The music industry is broken. Any business whose main product is stolen far more than it’s bought can’t be considered anything else.

But how to fix it? Online and mobile music sales are still in their infancy; and it’s still unclear whether the vast  majority of people will be willing to buy songs for

their iPods they can simply download from their friends’ hard drives.

That’s why ad-supported music deserves a look.

The very idea probably seems heretical to music purists. But how obtrusive is putting banner ads on a music site? Even putting short ads in front of songs is not as unseemly as we might think; that, after all, is essentially what radio is.

Imeem, a fast-growing social community built around music, video and other media offers a hint of what music’s future might look like.

You can stream as much copyrighted music as you want for free. Banner ads by Discover, Microsoft Live Search and other advertisers help cover the royalties Imeem pays every time someone listens to a copyrighted track.

The concept has taken Imeem from zero to 18 million unique visitors a month since March 2006.

"We’ve signed three out of the four major and stream their entire catalogs," says Director of Business Development Ethan Applen, who is speaking Tuesday at iHollywood @ AFM in Santa Monica. "Our entire business model is built around given them a share of the ad revenue."

Users who wish to download music are directed to iTunes or Amazon to buy; Imeem gets a percentage of the revenue.

Labels or studios may also choose to pay for ads themselves to call attention to an act or movie. Members can also place their own material for free on the site. If enough users enjoy it, Imeem posts ads on the page and gives the content creators a share of the ad revenue, too.

Undoubtedly, you could poke plenty of holes in Imeem’s business model. But isn’t it nice to find someone in the music industry besides Apple who actually has one?

Posted under Uncategorized

In the new world of Web original programming how do we measure success?

As showa like "Goodnight Burbank," MySpace’s "AfterWorld," and "Prom Queen" revive interest in the Webisodic format, media buyers and programmers have to ask themselves what constitutes a hit in this new environment of on-demand and viral video. 

At NewTeeVee, Chris Albrecht pulls some of the latest stats together to show that phenoms like Will Ferrell’s FunnyorDie.com baby landlord sketch pulled down 45 million views, while KateModern claims 2 million. Mike Hudak, who runs Blip.tv tells me that 100,000 views is doing nicely for a series but once viewership hits a million a month you know you have a real hit. The question is not whether a single clip or sketch goes ballistic virally. The point for advertisers is whether the Web can build a media entertainment brand that is worth investing in. Hudak feels this is the case, but it requires a diminished cost structure and real consistency. You are not going to make an online hit work on a TV budget for a good long while, he admits. But if a program like "Goodnight Burbank" or "RocketBoom" can maintain consistency, then they can build an audience. Releasing episodes on a regular basis, keeping the look, feel and format consistent across episodes, are key to success he argues.

Media buyers I ask about these issues have a range of thoughts. Some feel that slapping an ad banner on something that grabs a few million views is probably not so great a deal if the brand can make their own longer form programming and generate an audience that gives them full attention. Others say they like the opportunities these shows offer for deeper product integration. Some hosts weave promotions for the advertiser into their content.

We are in a new world in which the metrics and the content are shifting beneath our feet and both media producers and advertisers are trying to figure out how to make best contact with a fragmenting audience.    

See Also

• FunnyorDie
• Blip.tv

Posted under Michael's Blog

Media muscles into mobile

In the eyes of the major agencies, mobile advertising remains at the margins, according to Digitas VP and media director Jordan Bitterman at the second day of Ad Week here in New York. Bitterman was speaking on a panel at OMMA East about how the company is allocating resources. Widgets, one of the big buzzworthy hits of the show, were producing good results thus far, but the obile side is not sufficiently big enough to merit inclusion in many campaign plans. "It doesn’t have the scale," he says. "Our marketers are looking for scale."

From the perspective of mobile marketers themselves, however, the market is heating up considerably. One of the panels I moderated at the show involved video advertising to mobile platform. We had executives fro MyWaves.com, which aggregates and re-renders online video programming for mobile, Versaly, which runs an ad-supported Fast Lane network of young adult programming on Sprint and off-deck, and Kiptronic, which has an ad solution for both mobile and online video. One of the themes I keep hearing again and again is media companies willingness to circumvent the carriers and go directly to consumers on phones via WAP. MyWaves.com now will hit two million registered members soon, although only a fraction are from the U.S. Versaly says it has served over 3 million video streams across the Sprint deck since its launch earlier this year. It also brought some interesting new ad units to the table…literally. Steven Burke who runs content acuisitions for the company showed us some units that include a prompt to text a sponsor for more information at various points in a clip. Others used branded entertainment that was folded into the programming as just another channel.

