The free content model is all the rage, but what are the implications?

Free has become the revenue model du jour. Of course, RadioHead made waves last week by offering its latest tracks for an optional donation. SpiralFrog has already been offering downloadable music and video for free, with ads. And just yesterday Sprint expanded its free mobile TV selection on the new Sprint Exclusive Entertainment (SEE) channel.

The Sprint offering is significant because it broadens the earlier Power Vision channel, which seemed like an experiment in ad-supported mobile video. Now, Sprint is all in. With SEE it is committing to a full bore mobile video channel of homegrown programming. The channels are populated with repurposed Web material but also hours of material from its own studios and talent. And all of it is free to subscribers.

Free is the new fee. Word is out recently that Wired editor and “Long Tail” author Chris Anderson is working on a new book on this very topic. In fact, he aims to offer the book itself in some form for free. His “Long Tail” blog is beginning to test out some of the ideas.  The argument goes that content makes its money on the back end rather than the front end, via consumer fees. The back end could entail advertising. It could entail merchandising. Last year’s OzzFest concert tour, for instance, was free to attendees because the bands themselves were not paid. Instead, they made back their money from advertising. New ad-supported record labels are rumored to be ramping up, offering bands the opportunity to leverage their music as promotion for profitable concerts.

But the model also raises questions. In a world where advertising supports content so substantially, then how much more clout will marketers demand and get from content providers? On the other hand, how will a free-for-all model  affect content production? After all this is a model Google has used in part to justify its endless beta releases of half-baked products. No one is paying for it anyway, so let the users help develop it. Is this a rationale that could permeate the content production chain if a free model tends to de-value content.

Business models are not just ways of making money. They also affect content production and consumption.

Posted under Michael's Blog

Will downloadable versions of print ever catch on?

Since the turn of this century I have been watching a range of companies try to launch digital magazine solutions. Zinio, Newsstand, Texterity, Olive Software, to name a few, have come up with some very attractive ways of letting us view digitzed versions of print products either in downloadable formats or in a Web browser. Many of them have lovely animated pages, embedded multimedia, and even a crinkly sound to mimic the turning page. 

This season we will see some of these companies make another stab at a category that has been slow to grow. Olive releases a new version of its platform that relies more on XML, and Zinio is slated to release a new prodcut by year’s end. At the same time I hear more positive feedback from a handful of publishers about a model that many ignored or dismissed over the years. Some trade publishers in particular are realizing up to 10% of their controlled circulation base using the digital editions. For publishers who are getting no direct subscription income from readers, this is a solid cost savings, and for international distribution going digital is even more efficicent. Zinio recently told me that up to half of downloads are coming from overseas. And a new consultancy for magazines, mediaIDEAS just issued a brief arguing that publishers should be experimenting now with a digital format that will inevitably be critical to their futures.

Well, I don’t know about that. Digi-mags have been in a state of becoming for five years now. The look and feel of digital verisons of print is appealing to many users once or twice, but generally even the cheerleading enthusiasts at mediaIDEAS admit that the model is not there yet. Magazine publishers seem to be more in love with the idea of preserving their print layouts with digital flexibility more than readers are. Still if we ever see e-paper take off as a medium and touch screen handhelds become more widespread, then it is possible that finally, after years of trying, digital magazines will have a place under the arms of commuters and travelers.

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New York hosts the meeting of the marketing tribes

Once a year the Mad Men from around the globe descend on New York to reassess both their own industry and the media industry on which they depend. Yesterday morning I hosted a panel of heavy hitters in the digital and traditional content worlds all arguing that their businesses will indeed survive the tectonic shifts in consumption and distribution that are upon us.

Eileen Naughton, head of media for Google, George Kliavkoff, head of digital NBC Universal, Ron Bloom, CEO, PodShow, Shawn Gold, CMO, MySpace, Sarah Chubb, President CondeNet, and Herb Scannell, CEO Next New Networks were all laying out their strategies for being present when where and how the user wants it.

We posed to them the proposition that media mindshare is so fragmented, traditional media is so deeply threatened by homegrown and user-generated content, that it may not be worthwhile to own one’s own content anymore.

When I asked whether a diffused and fragmented audience would require more modest productions dispersed across more properties, Scannell was honest enough to admit that yes we were facing a world where the content economy would be spread thinner. One consensus is that in the future we would see the very definition of a "hit" change, so that it might be much more than mass adoption. epth of inovlvement with a property could be one of the criteria of a hit in the future. 

