The changing media business model

Forrester’s Charlene Li wraps up a panel she led on The changing media business model. I’m probably overreacting here a bit, as the idea of panels like that usually is to scare the s**t out of the incumbents to generate some fresh consulting business (hehe). And with most of the things she’s mentioning in here post, I would agree 100%. But then I read this paragraph, which I find a bit misleading.
Media companies in the past derived their value from either: 1) their distribution channel; or 2) the content they created. I believe that in the future media companies will generate the bulk of their value from serving their ability to aggregate and serve audiences better than the competition.

Well, some media companies already do that. As an example: It’s the core asset of any tv network. Owning a distribution channel is important; the channel we’re running reaches about 1.2 million German households; nice to start with, but the real battle is definitely somewhere else. In digital tv, network capacity is already almost a commodity And with IPTV, it definitely is.
So it just might be, that some top tier production houses will join the ranks of aggregators. If your brand, derived from relentless on air promotion (AKA scheduled programming on a major network), is strong enough, you’ll now have the chance become your own audience aggregator.

Unfortunately, the big question ist still lumbering: even if you aggregate a sizeable audience, how are you going to convert eyeballs into revenue? Look at YouTube. Billions are watching. But where’s the scalable business model? AdSense as the poor man’s answer for media sales can’t be taken serious as a solution. And cutting some special deals with some media houses makes good PR, takes a lot of time and probably barely covers the legal cost of reviewing the contracts.

Thing is: your business model depends on your place in the media value chain. In b2c it’s either product sales or ad sales. In b2b it’s either product sales or selling services.

Where would you place, for example, digg? Again, AdSense is nice, but. Now let’s look for an equivalent in traditional media.
How about this (I’m not sure whether Kevin likes this comparison): a TV Guide for the techno-cognoscenti audience, based on a recommendation engine, which tracks certain explicit behaviours?

Now, let’s look at the TV Guide model: b2c product sales (the printed guide), ad sales (the printed guide, the web, tv), b2b services (tv guide on screen), b2b product sales (EPG data) and so on and so on.
A great company, an undisputed global market leader in it’s field. But still: just an aggregator of meta data to tv content. The real business lies somewhere else.

So let’s be careful: most of the stuff we’re talking here about is meta content. Important, yes. And, combined with the (technical) cost of production and distribution being in free fall, good for quite some tectonic movements.

But let’s be reasonable: Give me a camcorder and iMovie and a broadband connection, and I will compete with “Americas Funniest Home Videos”. But I take any bet that nobody reading this comment will be a able to produce a full season of “Desperate Housewifes” in his past time.

So back to Charlene Li: The goal of the panel: to give “traditional media” attendees an idea of how new technologies are changing the way consumers interact with media. Yup. Makes more sense. The panel on the changing media business model is postponed.
Via RSS Blogger

Will YouTube save the old tube?

On GigaOM, Robert Young makes some bold predictions. According to his post Back to the Future… for Broadcast TV, from the disruptive forces of the Internet, the TV landscape is about to experience another tectonic shift. Just like multichannel cable drove viewers from the big networks to the cable channels, netbased on demand services will take their slice out of the multichannel viewing time. In just about five years, it is likely that most of the hundreds of channels we get today via our cable & satellite subscriptions will disappear and there will be only 10 to 20 “broadcast channels” left standing. Because niche cable networks, many of which are barely treading water now, cannot afford to lose viewers for their linear/broadcast channels.

Really? Here’s why not. Cable is not broadcast. If you look at the balance sheets of those tiny cable channels, it really depends on when they did launch. As a rule of thumb: the older the network, the higher it’s share from the subscriber fees. Which means: real viewership is important. But not that important. As ad revenues are dwarfed by the fees you get from the program packages the MSOs are selling.

And even for the MSOs, the real viewership of those channels is not the top priority. As they differentiate between reasons to subscribe (does anybody watch The Learning Channel?) and reasons to stay (the stuff people watch but would never tell theirs mothers about it).

And, not to forget: watching tv is about generation La-Z-Boy. It took about 20 years to convert network-tv viewers into multichannel zappers. So give me a good reason why they should convert completely in a snap from Seinfeld-rerun watching masses (all expenses covered) into proud decision makers, plowing through the abysses of a plethora of on demand programming, they might even have to pay for (yikes)?#

Of course, all networks, big and small, have to make their decisions on how to thrive and survive in an on demand world. What kind of rights to acquire, what kind of supplementary distribution platforms to choose.

