The Whole Gestalt: EconSM, Stanford…

17May09

There was so much news coming out of EconSM last week, from a Twitter M&E hire to Pandora’s numbers to the real reason for the TV.com/Hulu fallout, as well as a net metering update from Stanford Legal Frontiers, TiECon winners (GetJar, PlaySpan..), Cannes, Clios, and more….

#EconSM
We’ll start with EconSM which was a non-stop stream of social mobile consciousness. Onstage, behind the speakers was a floor to ceiling tweet board that became a focal point as a heckler was booed off.  Pretty juvenile considering the maturity of the crowd, but since tweeting is social mobile, the speakers were completely unfazed.  *IMHO, Twitter is the best thing that’s ever happened to public speaking.  The Twitterati speak to a global audience and the tweet board, despite the distraction, creates transparency that counters bad behavior of anonymity.  Tweeting makes the event more fun, more alive, more interactive, more participatory.  It creates eyewitness accounts, real-time reactions, and is what forum is all about.  So kudos to ContentNext Media, the show’s producers, for the tweet board and putting conversation first. The video is up at www.paidcontent.org/video , Mark Glaser of PBS MediaShift’s post is here and below is our take on what was said:

Content Ecosystem
TV.com app which just launched, already has 1mm+ downloads, CBSi standalone unit, $600mm ad revenue, $80mm profit, 10mm mobile and profitable, iTunes Californication, Dexter bestsellers, mobile not ad driven, lead generation with carriers
– Hulu/TV.com won’t happen with equity investment or exclusivity, not part of CBS DNA, CBS audience network has 300+ non-exclusive partnerships, radio generates lots of original IP like John Lennon’s last interview, very effective at merchandising and promotion on its own.  Editor’s note:  TV.com prevents Hulu from becoming the only gatekeeper  of the pipeline, competition from TV.com allows more premium content to flow into the marketplace. On the same note, kudos goes to Disney for investing in Hulu.   There is a quid pro quo with regards to branding a channel.  Trying to get away with free is short-sighted.  Zeroing out the marketing budget = no industry ad revenue = death to ad-based online video distribution from Hulu, TV.com, Joost, Crackle, Veoh, MySpaceVideo, DM, Metacafe … Instead content providers should contribute to their channel revenue, and in return the sites should offer CPC for banner ads, so that value is realized for the ad spend.  This give and take grows the content ecosystems and is what content partnering is about.

Twitter:  Monetizing Business Tools, Search
– Kevin Thau:  Twitter is a rocketship we were painting when it blasted off, living in a fishbowl with demand and media attention, web, API, SMS = 17mm uniques more than NYT, WSJ, API traffic is 2x that of web, goal is to make Twitter ubiquitous, carriers to integrate Twitter on native device, Twitter will make money by selling business tools and monetizing search, consumers will stay free, happy to have a vibrant third party community making money off Twitter platfom like the Tweetie app, Kogi BBQ tweets the location of the Korean Taco truck and crowds turn up, City Bakery announces when cookies are fresh out of the oven.  Since Thau joined months ago already sold 10-12 agreements, focusing on addressing Twitter quitters by demystifying Twitter to the newbie, improving first time user experience to improve retention, got a great start due to Obama’s social media campaign, Twitter is what you make of it, some use it just to consume news, stay tuned for Twitter shows, just hired an M&E director, will be splitting ad revenue on MTV/FB/Twitter – Alexa Chung ShowNightline/Twitter, Thau likes Zynga, FourSquare, Twitter now has 45 employees
– Twitter changing consumer behavior, who would have thought we’d be documenting our lives so frequently at such levels of banality
– 99% tweeted is useless to all but the tweeter, so its entertainment til something happens and then its news and Twitter search is the zeitgeist
– Attention economy follows interest, as excitement fatigue sets in, sustainable utility takes over, Twitter will need to cross the chasm
– Bambi Francisco, Vator.tv conducted a great interview with Ron Conway, the angel investor with the midas touch, investor of every major SV hit, including now:  Twitter, attributes his success to investing in great teams, reading the entrepreneur, does s/he have passion to ride it out when idea morphs, do they have a clear vision 5 years out, Mark Zuckerberg when he was at 8mm knew he’d be at 250mm users 5 years out and could explain how and why eventhough it was unchartered ground…biggest surprise was Digg, worst mistake was passing on Salesforce.com, thought valuation was too high, on Twitter, Conway talked about Jason Calacanis’s valuation that in 5 years one of Twitter’s top 20 spots will be worth $1mm…Twitter an opportunity to create brand direct content, celebrities now can go direct and control the conversation instead of their agencies, look at Kevin Spacey on Leno, couldn’t stop raving about Twitter, and Twitter is not for sale, its going to be the next Google in the persistent data arena  (Facebook 250mm users = $8B+, Twitter 37mm users = $700mm+, Conway in both, neither for sale.)  See M&A market heating up 6 months, Digg, FB could be IPO in a year, Napster could have been iTunes if it hadn’t been for mistakes, timing, lawyers, total disaster, also gave Apple and the apps ecosystem a shout out, Apple’s a buy, new Palm could be disruptive, its still early days.

