Ignore the Consumer At Your Own Risk: The death of Kodak

The latest tombstone in the “old media” cemetery is Kodak. Once the most powerful name in photography, Kodak stands out as a company that took too long to understand what its real purpose was. It wasn’t to make film, it was to take “pictures” that allow their customers to preserve images.

If Kodak understood that they were in the business of helping people preserve memories or create art, the would have been in the forefront of the digital revolution. It’s the same issue the newspaper industry faced because they were so busy protecting a newspaper business model that was dying in front of them that they forgot their real business, as defined by their customers, was to deliver news and information.

This isn’t a problem that has reared its head only in the media world. Remember trains? If the huge railroad companies saw themselves as transporting people and freight rather than running trains, they would have been more involved in the development of cars, trucks and airplanes than they were. And they would still be huge companies today.

It all comes down to a single simple point: As a business, define yourself through the customers you serve, not through yourself. In the end, if you are in business, you are in business to serve customers, not just yourself.

SOPA: We Can Fix This

The problem with the fight over SOPA is that no one is playing by the same rules.  In fact, there are no rules and frequently people on the same side are fighting for completely different reasons. 

In the media world, we have journalistically-minded companies who have spent a lifetime defending freedom of speech and fighting anything that seems to impair that right.   In that world such freedom overshadows the original reason for the proposed rules, which was the fact that most of those companies are losing billions of dollars because their intellectual property is being stolen and reused by others for profit.

Then we have the Googles of the world, who beat the Freedom-of-Speech drum as well, but who really are among those who have built huge businesses on the back of every content creator with little or no compensation for their content.  In their case, it’s Freedom-of-Profit and Growth that they are protecting.

Having Google out front defending the media on the SOPA issue is like having Larry Flynt be the point person defending Freedom of Speech in court.   We like what he is saying, but is he the right person to make the case around?

While this is a fight about rights for the media, for Silicon Valley its really a fight about an entirely new economic structure that tech firms have built around managing and presenting other people’s content.

The real problem is we have no standards yet to build an intelligent discussion around gray areas. Right now this has become a black and white, for or against, issue.  But like all things, there are going to be many ways to do this right and to do it wrong.  But we don’t even have fundamental building blocks in place.  We still haven’t defined, legally, what fair use is for content on the internet.  That’s something we did a long time ago for print and broadcast media.

Imagine having this fight in the print world without any existing idea of what is fair use.  None of us believe we should be able to sue someone for using a word or two that might be the same as two words in something we created last year.  But in print that doesn’t happen, because their are rules that loosely define how much of an existing work or idea you can repeat with stealing an idea or creative work.  And it’s a reasonable amount.

In television there are rules about how much video someone else can use from the creators of that video, and under what circumstances they can use it.  Beyond that, intellectual property is protected.

In both cases the industries came together and agreed on fair use.  Then  they figured out how to protect appropriate activity. 

With SOPA, the problem is everyone is shadow boxing against a massive grey cloud of “evil.”  
In the digital universe we have not brought everyone together, and we need to. It’s ridiculous to provide massive powers to shut people down when we can’t even agree on what exactly they are doing wrong.

How about as a industry, content creators of all kinds, text, video, photographic, graphic, audio, get together and come up with realistic guidelines that allow for freedom of speech and expression to grow, even around our content, and yet still make sure that those who fund the content creation itself are reimbursed appropriately for what they have given the world? Let’s try to agree on what “fair use” is before we agree on how to punish people for not being fair. 

It won’t be easy, the players in the many subsets of the content universe, music, newspapers, television all have had a hard time agreeing with each other about much simpler issues, but at least we’ll have a better idea of what we are trying to accomplish than we do now.

 

Move over Gilt, Hautlook etc. Here Comes vente-privee

It’s not widely known here that most of the highly-discounted fashion sites in the US, like Gilt,  HauteLook, Beyond The Rack, Rue La La,  Fab.com and others are really copies of a site that began in France almost a decade ago,  called vente-privee.

A fascinating company with nearly a billion dollars in revenue,  vente-privee began the process of daily sales of luxury products that were generally remnant inventory from high fashion designers discounted by about 70%.  its sales were generally posted at 8 in the morning, and enormously popular in France.  

The business soared because it offers a totally different experience than a direct sale from the brand itself.  The prices is considerably cheaper, yet doesn’t threaten the relationship between the brands and their best customers, who look for the latest and hottest fashions.  Vente-privee makes the brand accessible to a more mass audience because that audience is willing to concede certain things in order to own products from the brand at a more affordable price.