Much like online advertising in 1999, mobile marketing looks like a fast accelerating hot number from within the industry, but from the perspective of the media planners with the big wallets, it is barely on radar.  

The general sentiment that carriers simply have been too slow to embrace the mobile content model was growing among my panelists, and there seemed to me a sense that if the carriers won’t erect a better eco-system for content, then third parties and media brands will do it for themselves off the deck. Just the week alone we saw Fox properties and Myspace announce major mobile launches, and DoubleClick announced it was making its widely used online DART ad serving system available as a mobile platform. This latter development makes it that much easier for the major brands to get into mobile with an immediate revenue stream and an easy way of measuring mobile vs. Web performance. It is not clear to me why DoubleClick would make this announcement just as the FTC ponders its merger with Google. If anything, this move into mobile would just make a Google/DoubleClick marriage seem even more onerous to regulators.

Posted under Michael's Blog

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

Will privacy be a key differentiator in the ad wars to come?

The battle lines over privacy are going to be drawn overseas before any lines in the consumer privacy protection sand emerge on these shores. It is revealing that Google chose Europe to make its first public pronouncement on privacy. The company called for countries and Internet companies to cooperate on some kind of international standards for information and identity protection. This amplifies Google’s own recent policy shift in Europe, which reduced the time it would hold onto personal data to 18 months.

What is the meaning of this? Why Google, and why now? Privacy is one of those issues that journalists and advocates tend to bicker over. The hard reality is that few citizen/consumers ever pursue the issue very aggressively with their own ISPs, with ad networks, or with publishers. Behavioral tracking has been fairly common for years and there has been little discernible backlash over cookies tracking people anonymously across sites.

Google’s is a pre-emptive strike and a kind of inoculation. With its recent announcement it would acquire DoubleClick, and rumors it would start using behavioral targeting in some way, the heat is going to be on. Yahoo has been tracking its users’ behaviors in a much more deliberate way than Google ever tries, but because it is number two in the search world, it gets a pass. When Google starts targeting ads off of people’s search behaviors, even though the practice is going on elsewhere, it raises a red flag to legislators. Google know this is a danger, but it also knows that targeting display and video advertising only moves to the next level when content providers track activity and behavior. Clearly, it wants to be out in front of this issue before any possible hammer comes down on them. This privacy initiative also sets the brand up to point fingers at rivals who user behavioral information more freely on behalf of advertisers.  Microsoft, Yahoo, and AOL all have made substantial purchases in the behavioral targeting realm. No doubt, Google will have its own targeting solution, too. But before making these moves, it is trying to inoculate itself with an international community that may incur much harsher restrictions and penalties on privacy violators than any U.S. body.

See Also

• Google

Posted under Michael's Blog

Consolidation in the ad network space is a necessary next step

This has been a harrowing six months in the digitial ad space, with DoubleClick, aQuantive, Tacoda, RightMedia, 24/7, all getting gobbled. With today’s announcement that Yahoo! is buying behavioral targeting network BLueLithium for $300 million, it is clear that for now the big play online is to guarantee reach. Some have argued that the big players like Microsoft, Yahoo and Google are buying up technology in these acquisitions and positioning themselves for a coming day when ad targeting, expecially behavioral targeting, really kicks in. But Yahoo already has a behavioral engine that is highly evolved, and AOL already has Ad.com. For the time being, what these companies are after is reach, being able to create massive audiences that for now attract big brand advertising from TV. In the future this scale will translate into more viable behavioral and other programs. My old friend Denise Garcia, analyst at A.G. Edwards, has an excellent post today on the state of online media that explores some of these issues. Also, Web advertising veteran Jay Sears at ContextWeb gives an extensive analysis of where this points the online ad business generally.

But I think this is about aggregating audiences right now. BlueLithium is one of the largest networks in the U.S. Yahoo, like AOL and Microsoft, need to reach out beyond the traffic they pull into their portals with content. They need to offer their clients campaigns with more direct response applications (i.e. BlueLithium) and with greater targeting capabilities. As major media bring more of their wares online (Hulu.com, MySpaceTV, etc.) they also will need online the kind of mass reach for their promotions they are used to on TV. These deals are designed to give such clients that kind of massive inventory.