But for smaller cable networks, the imminent threat isn’t the stuff on the Veohs, YouTubes, and the likes. The real threat ist à la carte programming. And the marketing invests which would come with it. That’s why an everything’s-on-demand-over-the-net-tv with a gazillion channels is a no go business district.
And mind that. Right now, YouTube et al mean great business – if you run Akamai or Limelight. But not, if you run a content comapny (not counting free promotion). And not even, if you run YouTube.

Via Digitaler Film

Quaero? Good question.

French mega-blogger Loic Le Meur is making a point. He sees 10 reasons why the French search engine will fail. If you’re not in the loop: Quaero is a very French search engine project, with some kind of a German appendix. It’s (jointly?) run (?) by nimble startups like France Télécom, Thomson, Siemens AG and Thales. The basic idea seems to be transfer about 250 Million Euros in governement funding into the koffers of companies who will not even notice this windfall whilst delivering after five years of major league researching a multimedia search engine, which at least will be able to deliver what BBN’s Podzinger can deliver right now (audio to text) and then some.

But let’s get back to Loic’s points:

1- Can’t spell it.
Stupid names are not a problem. (QED: Colloquially, a sap is a weak or gullible person. Also known as dupe; see confidence trick.) Not owning the domain, either (prevents you from trying to trademark the hard to spell project name).

2- Centralized.
There are no centralized projects on the web that succeed. I know what you mean. But, of course, some exceptions do apply. Most notably: Google, Yahoo, eBay …

3- Secret versus beta.
Somtimes, I think, it’s time for web based beta blockers. Because mostly it’s smoke screening. Look at Google. Services like Froogle are/deserve to be in endless beta. But the secret project (world domination by abducting top software engineers into the Googleplex, introducing them to a 2 month brainwash and then …) is still, well: secret. I guess.

4- No buzz, no adoption.
Wait, Loic. We’re talking 5 year plans here. Quaero doesn’t need any buzz right now (well, we’re buzzing here …) as there’s not even a need yet for a domain for the service we cannot spell as the real product is only supposed to be ready in about 5 years.

5- A galaxy of actors who compete to get the subventions and don’t get much noticed for their latest web innovations
Yes, now it’s getting scary. It’s a powerful roster of partners. But if you want to build the prototype of the car for the mid 21st century, you probably wouldn’t start with talks to Nestlé.

6- Not really international.
‘scuse me. How about Google, Yahoo and the likes? Setting up a sales office in Hamburg, Paris or Munich doesn’t make you an international company. And not being really international is obviuosly not a recipe for disaster.

7- A neverending story.
Quaero has been announced as a 5 years project when Google is only barely 8 years old, where will Google be in 5 years when Quaero is finally launched ?
See. It’s not neverending. The life expectancy is exactly five years.

8- Not enough euros.
Outsmarting beats outspending. (Correction: would beat.) In it’s humble beginnings, Google didn’t bath in billions. So in theory, Quaero should have a chance.

9- Subventions euros are not worth venture capital euros.
Uhm, the source of the money is not the problem (in Latin: non olet). The question is: where to put it. VCs and the government share one thing: they’re all about other people’s money. But any VC betting 250 Million EUR to seed a company trying to beat a superrich global market leader with an unproven concept would immediately be awarded with the Nick Leeson Medal in gold.

10- Google is a thousand startups
[…] How many european startups could the Government help launch if these 250 M€ were invested in them ?

And that’s the point. Instead of playing the hare and the hedgehog, they launched a hare-brained single shot.
Why not open source Quaero and engage all individuals who would like to challenge Google’s position ? If the aim is to have an alternative and successful search engine, that it probably the way to go. It’s certainly not by trying to create centralized “multi-heads missiles” in a decentralized World where building communities matter more than the Country they originated from.

Exactly. Or why not seed 250+ search start-ups whilst offering the current Quaero partner a purchase option. Because, it’s a bit like Loic’s ten points. Most of the arguments are somewhat offleading (sez me). But in the end, he delivers his shot.

TV – all Ad-Free, A-La-Carte?

