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.