But as the Web finally evolves towards more sophisticated targeting, the reach and technology that a BlueLithium or Tacoda bring to the table become more important. Targeting audiences according to their past online behaviors is very effective, but it does not scale well. As you parse audiences into behavioral segments like recent auto content viewers in the 34-45 demo the slice of addressable eyeballs plummets. Only massive reach can render enough scale in these targets to make campaigns worthwhile to media buyers. By 2010 and 2011 perhaps, this will start making a big difference. At that point, portals like AOL and Yahoo, perhaps even Google, will become profiling engines. As people peruse their content, the protals will record their behaviors and then apply those profiles to targeted advertising the companies servie out across the network as users go out onto the general Web. For now, however, the new game is very much like the old game… attracting the masses.   

See Also

• BlueLithium

Posted under Michael's Blog

There is more to the Apple/NBC dispute than pricing

After NBC announced last week it would not be renewing its contract with Apple to distribute its premium content on iTunes, most industry insiders understood this to be a pretty big bite out of Apple’s online store. After all, various sources peg NBC being responsible for up to 30% of video sales on the service, with shows like "The Office" and "Heroes" among the top sellers. But on Friday, Apple bit back announcing that it would not carry this season’s new shows from NBC because it didn’t want to end their runs abruptly when the contract ran out later in the year. 

While Apple claims in its provocative press release that NBC wanted to double the wholesale price of its episodes, Mediapost reports that the negotiations were more complex than that. NBC was looking to tweak disappoiting revenues from the iTunes partnership by bundling episodes with NBC Universal film offerings as well. Apple felt this would "confuse" the market. NBC came back with its own release arguing that Apple’s business model for iTunes is really about selling hardware, not media.

This is an argument that has been a long time coming. This situation very much resembles early TV and radio, when the hardware makers considered on-air programming simply the sweetener that sold the TV and radio sets. While it is true, Apple is a hardware company, it is also now a media company and it needs to better understand the eco-system that supports ambitious programming.

On the other hand, NBC’s pressure on iTunes may have something to do with its own disappointing up fronts and a weaker-than-expected reception by media buyers for digital. This was one that everyone should have seen coming too. The major media companies were coming to the upfront table with all of these prime time shows running online, as if they were supposed to sell themselves. But the industry is still trying to sort out what kind of ad formats work on digital video, how much people really want their prime time on desktops, and what reasonable pricing should be.

This war is only beginning as distributors and content providers both struggle towards workable business models for digital video. The fact of the matter is that no matter how many eyeballs veer online, the digital ad market still only produces a fraction of the revenues that TV can. How digital distribution supports a robust eco-system of prime time prodcution remains an open question that neither Apple or NBC can answer.     

Posted under Michael's Blog

For the umpteenth time we hear that local ad spending online will ramp up

I have been covering the Web since aobut 1996, and so far as I can tell the local interactive ad market has been in a constant state of "preparing to explode." From the first days newspapers and classifieds sections made their online debut, analysts touted this massive amount of local ad money that mom and pop shops and plumbers and psychics were spending on Yellow Page and newspaper listing, local radio and TV spots. Once this multi-billion dollar largesse started pouring online — whoa Nellie, watch out. I cannot begin to count the number of schemes I covered for getting these small businesses online, building them Web sites and gettign their ad dollars into Yahoo Local and YellowPages.com, etc. etc.

Yesterday eMarketer issued its new report on local online ad spending, and it predicted that now, finally, really, no kidding this time, we will see the money start to flow. The $2.9 billion spent this year will grow to $7.8 billion in 2011 says ace analyst Dave Hallerman. Yes, it is tough to get a plumber to advertise online, even though by some estimates over 25% of search traffic is for local services. Local ad spending represents one of the biggest disconnects between actual content usage and media buying. Content online often is local, but advertising isn’t.

In general the local mapping and directory services have been supported by national franchisess like the Office Depots and Best Buys who have local stores but national media buyers. Penetrating that small to medium local business market has been the Achilles Heel of online advertising. What is different now? According to Hallerman, who has forgotten more about digital advertising than I know, "a number of factors are set to accelerate growth in the market: the wealth of small and midsize companies potentially available as online advertisers, the increased use of local Internet sites and services by individuals and the development of local online ad networks connected with local media, such as newspapers."