More tomorrow on Day Two

See Also

• Advertising Week

Posted under Michael's Blog

Nintendo teaches the digital media industry what it means to lead

With NPD’s latest game console sales figures the stunning reality of next-gen gaming finally sets in: Nintendo spanked the market with its own peculiar genius. We scoffed at its low-res hardware specs. We questioned the wisdom of forsaking a DVD player while other consoles aimed to be media servers. We speculated that after the weak GameCube showing this was the last generation of hardware Nintendo had in it. Maybe it should just be a software company from here out, many argued.

But in August, 403,600 Wii units sold through retail, NPD found, far ahead of the 276,700 a Halo 3-hyped Xbox 360 nabbed and the 103,600 a game-deprived Sony Playstation 3 sold. This has been the game console sales story all year. The behemoths of modern media, Microsoft and Sony, are playing catch-up month after month.

The Nintendo strategy of aiming toward the family and at the non-gamer has worked when everyone thought HD and prohibitively expensive new game design would rule the day. Kids and parents, and just about anyone else who ventures into my living room-cum-test lab can’t keep their hands off the Wii-mote.

The Wii is not the only place Nintendo dominates. It also sold 383,300 handheld DS units to the Sony PSP’s 130,600, even though both machines are fairly close in price now. Likewise, any argument that the Wii’s success is price driven become less convincing now that Xbox 360 price cuts bring it close to the Nintendo price point.

Point being? While Microsoft and Sony merely extended farther into the same old familiar territory with their next-gen strategy, Nintendo took us in a different direction that many observers resisted. We are in an age of focus groups, of supposedly empowered consumers, of a user-led market. It is significant that one Japanese company bucked all of these trends. It led us into a way of gaming, of interacting with technology, that was novel and unfamiliar. The key word here is that it led the market rather than followed it.

This is something to think about the next time your company brags about “following the user.”

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In which a tech site and a fashion site struggle to manage online video

It was the best of times, it was the worst of times…for online video. Broadband has become ubiquitous and at long last the expectations of users is for a video experience to replace the text-bound Web. But with hours and hours of video clips floating about on all manner of sites, the real issue now is how to organize them in ways that approximate the indexing and cataloging we associate mainly with text?

This is a work in progress, to be sure, but it is interesting to watch two sites from radically different worlds and sensibilities come at the same problem in the same week. CNetTV.com unveiled its version 2.0 which tries to give users more on-demand choice among the growing library of videos than the first iteration of CNetTV. The site moves from an overwrought TV+remote control interface to a page that looks more like a standard CNet page, with the same green tabs and drop down menus that navigate directly to libraries of reviews, shows, tips., etc. There is a search box that brings up video results in a floating window, so you can stay on the current page while you look for other clips. We found that the library of videos is so vast that even when you do pare the results down to a manageable collection of clips, there is still a lot of scrolling and scanning headlines to find what you really wanted. The experience is not quite as efficient as text, in that there isn’t a navigation tree you climb down easily to find the relevant clip. On the plus side, however, the responsiveness is superb. You click on an entry and it just starts playing as if the video already resided on your hard drive. This makes video browsing a reality. The CNetTV challenge is considerable given the range of videos it is producing now. Just filtering reviews from tips is hurdle in a library this big.

On the other hand, CondeNet’s highly stylized ShopVogue.TV is all about a visually stunning presentation. It is trying to video-fy the lush pages of the fashion bible for its many advertisers. You can drill into the site via designer brand, by price or trend, but each option gives you auto-loading video. Mouse-overs animate even the static objects to give the site a feeling of aliveness and interactivity at every turn. Clearly made for browsing, er, shopping, ShopVogue.TV is a little less concerned with surfacing every bit of content than it is about giving you inviting entry points for swimming around in the videos.

And this tale of two sites embodies different approaches to online video. CNet’s second iteration is trying to make video index and behave more like text. It is very task-driven and designed to minimize user frustration with lost time. The ads are very brief and blessedly well paced so that the same ad doesn’t replay every time you start a new clip. It is meant to look and feel like a text site that moves. ShopVogue.TV is making the most of the animated experience. It is aimed more towards a user dwelling in this moving, talking environment. The brands are the content here. Yes it is possible to find a designer, but this site is not the straightest route to finding that cute bag you saw in the Macy’s window yesterday. This site is trying to make information more fun than efficient.

No doubt both approaches have a place online, but CNet does have more experience with online video presentation than CondeNet, and the tendency of Web development has been to go from stylish and fancy to more efficient and simple. It will be interesting to see how both evolve over time.     