There’s a new (?) meme on the block: ad-based tv is/should be dead. The future of tv is ad-free, no-tier, and totally à la carte. Listen to Steve Rubel of Micro Persuasion fame: As the technology gets more sophisticated and the generation that grew up with the Internet , iPods and always on connections become adults, I see a day coming when a lot of TV content will a) be paid for and b) consumed ad-free. Nice try. But, guess what: a) is already here and b) is highly unlikely to happen.

The fundamental misunderstanding starts with the words as the technology gets more sophisticated. Of course, technology is crucial. But at this point, usage patterns and applied business models are more important.
a) is easy. It’s called pay per tier, and is basically the pretty successful formula which has propelled US-based cable networks from MTV to CNN to Discovery into the global top position regarding multichannel tv. The basic math behind it: a multichannel operator sells easy to understand program packages to the consumer. The programmer gets a certain portion of the subscriber fee and decides by gut and market research in what programs to invest. So why not breaking it down into selling separate pieces of content?
Let’s make a sidestep. In the Boston Globe, Alex Beam toots almost the same horn (at least, according to Steve). Remind me again: Why am I paying $50 a month for services I don’t want? Oh, that’s right. Because the cable TV monopolists say I have to.

The basic principle of a successful multichannel tv environment is simple. Networks are packaging shows into a channel. Cable operators are packaging channels into tiers. According to Beam, selling tiers is just a greedy, oversimplistic one size fits all approach. According to Rubel, selling ad space is just an annoying habit of channels inc., to be broken by the powers of technology. Vivat, à la carte.

Beam proposes. I pay to get 80 channels, about 20 of which I actually want to watch. Hey, Mr. Comcast, let’s make a deal. I’ll pay you, say, $25 a month, and you beam me the 20 stations that I want to watch. Makes a fiver for the connection and one Dollar per channel each. Sounds good, true and populistic. But, unfortunately, not feasible. Ask Mark Cuban. He did the math (trust him, not me: I’m just running my micro tv network somewhere in old Europe – he’s a selfmade billionaire). The big difference is, that in an à la carte world, the cost of reaching an audience is outrageous.

And it’s not just the price tag. Because of the cost of reaching an audience, à la carte  programming favors inherently the big, the established, the incumbents. Mark’s example is the movie market. Look at which content rises to the top in terms of revenues from consumers and visibility. The content from the biggest companies who have spent the most money to market.

OK, you might say. Unbundling tiers might not be that great an idea. But the unbundling of channels into separately sold pieces of content is a technological given. Everybody builds it. So it has to come, it’s already happening.

According to Steve, in the future – as technology progresses – you will have to pay for the best programming, even if it’s carried by ABC, NBC, Fox or CBS. These shows will be sold a-la-carte, as subscriptions or in packages and they will all be delivered over the Internet protocol. Nice try. But technology’s just one (important) piece of the puzzle.

To quote myself (sometimes, I like that): can $1.99 downloads substitute broadcast tv? Only if you’re a Hollywood producer. Or could you imagine every tv household shelling out $200 a month at least just for watching tv content (and that number’s not even based upon the real tv usage hours)? So even in a virtually broadcast-free world, we’ll have to look for ad support. Otherwise, people will have to find themselves some new (and cheap) hobbies pretty soon.

So one thing is the business model applied to usage patterns. You can’t beat free beer with almost free beer. But free beer and premium imported Pilsener can peacefully coexist. Because they’re catering to different markets.

Would you pay for a download of Jerry Springer? Nobody would. Those who watch, can’t afford. Those who could afford, don’t watch. Would you pay for a download of Desperate Housewifes – if it would have never been aired on network tv? Most likely: not. Because you would never ever heard about it (if somebody didn’t spend some gazillions on marketing). Because it would never ever had been produced (if somebody didn’t wager some gazillions on production).

Placeshifting vs. Mobile Video Services

What’s placeshifting? Services like Slingbox or Orb use your broadband internet connection at home to stream your favorite shows to your PDA, your handset or laptop. If you like the idea, it’s highly likely that you’re not working for a mobile network operator.

MocoNews ha a nice wrap up of a report by ABI. Of course, the handest only moble video offerings aren’t that versatile, compared to Orb’s multidevice approach. But rebroadcasting regular tv shows to a handset is a rather futile approach anyway. First thing: screen resolution and real estate. We’re moving to HDTV in the living room. But you’ll never carry mobile phone with a 60″ screen.

