponsors create, in order to get to the content. Thus the brands get your attention, and for that attention they pay producers to create content that you want to watch but will put up with commercials to get to. Now the equation is changing with TiVo and DVRs. Now the user doesn't pay, but brands are still paying. Content is still being made so there's an imbalance. Who's losing? It's the same case as Diallo - the guy footing the bill. In TV its the sponsors.

I think that pay per entrance still works. After all, you get the luxury (at least in some theaters) of comfortable seats, big screen, shared movie going experience, and last but not least, new cutting edge content. It's worth $9 ($12 in Manhattan). But TV? In the comfort of your own home you can do anything...including stealing content. There are legitimate tools out there that make this easy for you to do. In the old days you could just tune your brain out but now you don't even have to do that. And with tools like Apple's ITV how can we continue to justify television broadcast and more importantly, costly national media buys?

True, there are some events out there like the Super Bowl, and other sports, awards shows like the Oscars, and other "events" out there (last episode of Sopranos for example) that are worthy of getting a large audience together at the same time. But for the most part we want to watch what we want when we want. I've been an advocate of product placement for some time and I'll put this one thought in your head of cross generation product placement with a strange product known as the female sponge. In yesterday's AdAge the mention of the contraceptive sponge as used by Elaine in Seinfeld, demonstrated the power of perfect product integration. The product had recall among every generation and with the power of Seinfeld's syndication network, even stronger. Now are you Tivo-ing through that?

One last thought: the folks that paid for the production, namely GM, although I haven't seen the movie yet, would probably want this movie to get around as much as possible, although now that I think about it, if you are bootlegging a $10 movie, you probably can't afford a $30,000 Camaro.

The Hype

2007-07-05T08:46:00.000-05:00

Well even if we have been living under a rock, we would have known about Apple's iPhone release last Friday at 6pm. In fact that was single handedly the only piece of news out there in the tech community. But some of the stats are in (via TechCrunch). As of Sunday, Apple and AT&T moved 700,000 iPhones. Apple sold out in 95 of its 164 stores. The larger phone which was calculated at a cost of $220 and sold for $599 and the cheaper phone at a cost of $200 selling at $499 gives Apple somewhere of a $200 million + weekend IN PROFIT (less marketing costs, we'll talk about this later).

It's an amazing phenomenon. People were in line as early as 5am on MONDAY, a whopping FOUR days before the iPhone went on sale. How much marketing was done? Very little. If memory serves me correctly, a Super Bowl ad. That's it. The rest was Jobs talking at various conferences and user generated hype. How sustainable is this? If the iPhone promises to change the way we do telecommunications...a lot.

But what really interests me is the artificial hype that was created about this phone. Sure its a beautiful phone and this past week, when I noticed someone with the phone it made me turn my head, but never before has a phone really made this much impact. A phone as status symbol. Only Apple could do it. The Sidekick went for the young hipsters, the Razrs went for the mainstream, but the iPhone did it right. I'm not sure why but it did.

There are many Apple evangelists out there that support anything that Jobs does. I don't know if its a function of that fact that he's going up against the evil empire in Redmond led by evil Bill Gates and that in a way he's still David versus Bill (Goliath). But there is no other brand that has much loyalty as the Apple heads. And I cannot figure out why. You'd think that there'd be diehard Yahoo guys against Google, but there aren't. Wii versus Playstation. Nope. The only one that comes close and this is very distant are MiniCooper owners who seem to have formed a click. And for that fact other rare car owners (see Larry David's Prius episode).

But these supporters came out and did what Steve wanted them to do without him asking them. They just read his mind. They blogged about it, they created mock commercials about it, they waited in line for days, they thought about it, they drooled about it. Over a phone. Over an IPHONE. The fastest selling gadget of all time - people are trading off weeks of food for a $600 phone! And I bet you if it weren't for all of the mumbo jumbo that you have to deal with when you go to a cell phone service contract they would have to sold more. Which leads to my final point of sustainability. Sales will be sustained....but now the ball is in AT&T's court (which so far have not been positive)....