Posted under Michael's Blog

A new game reminds us how interactive entertainment could reach beyond the fan base

Game reviews are not in the purview of these posts but every once in a while a video game comes along that reminds us what is possible in this digital content medium. No doubt Microsoft’s release of Hale 3 this fall will initiate another predictable wave of press coverage about gaming’s growing importance, how Hollywood-like it has become, how much of the young male demo it grabs away from other media. Yadda, yadda yadda. In fact, the current best candidate for game of the year emerges from 2K Games today in the form of Bioshock. The Xbox 260/PC release has been duly touted by the game press as a stunner of an experience, and if the first few hours of the pre-release version I played is any indication they are right.

The game is set mostly in an underwater world created by a megalomaniacal tycoon of the 1930s. No pun intended, it is immersive in the way that only gaming can be. It defines an environment, literally submerges you in a foreign technology and sensibility that is as compelling as any filmed drama. The visual textures are as rich, the set designs as thoughtful as any Spielberg historical epic. The pace is carefully constructed, even as it lets the player feel free to go anywhere and interact with environments at will.

As a piece of interactive digital content, Bioshock is a lush and involving as it gets. Why mention it here? Because it underscores where gaming has gone so wrong. Even executives at major gaming firms like EA now say publicly that gaming has gotten boring and predictable. In large part, this is a function of the business and technology themselves, which have become so bloated and costly that the entire infrastructure is risk-averse. “Game play,” is the core elelent of gaming that retains that central gaming audience, but there are other more creative elements that lure in the rest of us.

To some degree even Bioshock is a safer bet than most. It is a classic first-person RPG designed by some of the same crew that gave us the brilliant System Shock 2. But this game is leveraging the elements that make interactive gaming artistic – environment, mood, texture, immersion. This is why a gamer can spend scores of hours in a game and feel restless after two hours in a movie theater. These are the unique aesthetic values of gaming. Yes, there is a good mystery in the game, and that helps move things along and keep the stakes high, but the essential quality of this digital medium is a convincing world we inhabit and move within.  

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The next wave of UGC video online will be verticalized and better dressed for mass consumption

My 15-year old seems to get a kick out of browsing the YouTube channel on our AppleTV. She doesn’t mind rifling through the many random thumbnails and clips in search of just the right one to entertain her, whether it is skateboarders falling off of a roof or cats stuck in toilet paper tubes. For the rest of us, however, user-generated video is entertaining but cluttered. Entertainment fast food eaters and drive-by digital snackers by definition do not want to hunt for their fix. YouTube is successful (traffic-wise) but still messy and uninviting. Advertisers, too, remain dubious about just how they fit into a mosh pit like this.

And so expect to see more verticalized iterations of the UGC video portal model at places like Future Publishing’s upcoming Gloob.tv. It launches officially on Monday but it is accessible this weekend.

Boasting 25 editors who pick and choose only the best video across news, celebrity, sports, and other content buckets, the site clearly is trying to make UGC safe for audiences and for advertisers. One of the persistent fears of marketers is that their ads on UGC sites will show up next to something unpredictable and rude. Publishers are looking for ways of making UGC seem more tame and controllable, more reliable for advertising. 

Another way to corral the mosh pit of random video online is to verticalize it. Sites like VideoJug are creating and aggregating expert advice interviews and how-to clips. The impressive thing about VideoJug is that it adds genuine value to the video experience. These are not just stray clips. They are segmented with a cool navigation system that lets you bounce among different questions, and many of the topics also have written and more detailed instructions. 

The point is that the next generation of online video goes beyond dumping and indexing, tagging and re-distriubuting. There is still an important role here for editorial descrimination and for value added content. YouTube was a starting point, not an end point, but online video needs to evolve.

See Also

• YouTube

Posted under Michael's Blog

As agencies conglomerate and content providers focus on the value of their data, Washington will take notice

The Federal Trade Commission announced yesterday that it will host a two-day Town Hall on issues of privacy with a specific focus on behavioral tracking and targeting. Coming on the heels of the AOL purchase of behavioral ad network Tacoda, Google’s intentions to buy DoubleClick, and Microsoft’s purchase of aQuantive, this is a fair warning to the content and ad industries. Details of the FTC Town Meeting and its agenda are here.

Ironically, this new and more focused attention on BT (behavioral targeting) by agencies of the government is a good sign of just how mature and evolved the interactive marketing economy has become.

A number of people in the interactive marketing and publishing industries have told me recently that the wave of buyouts demonstrates how the online-ad game is all about technology now. The years of talking about better targeting finally are coming to a head as search engines, ad networks, and content providers begin to collect the necessary toys for putting the full potential of interactive targeting into practice. Yahoo already uses search-keyword data to better track and target its users. Microsoft’s AdCenter has folded behavioral segments into the targeting mix. And Google had to retract a public slip by one of its executives last week when she mentioned that the engine was going to move into the behavioral realm. Make no mistake, BT is the next big thing in online advertising and it is bound to attract the attention of legislators.