All About Apps
Tricia Duryee, MocoNews summed up the app store offerings as follows:  BB is a boutique, picky and the prices are higher, Android is a thrift store, huge selection, affordable, never know what you’ll get picking through the bargain bins, and iTunes, well iTunes is just right, took he friction out for the consumer, ease of development and distribution, power of a great platform, Apple rumored to have made only $20mm – $45mm in the Apps Store the first 9 months.  Tricia also talked about Push coming to 3.0, right now it’s always sunny in Cupertino, the icon never changes but with Push, as you approach San Francisco, you should get a San Francisco icon … is that right 🙂
– Then there’s GetJar, with 10mm users, 35mm downloads, the world’s largest independant app store which includes iPhone apps that didn’t get the thumbs up from Apple, wth GetJar auction developers can pay for visibility, GetJar was just named the TiECon 50
– Top iPhone app means that you’ve reached 20% of all iPhone users, but just 1% of all global mobile users
Pandora experiencing hyper-growth, doubling listeners annually, 32mm = 27mm web, 5mm iPhone, 1mm BB, TSL time spent listening, 3h web, 1h40m iPhone, listener interacts 6x/h, iPhone demo 15-45 core skews younger, more male, early adopters, not many audio ads, 15s at most, subscription yes, most free, statutory license allows only 6 skips/h,
$.07 – $.08 earned per listener per hour (traditional radio), $.03 per listener per hour (proposed 2010 statutory rates), 42% performance royalty too high, rationale resolution expected soon, 500,000 listeners/day listen to 100mm  tracks (20,833 x .$.08 x 24 x 365 = $14.6mm), $20mm 2008 revenue, now at scale advertisers seek, $1mm in music/month, 20% songs from iPhone, small part of business, 200,000m x $.05 iTunes affiliate fee = $10,000m (by contrast, Netflix affiliate payment of $9), 400,000 listen/day to 100mm tracks/day, not impressed with Android first phone, mini-USB, no audio jack, most important thing for Pandora is to create a great user experience, Palm Pre hero device, newer Android devices, Pandora is only in US so not considering Nokia and Vodafone devices now, 25% in car working with automakers
– Wolfgang’s Vault owns the master recordings of Bill Graham productions and most of the legendary concerts except Dillon.  Recently bought the Newport Jazz & Folk Fest.  Wolfgang app has 250,000 downloads, with nichy content and ad messaging, TSL 1 hour daily, app is driving traffic to website for merchandising play, shake app for concert
– Mobile is a media channel like TV, newspapers, consumers want it free, carriers can no longer charge for basic apps
– Friend finder, location awareness brings money to the network, geotracking is the next trend as concerns for privacy fall by the wayside, where’s my kid app $10
– LBS location based services will soon have contextual presence, place, availability, can’t go for a coffee even if onstage  even if nearby
– Carriers favorite apps:  soon everyone will be a broadcaster with Qik videorecording app, other cool apps iScout, Shazam Rocket Mobile for Vcast, Blackberry augmented reality apps constellation overlay
– Verizon is working with Blackberry, Samsung, LG, Motorola to make it easier for developers to access Verizon’s 86mm subscribers
– BB was stagnant 2001-8, pick up in 2008 with apps store
– iTunes has it right with the 30/70 split vs Amazon’s 70/30 split
– on subscription, some would rather pay $2/day than $3/month
– a one-time download is not a business model
– Ovi store operator billing in 8 countries is exciting, will offer located based services
– early adopters leave first when cool goes mainstream
– The phone is the original social network
– Glu 3.0 games will be ubiquitous across all platforms
– GetJar, Handango apps stores
– Zannel fancasting – microblogging artist on tours, exclusive content
– Yahoo! answers to 10mm questions