Vente-privee’s founder Jacques-Antoine Granjon had, until now, avoided the American market, making the case to me in an interview in 2010 that it was different and now more competitive.  But he found a way in.  He found a partner, American Express (NYSE: AXP).  By partnering with American Express he avoids the huge costs of having to build his brand here..they will do it for him.  And because of his relationships with the European designers, he might be able to bring more exclusive products to this market, which otherwise has become very crowded with copycats.

This international move is another example of the power of the internet to remove barriers to doing business everywhere.  Vente-privee is now able to bring its size and pricing power into the US Market without huge upfront costs because American Express, like so many US companies looking for pathways to grow, is expanding it’s presence into e-commerce.  This is a perfect opportunity to test the e-commerce marketplace with a successful partner.  By working with an established business from another country, American Express is able to extract value from the relationship in the form of a learning process in exchange for something it can trade with little incremental expense, branding and exposure to the US Market.  It’s a smart move for both companies.

The impact on the US competitors is yet to be seen.  It could make life more difficult, but it could also serve to expand the market for everyone by making this kind of shopping more acceptable.

Yahoo’s Choice

The choice of Scott Thompson is another roll of the dice by the Yahoo Board, which hasn’t been winning a lot at the craps table lately. But to be fair to Pay Pal’s extremely successful boss Scott Thompson, everyone deserves a chance to rise to the occasion,

The problem is that Yahoos board continues to see the company in their image as a technology company when it clearly has to become a media company to succeed. The last CEO was also hired for her tech creds, though shortly after arriving she admitted that her own assessment was that the company had to become a media content company. She just didn’t know how to do that.

Hopefully, Thompson will be a quick study and will learn what it takes to become a content creator. But it is a big bet, and the choice reflects a board that is still unable to see the future clearly enough to make the changes necessary. They hired one of their own, leaving the task of deciding the company’s future in the CEO with little or no help from the board.

It can be done. But it’s not easy.

A clear message that the board understood the direction the company had to take would have been to appoint a true media executive. I’m thankful that Thompson has deep consumer experience. But it remains to be seen whether or not he has the vision to become a great media executive.

Watch out Comcast, I’ve Got Choices

It was a great New Year’s gift.

I was at our home in California this week and looking forward to watching my alma mater, Syracuse, play DePaul in basketball on New Years Day. The Orange are undefeated and the number one team in the country this year, and despite my brutal travel schedule and the fact that we are splitting our time between San Francisco and New York City, I’ve had the opportunity over one form of media or another, to watch most of their first 14 games live on TV, a computer, my IPad or my IPhone.

This time I was really looking forward to seeing the game on our big screen TV at home. Even though the game was scheduled on ESPN3, the digital channel available on the internet, I had purchased the pay-per-view package on Comcast’s Xfinity Service that was also carrying the game on cable.

But when I sat down to watch the game at 2pm on New Years day, all I could get was a notice on the screen saying the game would be available soon, and a useless code number.

I called Comcast, which is normally pretty responsive to my calls.

First, whatever choices I made on their infuriating automated call system only got me to a tape that their offices were closed for the holidays. Then, after altering my selections to “technical” difficulties I was able, after 15 minutes (the game was 10 minutes in at this point) to find an agent who was very nice and tried to help me. After several restarts of my system and long pauses while she spoke to co-workers, presumably about my problems, the game finally reached half time (nearly an hour on the phone) before she gave up trying to get this pay service started on cable box. After talking to various people she also came back to tell me there was no such game on the schedule (it was on the on-screen guide in great detail) and then that maybe it was on the schedule but she couldn’t explain why they couldn’t start it..they were able to take my money for the special package, but couldn’t seem to deliver me the content. She seemed as frustrated as I was and was trying to be helpful. Ultimately, all she could do was schedule a service call for later this week.

This would have been a totally infurating process had I not decided (about 15 minutes into the game) to check to see if I was able to get the game on my Ipad via ESPNWatch, a service I get because I’m an ESPN subscriber on Time Warner Cable in NYC and Comcast in San Francisco.

Sure enough, I found the game on my IPad and watched the last 2/3rds of it while waiting for it to appear on my TV. Ironically, if I had the right wire attachments, I could have ported the game from my IPad onto the TV and watched it, with no commercials!, on the big screen.

So despite my frustration with Comcast’s inability to delivery their own service, I still had access to the event. While I still wanted to see it on my big screen, I had found an alternative that wasn’t available to me until this year.