The FTC called this Town Meeting, in part, as a result of hearings it held late last year on the topic of online privacy and advertising and, in part, because of petitions from advocates. But don’t be surprised to see publishers trying to use privacy as a differentiator and helping to fuel the controversy. Marketers and publishers have never before had such tools for tracking and targeting users. Frankly, the industry has done a poor job of preparing for this day when the government and advocates ask who is guarding our data and how will it be used? Individual publishers and networks have many good and bad answers to these questions, and that is the problem. If this industry is advanced enough now to network our profiles across thousands of sites and target our recent activities – even our search histories – it is mature enough to agree to some common standards all consumers can count on.

Posted under Michael's Blog

Take Two’s surprise delay of Grand Theft Auto IV reminds the game industry just how expensive next-gen gaming has become

Just as the video-gaming industry went mainstream in this generation of consoles, it also got much more expensive and risky. The Xbox 360 and Playstation 3 raised the ante on top-tier gaming so high that even deep-pocketed publishers like Electronic Arts and Take Two are feeling the squeeze of development costs. When a tent-pole title like Grand Theft Auto IV misses the all-important Christmas sales season, it has the same effect of a blockbuster film on general box office. Everyone, not only Take Two, will suffer from the absence of such an important franchise. When Take Two announced this week that GTA IV was being pushed to 2008, analysts warned that it could depress fourth-quarter sales throughout the gaming industry. Wedbush Morgan’s always provocative analyst, Michael Pachter, speculated that the delay probably involved development problems with the PS3 version and some undisclosed agreement between TT and Sony not to release the Xbox 360 version separately.

Some analysts believe that the GTA IV debacle will be contained by Take Two and give competitors EA and Activision a boost, but other analysts we have consulted say the franchise is so iconic that it sucks air out of the whole games sector. A game like GTA brings in so many peripheral players and generally reminds so many others why they like to play, the theory goes, that it helps sell the act of gaming itself during a key buying season like Q4.

Whatever the net effect of the GTA IV delay, it underscores the harsh new reality of next-gen platforms. Development costs and complexity are multiples greater than the last generation. Companies are more reliant than ever on franchises to bring built-in audiences to new releases and minimize the marketing costs. Even executives at major publishers are complaining publically about the dearth of innovation coming from their own companies.

The game industry has become just like the film industry, except that it lacks a key safety net – an after market. While movies can always fall back on multiple post-release windows for grabbing audiences, even when box office fails, games do not. If games don’t make their money in the first month of release, they are write-offs. This is an industry that desperately needs alternative distribution methods and ways of finding and exploiting audience niches outside of the golden window.

See Also

• RockStar Games

Posted under Uncategorized

Mobile video aggregator brings iTunes-like functionality to phones

One of the most interesting mobile video plays and technologies I have seen recently is from MyWaves.com, primarily an off-deck video aggregator that brings iTunes-like functionality to phones. Getting content providers in the mobile arena to provide hard subscription numbers is tough enough, so MyWaves’ announcement yesterday that it had signed its one millionth subscriber is notable. According to CEO Rajeev Raman, the service is signing people up at a rate of 25,00 to 35,000 a day and serving one to two million video views a day as well. 

MyWaves only launched in December, and its marketing profile has been slight, but its exponential growth is a testament to how quickly mobile content can scale. While the initial model for MyWaves.com has been free, ad-supported, off-deck distribution, the company also announced yesterday it was launching a BREW version of its Java client on Alltel, where it would run as a $3.99 service. There is more on the Alltel deal at FierceMobileContent.

The most remarkable aspect of MyWaves is how fluidly it brings existing video material from the Web to the phone. Most of the branded video podcasts from CNN, ABC, RocketBoom, Ask a Ninja, etc. can be added to your customized video list online or on the phone deck itself, and the two stay in synch, much like an iPod and iTunes. Raman tells me that he is hoping to bring the ad model to many of the video podcasts already on the Web because he believes mobile distribution of this scale offers better CPMs than they might get. At the same time, MyWaves lets user create channels of content from video and even make them private for sharing among a select group. Part of the MyWaves model also involves giving any brand or content provider online the ability to mobilize their Web video with a single SND2MBL button that pushes a Web-based video through the MyWaves system and out to any designated cell phone number. The MyWaves staff has experience at Yahoo, Tivo, CBS, and PayPal. The experience shows in the product, which is among the smoothest implementations of mobile video I have seen. MyWaves is also among the first video services to offer an iPhones version.

See Also

• MyWaves
• Alltel

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