Facebook, MySpace
– Social mobile vs. FB – realtime messaging response expectation is different, wouldn’t use FB to make plans when out, worldwide 3B mobile devices, 1B PCs worldwide, half on web, can’t focus on just one platform, need both web and mobile, most kids not on smart phones with apps but free phones
– MySpace had initial success with paid service on ATT, now its free and some are still paying because they don’t know its now free, MySpace mobile will soon eclipse the web
– Sprint baking FB, MySpace into Samsung Lucello standard UI

Mobile Advertising
Mobile CPMs $0.25, a fraction of web CPMs, gap is huge, but more conversion to merchandisable events, google knows if youre standing in front of the tv in store while researching it, might research on mobile but buy on desktop, Ad Mob doesn’t run SMS ads, mobile should be part of a larger media mix:  conversion, reach, branding, brands highly monetizable mobile event
– Charmin sit or squat mobile app – 1500 downloads – a success?
– watching how many installs for every ad $ spent, access 15mm iPhone users month, if 5% downloads installs, then 20x seeing it, run rate 2.5mm download enough, CTR is not the conversion rate, click to talk campaign, opt-in for live phone call, now can pay Ad Mob to get Twitter followers
– Brands advertising on mobile – Ford, LandRover, Jaguar, Kraft, Charmin, Cover Girl, Target, Best Buy, Adidas, Nike, Subway, DeVry, Red Bull, Becks, Dockers, Warner Bros, McDonalds, Dove, Fox, Dominos (click to order pizza)


IPOs, M&As, Monetization, Profitability
– Media acquisitions that brought on massive shareholder destruction – CBS/Last.fm (although Last.fm recenty had a significant uptake with users, now focusing on premium content, coop with artists/labels, and UGC), AOL/Bebo (paid $900mm, now shopping $200mm, no takers), Yahoo Geocities paid $5B, now that’s Yahoos entire market cap, Time Warner/AOL, fire sale buyouts are best current exit strategy
– OpenTable will be a test of current IPO market
– No VC money for feature set environment, the days of views x CPM is over,ad op vs. performance op, build audience for engagement, lead generation, coupons, concerts, microtransactions, search
– Web ad model doesn’t scale, 200mm not profitable, just grows marketshare
– Down economy cause shakeout, forces discipline, do more with less people
– The idea of growing a 1-2 person company at no cost of acquisition with viral model aspects, here a zero marketing budget makes sense, when a company is little, don’t know what a customer is worth for ad spend, do know that every click in the purchase process is an opportunity to walk away
– no more brand destination websites, now brand + delivery