What will it mean for next year, when I’m deciding whether or not to add the extra sports package to my Xfinity service from Comcast?

Take a guess.

The Influence Gap: Who Should Be Talking About You, But Isn’t?

One of the biggest advantages of the new digital media world is the ability to track behavior and generate data that can have profound impact on the success of companies and their products. By measuring actual consumer behavior and being able to track the roots of that behavior — as in discovering WHY someone was led to take an action, or WHO influenced them to buy the product they did — one can craft a much more efficient attack to change or improve image or sales.

While hundreds of new companies are working on data mining techniques that will analyze this newly-available data in real time and help companies discovery what they have to do and who they have to influence to help get their products or services to grow, there are some new developments that significantly raise the bar in the quality of the data that will be available.

Many of the early players in this world, sensing that social media was driving a lot of the new online consumer activity, began to build software that monitored social media influence. By tapping into the social media behavior of people, these firms were able to determine who has power in social media. Which tweeters get retweeted the most, who gets followed or “liked” on Facebook the most, etc. It can measure the level of discussion about a product on social media platforms. Klout is an example of this kind of business, giving everyone who signs up on their site a “score” for how influential they are.

But Social Media is only part of the story. The “Warren Buffett” problem is a good example why it isn’t the answer. Warren Buffett is not on Social Media, but he would rank high on anyone’s list as someone with influence. His influence shows up more, for example, in traditional media like Television, Newspapers and Magazines, on and in which he regularly appears. Yet his Klout score would be zero.

This brings me to a new product being released tomorrow from a company in New York called Appinions (full disclosure, I joined the board of this company earlier this year and watched the development of this product with great anticipation). Using search and analysis software developed at Cornell, Appinions measures the influence of individuals across all forms of media — textual and video — and allows its customers to drill down and see exactly what the influencers are saying. Appinions can tell you how many people are talking about you, how loudly they are speaking (ie how many people are watching, listening, reading their words), and whether or not what they are saying is positive or negative. And it can give the customer the same information about their competition and their industry in general.

Thus is born the “The Influence Gap”, a data product that can produce data on any topic or product or industry and tell a company where they stand in true public discussion. Are they talked about more or less than competitors? How many people are talking about them, and What do people say about them, about their competition and about the industry they are in?

This kind of information is invaluable to companies trying to build a brand, or, for example, politicians trying to win votes. Imagine a politician being able to pinpoint which Influencers, like media pundits or other politicians, are influencing the most people to vote for someone else and to be able to pinpoint exactly what they are saying and where they are saying it. That politician could then target his message to those people and focus on the issue THEY are raising. This would allow for much more efficient campaign spending on advertising or PR. They could, for example, figure our who is influencing opinion on a particular subject, like foreign policy. Then they can target that influence and his or her audience, with just a targeted foreign policy message.

Finally, by following these trends before and after a company has launched it’s marketing campaign, or a politician has responded, Appinions can, for the first time, generate a true ROI on the impact of the campaign on the public perception of a product, brand or candidate. In Appinion’s case, they serve media customers like the Economist, corporate clients and several Advertising and PR agencies like Mediawhiz, Digitas, EuroRSCG and Edelman. And they are in discussions with several political campaigns.

This will be a major step forward toward actually realizing the early promise that digital media platforms would truly monitor consumer and influencer behavior in a much richer way than has ever been available before.

Now THIS is Convergence

You gotta love this. Picked it up at sports site SBNation in a blog item from Jason Kirk. It’s the ultimate use of old media to promote new to drive engagement! Go Mississippi State!

Is The Ad Market Slowing Down? The Media Search for New Revenue Streams Picks Up Steam

Concern is growing that the overall Advertising Market is beginning to slow down, and that situation will worsen after the presidential election is over. Such concerns have caused media companies to accelerate their hunt for new revenue streams.

None of this comes as a surprise. Increasingly marketers have shifted funds from advertising to PR, social media efforts and even content creation. The percentage of marketing money that goes to advertising is dropping and is expected to continue to drop.

According to The Wall Street Journal today, Kantar Media is suggesting that decelerating ad spending growth in the first half of the year could shift to an actual decline in the third quarter.

The Los Angeles Times Story about the same report from Kantar says that “seismic shifts in spending continue to roil the media industry.” Pointing out that many of these changes have been driven by the recession, the LA Times cites major ad buying categories like retailers, automakers and homes sellers as having “been particularly hard hit, and few are predicting a speedy recovery.”