Well, maybe. Ultimately, the major national advertisers only came online when the suits who bought media themselves came online. My experience covering the first Web bubble was that media and advertising only "got" the Web’s marketing power when the Web finally got to them. Only when the guys in the executive wing of major media and packaged goods manufacturers spent much of their own days connected to the Web did they start putting money here. My bet is the same will hold true for local business. When their own companies are more connected. When their communications with their client base and their partners finally becomes fully Web-centric, then these companies will start looking ot Google AdSense, to YellowPages.com, and to their newspaper ad rep.

Posted under Michael's Blog

The NBCu and News Corp. portal unveils a name and a URL

We imagine that the executives at NBCu and News Corp. decided to be a bit playful and "YouTube-sounding" when they came up with the name Hulu for their much-awaited video portal. But we can’t say we are much amused, although we are sure it went through more focus groups than a new brand of soap. The story broke from Mediapost this morning that Hulu.com would be the brand and the address of this home to NBC, Fox and others’ TV fare. The site is inviting users to put their name on the list for an invitation-only beta test in October, which means the site is well behind schedule and will not coincide with the rollout of new fall programming.

When I spoke with NBCu executive George Kliavkoff in the spring about this plan, hyper-distribution seemed to be the key. Hulu has partnered with YouTube, MySpace, MSN and others to boast an unprecendented Web reach of 93%. They believe that advertisers and users prefer quality, well-produced content. Advertisers need environments they can trust and users can only watch so many cats playing pianos and kids skateboarding into walls. The guys at News Corp. and NBC appear confident that dispersing their shows far and wide but keeping the ads bolted to them is the best way to ensure distribution and monetization. Interestingly, they ar elaso engaging in unprecedented coopetition, in that the search engine and categorization of the portal Kliavkoff described to me would let users mash up their networks and brands pretty freely. The biggest innovation in this portal may be the networks’ (well two of them) new willingness to dissolve the only brand walls. The plan that I heard months ago involved letting other media brands into the mix as well.  

Who knows how well this will fly. I can say that there is a great deal of interest and excitement among media buyers. Social media, user-generated media, etc. are tough for traditional buyers to figure out. Sure there is a lot of interest and experimentation going on here. Google just launched its first tests of in-video ads at YouTube. But on the whole, ad buyers need safe and well-lit places with lots of eyeballs in which to plant their massive budgets. Hulu may succeed with the advertisers more effectively and earlier than it succeeds with viewers. 

If it ever gets to Beta, that is.    

Posted under Michael's Blog

Nielsen’s new time-spent metric loves big brands and multimedia

Several months ago when Nielsen//NetRatings eschewed page views as an antiquated metric, there seemd to be few complaints from major publishers. After all, increased use of Web 2.0 technologies like embedded video and AJAX interfaces made the traditional page impression increasingly obsolete.

While reach remains the coin of the realm online, and NetRatings continues to use unique visitors to rank top properties, the new "time spent" metric is giving some sites a lot more to crow about. Looking at the latest July numbers, among the top properties, media-heavy Time Warner has a smaller reach than Google, Microsoft and Yahoo, but its 4 hours of hange time per person far outdistances the competition. Cartoon Network announced today that its site keeps an average user for 77 minutes a month, bringing the site to 26th in the time-spent rankings. This new metric clearly favors multimedia sites, or at least it brings them more visibility in the market. Electronic Arts benefits from its addictive casual game portal Pogo.com, where many soccer moms plant themselves for hours at a time. Cartoon Network has a combination of full episode videos and online games to keep users involved for lengthy stretches. As the major networks bring more of their prime time schedule online for on demand viewing, we may start seeing these networks pop onto ratings charts even if other Web brands gather more raw reach.

The new metric is also giving lower traffic segments cause to crow. The magazine industry traditionally maintains a loyal but relatively small following on their companion sites. In most categories like women’s service, tech, and news, the TV-fueled and endemic Web brands have much broader reach. But as companies like Hachette and Hearst re-tool many of their online brands like CarandDriver.com (Hachette) and Cosmopolitan.com (Hearst) they are bringing more social media and on-demand video to the mix that is designed to keep users there longer. In fact, Chuck Cordray, head of Hearst’s digital unit, recently told me that time-spent at some of the sites is up markedly in the last few months as the sites turn up the multimedia features, and he sees this metric replacing page views altogether.

I think the next step for publishers is to demonstrate to their ad clients that this added engagement translates into benefits for marketers. Does added hang time at a site simply mean that a publisher serves more ads or develops marketing programs that leverage this deeper relationship with users? You can’t just change the metric and expect it to make sense to advertisers. You have to offer a new model as well. 

Posted under Michael's Blog