Stanford Legal Frontiers in Digital Media
In contrast to EconSM’s tweet board, the Stanford Legal Frontiers in Digital Media didn’t even have a hashtag.  Lawyers, by nature, don’t record as candor comes at a cost.  But these days everything said can be assumed to be tweeted, and if good, retweeted.  Big Brother is here, and we are him. Although not videotaped, Stanford welcomed the press, the audience was packed with major media counsel and valuable, detailed information was imparted and there was great food for thought.  Check out this Venture Beat article on the Disney / SquareEnix Virtual Worlds Law panel at venturebeat.com/2009/05/16/sofa-king-rude-real-world-laws-intrude-on-virtual-world-behavior/ and here are my notes from the first half of the second day:

Net Metering
Net metering addresses the amount of control a pipe owner exerts over the pipe.  In 2005 when there was basically just text and email, the FCC came up with non-enforceable principles which allows ISPs reasonable network management.  But in the ISPs recent attempts to manage data flow traffic of P2P, voice, video, and games to avoid bandwidth connectivity delays, discrimination lawsuits have sprung up.   Now consumption-based billing is being banted about.  Verizon FiOS offers 5 tier pricing for rational broadband allocation.  Time Warner Cable is offering overages caps at $75.  The debate rages on as industry tries to resolves this before government weighs in with regulation.

Spectrum Allocation
As the FCC begins licensing white spaces for WiFi and other uses, broadcasters are concerned about the potential interference with the viewing experience.  Maureen O’Connell had the audience laughing pretty hard when she illustrated the worst case scenario.  Its the season finale of 24 and everytime someone drives by outside on their cell your screen go black -not too cool.  Obama stimulus package has $70B allocated to braodband $2.5B for rural broadband, and there is now lots of swirl in DC on how to take advantage with comments due this summer for National Broadband Plan. Verizon bent on fiber optical FiOS but not everywhere, very expensive digging up street, 18-20% footprint, ATT’s last leg is still twisted copper.

Fleeting Expletives
Different standards apply for tv vs web, which like cable you invite into your home.  Eventhough most consumers no longer distinguish between braodcast and cable, the laws remain different.  Fox got hit with fines for Cher and Nicole Ritchie’s fleeting expletives at the Billboard awards and Married by America’s tacky but not illegally indecent simulations.

Behavioral Advertising
FTC Chariman Jon Leibowitz introducing sweeping privacy legislation to draw parameters for data collection across all platforms, best practices, transparency, consistency.

TOS – Shrinkwrap Enforceable
Read the TOS – click!   Picture this, you’re in your doctor’s office thumbing through a Yahoo or Facebook coffee table book, A Day in the Life, when you stumble upon your baby pictures, or worse.  Can the TOS make you waive your right of publicity claim, can they assert broad rights over your uploads, can they include language that allows malicious downloads?

UGC/DMCA
– YouTube has a content filtering program that enables rightsholders to identify their works and opt for monetizing it or taking it down.  The uploader has a right to counternotice for fair use but must be willing to be sued for nuisance claim. Luckily, thanks to Mitch Kapor, visionary extraordinaire, the EFF exists to even out the playing field.
– The DMCA safe harbor provision is layered upon underlying liabilities, and thus is optional.  YouTube acts immediately upon counternotice instead of taking the the stipulated 10-14 waiting period.  Lets the rightsowner step in for the grey areas.  Case in point, BGT has 3 producers and 1 distributor of the Susan Boyle videos and was unable to resolve rightsowndership prior to the video going virla and lost out on nearly $2mm in potential rev-share for the 100mm+ views.
– UGC is looking more premium everyday, people more practiced, resembles the early days of the Mac with desktop publishing, growing quality of original content now looking like indie filmmakers.  Fred von Lohmann was on the scene (sans ponytail) urging the audience to check out the 40 minute prequel to LOTR, created by 150 fans: http://www.thehuntforgollum.com
– If a company proactively monitors for pirated goods on eBay, do they assume some duty, is tagging vs auto-blocking a better way to monitor, there needs to be more consumer education on why its not ok to sell iPod full of music.

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One Response to “The Whole Gestalt: EconSM, Stanford…”

  1. Perfect!


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