The Self-Media Decade

November 18, 2009

We’re almost at the end of the first decade of the 21st century (yes, it went by really fast!) and it’s probably time to reflect on what characterized the last ten years. Each decade gets its own descriptive “brand” and this one won’t be different. The seventies were all about “the peak of hippie culture“, social change and related values. The eighties were all about the individual, economic liberalization and some would say money and greed but it also saw the end of the Cold War. The beginning of the 90’s was very nihilistic with the grunge movement but finished on a high note with the start of a long period of economic growth, an amazing era of technology innovation and the dotcom boom.

So, what defined the 2000’s? We obviously could talk about September 11, the dotcom bust and the recent worldwide financial crisis but those are punctual events. They definitely influenced the zeitgeist but they are not the zeitgeist. I believe the decade that’s ending was all about “me” and the extreme democratization of media. I call it “The Self-Media Decade”.

It all started with the reality television phenomenon in 2000. Survivor, the famous TV show, ignited the genre and there’s been no looking back since then. Every time you watch television today, you see “real” people in “real” situations. In parallel to that, blogging and blog platforms arrived on the market (LiveJournal in March 1999 and blogger.com in August 1999). Throughout the decade, millions of people took up blogging. Some blogs became a real alternative to newspapers and magazines, journalists started blogging and the line with mainstream media started blurring. In the newspaper industry also, Craigslist democratized classifieds, allowing anyone to post a classified ad online for free. Their first real expansion out of the San Francisco market happened in 2000.

Another parallel was the arrival of Napster, also in 1999. By enabling downloads of individual songs, Napster was allowing everyone to become their own radio programmer (or CD mixer). Why listen to radio (or buy packaged music CDs) when you can just download your favorite songs and get instant gratification. We all knew at the time that television and movie distribution would be impacted in the coming years. Tivo became a phenomenon in itself and created the personal video recorder product category. No need to sit down at a fixed date and time to watch a television show. Can you guess when Tivo launched? Yup, 1999.

On the shopping side, the birth of Epinions (again in 1999) was the first signal of the important role consumers would play regarding merchant and product recommendations via user reviews. Up until then, directory publishers were pretty much the sole gatekeepers in a very advertiser-focused world.

With the introduction of these new sites and tools, the only thing missing was a solid broadcast ecosystem. Facebook (and later Twitter) created those much needed amplifiers starting mid-decade. By building your social graph, you’re creating your own media network. I quickly clued in to this when I wrote my “Robert Scoble is Media” blog post. We were all becoming media (production and broadcast) including myself.

I’m actually a good case study of the power of social media tools. Up until I started blogging in 2006, I had an excellent professional reputation but in a very small circle of industry colleagues and peers. By blogging extensively since then and by using broadcast mechanisms provided by sites like Facebook, Twitter and LinkedIn, my worldwide reputation has grown tremendously. I now have thousands of monthly industry readers on my blog and I’m often invited to speak at conferences. I’ve become an important influencer in the directory publishing industry and I’m amazed at the speed at which it happened.

So, what did we gain as a society? We now have more transparency, democracy and meritocracy. What did we lose? We lost common “experiences” (traditionally focused by media) and we’re not always sure who we can trust out there. There’s a lot more noise. But clearly, we’ve all become media by participating, with everything good and bad that comes with it and this will continue in the next decade.

The Innovator's Dilemma

March 31, 2009

Yesterday, Sophie Cousineau, a business journalist from Montreal’s La Presse, offered her explanation as to why Barack Obama had to fire Rick Wagoner, the CEO of [praized subtype="small" pid="597ce70258167de10a3ead0ceea0179355" type="badge" dynamic="true"] (GM). She talked about some of Wagoner’s past successes but also the fact that he hung on too long to his strategy that centered on SUVs and trucks.

It struck me that with the GM situation, we are facing a perfect example of the innovator’s dilemma. Coined by Clayton M. Christensen in the book of the same name, the innovator’s dilemma is “a theory about how large, outstanding firms can fail “by doing everything right.” The Innovator’s Dilemma, according to Christensen, describes companies whose successes and capabilities can actually become obstacles in the face of changing markets and technologies. ” (source: mit.edu) Christensen also talked about “disruptive technologies”.

In GM’s case, they were so focused on their high-profit margin products (SUVs, trucks, minivans) that they ended up being blindsided when the easy credit required to buy these expensive vehicles evaporated and the price of gas went through the roof.  It also reminded me that sometimes you need to kill your cash cow before someone else does it for you (or said otherwise, it’s better to cannibalize yourself than have someone else do if to you).

Which brings me to traditional media (you knew I was going there, were you?).

Newspapers traditionally have been huge cash-generating vehicles but they now have clearly met disruptive technologies both on the reader and on the advertiser side. Basic news is a commodity and aggregators (like Google News) serve as destination site. On the advertiser front, classifieds revenue has been completely disrupted via the free model (pioneered by [praized subtype="small" pid="c51b8fbbdf9041e28ba547a1644985a2c4" type="badge" dynamic="true"]) and online eyeballs do not monetize as well as print readers. That leaves an industry that’s questioning itself with many people wondering what will happen to it in the future.

Directory publishers have very good profit margins but, for most of them, 80%+ of their revenues still come from the print platform. The good news is there hasn’t been too many disruptive technologies yet but you always have to wonder what will blindside the industry. Social media and mobile should be top of mind IMHO.

