Archive for November, 2010

For the first time, over the holidays, Netflix will pay more to stream its movies over the internet than to send discs through the mail. Once again, a company has survived and perhaps even prospered by being able to quickly change its business model. It has adapted to changing consumer habits.

Its’ old competitor, Blockbuster, didn’t catch on until it was too late.

Netflix was able to use two of the most public and most used networks, the postal service and the internet, as the basis for their distribution business. In both cases, they didn’t have to build anything except a strong marketing machine.

Excellent story by David Carr in the NY Times today
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Stunning Facebook Facts

Posted: November 23, 2010 in Uncategorized

My panelmate at the Miami Book Fair over the weekend was David Kirkpatrick, the author of The Facebook Effect and a long time follower of Facebook and Digital Media from his former perch at Fortune Magazine, where he rose to Senior Editor.

He opened his remarks with the rather startling nugget that Facebook now accounted for 25% of ALL internet page views in the US. Subsequently I learned they have 10% of all individual visits on the web, more than even Google, which has about 7% of all visits.

Facebook was already a sticky site, but it’s now even stickier.

One of the cornerstone themes of change that I outline in “C-Scape” is the growing need for every business to produce quality content, whether it’s information, entertainment, something tangible, or even any kind of “experience” . The point is, with the methods of distribution collapsing the only way you can insure a place in the marketplace is to produce a differentiated product that is better than others.

In the past, you were more able to stay in business just by having superior distribution. If you had more bookstores, more people were likely to pass through your doors to buy the same book that every store carried. Today, with Amazon on every computer, being in every store didn’t help you as much because anyone could order the book from Amazon wherever they were.

But now Amazon, which became a dominant bookseller by beating everyone else to selling books on the Internet, is now itself coming under the pressure of competition from several other Internet booksellers. The Internet is a fickle partner. There are practically no barriers to entry for new “distributors” of content. Once someone has an e-commerce platform, and can draw an audience, they can sell anything they want. It wasn’t a surprise that Apple would branch into video and even books through its ITunes platform.

So how has Amazon responded? Exactly the way C-scape suggests, it has expanded the products it sells through it’s e-commerce platform and now it is moving toward creating its own content. First, it began to sell much a much wider set of products. Now, it is going to use its relationship with millions of consumers to create it’s own content. In much the same way Comcast is expanding beyond it’s core business of distributing television programming by buying NBC and its several cable channels, Amazon is moving to own some of the content it sells.

Amazon has announced the creation of Amazon Studios, a business that will offer millions of dollars in prizes to the best efforts it gets from aspiring movie makers and screenwriters. And, it will produce and distribute the best of the work it gets in through this crowdsourcing.

It’s a traditional business model. Amazon painted the business strategy as simple. “We make money when we make great movies,” spokeswoman, Cat Griffin told the NY Times blog Media Decoder. Left unsaid is the fact that archrival Netflix is rumored to be considering a move into content creation. So this move is as much a defensive one as offensive.

Like all youngster, Digital Media startups have begun to grow up and mature. While they may be losing some of their youthful charm, they have begun to look more and more like some of the main stream media they are replacing, but in a good way.

Gawker, Newser and Talking Points Memo have all begun to shed the “Blog” format of presenting new content. That is the format that puts the latest post on top of the column. Instead they are all moving toward a “Curated” experience where their Editors (aka Humans) are creating a front page that assigns various levels of importance on each story.

In addition Digg, the site that is totally dependent on users who submit and recommend storys, has for the first time added editors who will create a front page and pull what they believe are the more important trending stories to the top.

I wrote at length about some of this in a commentary on MarketWatch today.

For me the irony was that these moves are exactly what we did at the birth of MarketWatch 15 years ago. A curated front page, representing the best, real-time, thinking of a group of editors, was the “secret sauce” of MarketWatch. As former journalists we knew that our value wasn’t just in the stories we wrote, but in the context and perspective we added. A front page that resembled a newspaper front page, that graphically presented the day’s news in perspective, was just as valuable to time-starved readers who just wanted to know quickly what was happening in their world.

Today, that curation is even more important, largely because there is so much more content being thrown at people, they have an even harder time sorting it.

So, the good news is that humans…us….matter. Technology can help us, but it also needs us to work at its best.

While Gawker, Newser, TPM and Digg are all children of the new digital era, and were fueled by the ability of technology to deliver their content more broadly and more efficiently than traditional media, they are all now discovering something critical to their future success: human judgment matters. The technology that gave them the ability to compete in the media space also has limitations, and can be used wisely or poorly.

There are some things that technology CAN’T replace, like the value of smart people debating the facts and striving to give context and perspective on information. And in today’s world of unlimited information, that has become even more important.

MONACO- James Murdoch believes in the digital platform, but in his keynote speech to the Monaco Media Forum today he expressed serious concern that “The problem with apps (even apps the public pays for) is that they are much more directly cannibalistic of the print products than the website. People interact with it much more like they do with the traditional product.” said the man who runs News Corps’ European and Asian Operations, and is Rupert Murdoch’s son.

OMG, you’re creating a product the public WANTS! Murdoch’s response reflects the difficulty established companies have transitioning to the new digital platforms. They still look at it as a threat to their traditional business models MORE than as an exciting new, more efficient, platform on which they can serve their customers.

Let’s not lose sight of an even more important observation: In this case the newspaper is losing it’s customer to itself and NOT to a digital competitor. In the long run, this is the answer, not the problem.

I understand the issue, these companies are depending on their existing revenues to carry them during their transition to new platforms. But it’s a suicide strategy to keep the old products propped up while cutting them to the bone as they lose revenue and customers. The fact is, if you don’t give customers your content on the platform they want it, they will find someone who will give it to them and the traditional players will be left in the dust.

The reason IPad Apps are cannibalistic is simple: They are great products, or at least some of them are. I love the NYPost app. They are giving consumers exactly what they want…a replicated news experience on a convenient platform. It’s a fun product AND I pay for it.

Make more of these, James, and charge a fair price. If you lose your newspaper subscribers to this, you still win big, because you still have them as customers, and they are fine.

Without the printing and distribution, the cost drops significantly, and the product is timelier. And, it doesn’t come off on your hands!

Minyanville Founder and CEO Todd Harrison interviews the founder and former CEO of MarketWatch, Inc., Larry Kramer, about his new book, C-Scape (which can be found on Amazon here). The discussion touches on the changing landscape of business media, and how content and curation will play a major role in new media.

The rumors around AOL’s interest in merging with Yahoo make this as good a time as any to remind everyone just how badly most mergers go. AOL has already participated in one of the storied merger disasters of all time, and Yahoo has had some historic failures itself, with one of the side effects the creation of the maelstrom formerly known as Mark Cuban.

So let’s take a quick look at what some of the good news and the bad news could be in bringing these two together.

Good) They are both headed in the same direction, which is to become content businesses with huge audiences.

Bad) They are both still losing audience and marketshare.

Good) Both management teams have holes, and they could compliment each other by putting the businesses together. They could both build content together.

Bad) Neither of them has shown the ability to hired the necessary creative talent to head up content creation and content products. They are spending like crazy to bring in content creators, but neither company has elevated the concept of Chief Content Officer to the very top of the company.

Good) AOL would increase its audience by as much as 88% in a merger, according to an analysis by Comscore. But the larger Yahoo would only see its reach increase by 10%.

Bad) Yahoo’s advertising machine has slowed down for the first time in a while, at the very time AOL advertising has also decided to drop.

Good) Tim Armstrong is a strong Ad exec, and knows his new enemy.

Really Good) Together, the two would have larger reach in the US than Google, 197 million to 180 million.