But there have been other contributors to the problems. After the Japanese earthquake damaged car factories and slammed auto production, the floods in Thailand did the same thing to many of the parts manufacturers.

All of this is contributing to a need on the part of content creators to search for new revenue streams besides traditional advertising. In the video world, while some of that money may come from non-traditional advertising, like digital or even advertising supported video-on-demand, there are also non-advertising related revenue streams, like NetFlix and Amazon deals, where consumers are starting to pay both subscriptions and one-time fees to have content delivered when and where they want it.

For print publications, that can mean several things. One of the more interesting strategies comes from the LA Times this week, which launched its e-books business this week with the publication of “A Nightmare Made Real”, an e-book about a crime the paper covered earlier in the year, combining the paper’s coverage and some new material into a digital book. Coming soon is a collection of holiday cookie recipes that paper had published earlier. Pricing on e-books is going to be tested, ranging from 99 cents to $19.99, with some consideration being given to a subscription model. The books will be sold on Kindle, Nook, IBooks and at the newspaper’s own e-bookstore. According to the LA Times, several newspapers are now experimenting with ebooks.

We can only hope the move to generate new revenue streams happens quickly enough to offset the softening in the traditional markets.

Changing The Game For Hotel Rooms

The latest industry to see the rise of a potential game changing start-up is the Hotel Biz.

A little known startup called Room 77 was profiled today by Nick Wingfield in the Bits Blog of the New York Times.
Earlier this year Room 77 launched a web site that allows its customers to select specific rooms in hotels instead of just “Types” of rooms.

With a very clean interface that enables a consumer to study the layout of rooms in the hotel and even see the view from the hotel window for that room, Room 77 allows a traveler to check out things that may be important to them, like distance from elevators or stairs. In the beginning not a lot of hotels will be able to offer the information needed for this product, so getting the exact room will be difficult for a while.

But when they do start offering this service, they will be embarking on a new world for hotel operators: transparency.
Most hotels aren’t thrilled about the idea of a consumer knowing exactly what he or she wants. The problem is obvious: Hotels haven’t been particularly good at giving people what they want, so they use their own judgement frequently to give the potential customer something close to what they really want, but not the exact room type because it may not be available. That process becomes much more complicated if the requests are for specific rooms.

The hotels worry that they will lose customers who can’t get the specific room they want. There is a legitimate question as to whether or not the hotel managers really want to see this kind of information out there in real time.

The Room 77 Site Showing the View from a Cosmopolitan Hotel Room in Vegas.

But the fact is, if you can give the consumer something he or she wants, you are doing the right thing. One way or another they will get the information they want, so if you are a hotel owner/manager, you would be better off embracing this technology and running to be up first and best with it.

On top of that, this opens the door for a new pricing model. The very “best” rooms, based on the demand from customers, could cost more. Think of the airline seats with more space that now sell that added space for more.

No matter what, this is the case of technology improving the relationship between the customer and the company.

Google Seeks To Accelerate Convergence, And Become the Gateway to All Video Content

The latest disclosure that Google is thinking about offering a full cable-tv service, along with phone service, is a strong indicator of where the company is heading. It wants to be the portal into all things video for the consumer.

Google has seen the future of video entertainment and realizes that consumers will ultimately seek out the easiest way to have access to the most content, and that means a system that can access all forms of delivery systems. While some programming will be best served over the traditional point-to-multipoint systems like cable, satellite or even over-the-air, more and more programming will come from interactive 2-way delivery, either on-demand or IP.

The trick will be to hand the consumer a single remote control device that will control access to all those pipes of content, and easily manage and “authorize” their access to programming on each platform.

Cable operators and programmers have called this concept “TV Everywhere” and have been working toward building systems where one point of authentication can allow access to the same programming on all platforms. Google wants to take the next step and provide not just the authentication, but the actual access to the programming through Google software and perhaps even Hardware (Android?)

Another potential player in this world is Apple, which already ties together it’s platforms and allows its customers to access paid content on phones, tablets and computers via its ITunes service. Its Apple TV product is moving quickly toward adding the home TV into the equation.

Some insight into Google’s thinking from Today’s Wall Street Journal:

“Google has been thinking about a move into TV for many years, says Keval Desai, a former Google product director who is now a venture capitalist at InterWest Partners LLC. ‘TV is built on a closed system, which is why traditional cable and satellite operators are the only place where consumers can get ESPN and other channels,’ he said. As more TVs become connected to the Web, he said, ‘Internet companies like Google will be able to give you that same high-quality content,’ possibly at lower prices.”