So esentially the fun starts with made for mobile content and services. Looking at the different, German production companies and carriers already produce some stuff, which partially is made for miobile only consumption, partially as some kind of augmented tv service – depending in the time of the day.

In the long run, augmented television services and some time critical content will be the only stuff which will be broadcasted in a traditional way. Everything else will be pushed to devices for local caching. Because storage prices (with virually unlimited production capacities behind) will fall always much faster than bandwith, which is restricted by its spectrum limitations.

Via unmediated

UGC – billions and billions of $ made

Finally, finally I get it. User Generated Content (UGC) is already a billion dollar industry. I mean: look at Google.

Philipp Lenssen of Google Blogoscoped is quoting Google CEO Eric Schmidt from Googles Pressday 2006: “We’re moving to the next state of the internet where it’s all about people and expression” – search is still the focus, he adds.

But why would search qualify as UGC? To quote Schmidt again: The Google “aha” moment for many was when you use their search and say, “wow, that’s amazing.” Eric says these small personal “aha” moments created Google’s viralness, and they’re different for different persons.

Search is personal. Well, maybe not the single word you type into a box and press return. But your search patterns are pretty unique. And with Google Co-op, search results and UGC get a bit closer together.

It might not be ready for prime time (The product is an open platform but it’s very difficult to understand and use right now, even for a geek like me, writes Steve Rubel in Micro Persuasion). But the gist is: you can label websites you like – and people can subscribe to your choices. Everythings going to be integrated into search (as search is just an interface to a collection of information).

Searching the engine already creates you a potentially personal collection of content. Tagging and qualifying those results creates another layer of meta-content – which now can be re-fed into the search engine.
The NY Times quotes Marissa Mayer, Google’s vice president for search products. “A little bit of human involvement goes a long way,” Ms. Mayer said. Which is a cutesy way of saying that algorithms can get you just so far. In a certain way, the geekly kingdom is following the tracks of Yahoo! and its latest buyouts (Flickr, Webjay, …).

As an example: Palatable computer generated restaurant recommendations would be real rocket science. Why? Taste buds are fickle. That’s why the typical consumer recommendation site are quack, too. If you want to have a nice dinner, why would you trust the recommendation of a persons who’s social life (or, at least the part that you’re aware of) is about recommending products and services you’ll never need? Let’s see, how Co-op tackles this.
Google Notebook takes yet another step of blending user interactions (searching, choosing from results, dismissing most of them …) into content. The idea: take the bland results. And let the user pick the best hits and annotate them. “If someone has planned a great Hawaiian vacation with great research into snorkel boats, they should be able to share it,” Ms. Mayer said.

As Steve Rubel writes regarding Co-op: I would love to see them layer in Blogger so that there is some editorial around these results as well. We haven’t seen Notebook yet. But it does already sound a bit like Blogger light. Instead of Blog This, it’s put it in your Notebook.

BBC Web API (beta)

What’s the future of television? Yes, delivering tv via the Internet makes a difference. Like, uhm, the difference between cable, satellite and terrestrial tv – if you just think about the web as just another distribution channel. But te fun part starts, if you take networking more literally. The BBC, mother of all tv networks, is now at the forefront again. And theyre not just opening their archives. The Beeb is sharing some data and releasing a Web API.

Want to build your own Yahoo!BBCwidget? An AJAX-EPG? The BBC Application Programming Interface delivers all the data you need. Program information, schedules, genre listings, you name it. Have just another look at the AJAX-EPG. Built using the BBC Web API and the BBC Multicast Trial, explains the header. Yes the Beeb is heavily into R&D. Because, as Terry Heaton explains, the killer app isn’t “monkey see, monkey do”.

So what, you may say? It’s just marketing material they’re offering here. But that’s what you think. Some broadcasters, like RTL Group, even stopped transmitting DVB-SI infos (which means: the EPG in most set top box won’t get any information (except the most basic like title, start and end time). Their idea: selling the data. OK. But with all due respect: That’s not the future of anything. If you want to monetize your meta data, you either aggregate everything what’s out there – or give them away. Because most likely, you lose more by not binding your audience than via peddling your meta data in 200 EUR chunks.

Via Micro Persuasion