TV networks and cable providers are still enjoying a successful ride with broadcast/cable television and are slowly starting to think of a post-broadcast world. Disruption there will clearly come from the ability for viewers to go à-la-carte on the Web (either through legit or pirated channels) and link back to their television set. A startup like Boxee is trying to crack that nut.

What it means: the GM and the newspaper industry examples definitely show us that smart people, doing what feels like the right thing, can lead whole industries to catastrophe. What should media companies do? As Clay Shirky said recently “If the old model is broken, what will work in its place?” The answer is: Nothing will work, but everything might. Now is the time for experiments, lots and lots of experiments, each of which will seem as minor at launch as craigslist did, as Wikipedia did…”

The Innovator's Dilemma

March 31, 2009

Yesterday, Sophie Cousineau, a business journalist from Montreal’s La Presse, offered her explanation as to why Barack Obama had to fire Rick Wagoner, the CEO of [praized subtype="small" pid="597ce70258167de10a3ead0ceea0179355" type="badge" dynamic="true"] (GM). She talked about some of Wagoner’s past successes but also the fact that he hung on too long to his strategy that centered on SUVs and trucks.

It struck me that with the GM situation, we are facing a perfect example of the innovator’s dilemma. Coined by Clayton M. Christensen in the book of the same name, the innovator’s dilemma is “a theory about how large, outstanding firms can fail “by doing everything right.” The Innovator’s Dilemma, according to Christensen, describes companies whose successes and capabilities can actually become obstacles in the face of changing markets and technologies. ” (source: mit.edu) Christensen also talked about “disruptive technologies”.

In GM’s case, they were so focused on their high-profit margin products (SUVs, trucks, minivans) that they ended up being blindsided when the easy credit required to buy these expensive vehicles evaporated and the price of gas went through the roof.  It also reminded me that sometimes you need to kill your cash cow before someone else does it for you (or said otherwise, it’s better to cannibalize yourself than have someone else do if to you).

Which brings me to traditional media (you knew I was going there, were you?).

Newspapers traditionally have been huge cash-generating vehicles but they now have clearly met disruptive technologies both on the reader and on the advertiser side. Basic news is a commodity and aggregators (like Google News) serve as destination site. On the advertiser front, classifieds revenue has been completely disrupted via the free model (pioneered by [praized subtype="small" pid="c51b8fbbdf9041e28ba547a1644985a2c4" type="badge" dynamic="true"]) and online eyeballs do not monetize as well as print readers. That leaves an industry that’s questioning itself with many people wondering what will happen to it in the future.

Directory publishers have very good profit margins but, for most of them, 80%+ of their revenues still come from the print platform. The good news is there hasn’t been too many disruptive technologies yet but you always have to wonder what will blindside the industry. Social media and mobile should be top of mind IMHO.

TV networks and cable providers are still enjoying a successful ride with broadcast/cable television and are slowly starting to think of a post-broadcast world. Disruption there will clearly come from the ability for viewers to go à-la-carte on the Web (either through legit or pirated channels) and link back to their television set. A startup like Boxee is trying to crack that nut.

What it means: the GM and the newspaper industry examples definitely show us that smart people, doing what feels like the right thing, can lead whole industries to catastrophe. What should media companies do? As Clay Shirky said recently “If the old model is broken, what will work in its place?” The answer is: Nothing will work, but everything might. Now is the time for experiments, lots and lots of experiments, each of which will seem as minor at launch as craigslist did, as Wikipedia did…”

Continuing our series on the atomization of content and business models, today I look at the newspaper industry.

First, from the user point of view: online (vs. the print version), it’s much more difficult to find the glue that will make your news container (your URL) stick together. if you have a strong brand (the New York Times, for example), people will navigate directly to your site but readers can now access your content via RSS readers, blog posts and news aggregators like Google News. These have been flourishing, reorganizing newspapers’ articles (the new content atoms), into flexible reading formats. For newspapers, it’s a catch-22. You want to be indexed by news aggregators to drive traffic back to your site but you wonder if you’re losing brand equity at the same time. Efforts at trying to get readers to register to newspapers’ sites (to generate potentially valuable socio-demographics information) have been a major failure. Clearly, the only strategy now is building a strong brand online while allowing readers to access your atomized content via a variety of vehicles but that creates problems from a monetization point of view.

Traditionally, the newspaper business model has been found in these three revenue categories: reader subscriptions, traditional display advertising and classifieds. Except for a few exceptions (the Wall Street Journal comes to mind), experiments in paid online user subscriptions have been failures as digital content is much more difficult to sell as an aggregate than print content. Classified revenues are being nuked by free sites like Craigslist or Kijiji, or aggregators like Oodle. Newspapers have been also forced to offer free classifieds, managing to generate some priority placement /enhanced content revenues but not to the previous print level. Online display advertising is working but it does not monetize as well as print advertising.

To better monetize their destination site, newspapers have been looking at various new solutions. One is in-line text ads (double-underlined sponsored keyword ads appearing directly in the article text) delivered by companies like Vibrant Media but, as I mentioned yesterday, the blurring of the line between editorial and advertising content has created ethical issues within news organizations. Already in 2006, in an article called “Is It News…or Is It an Ad?”, the Wall Street Journal exposed the various issues around the product:

“This type of online advertising within the text of an article, known as in-text advertising, has been around for a while. But it used to be relegated to niche sites like the videogamers’ haven IGN.com and ScienceDaily.com. Now it is appearing on some mainstream journalistic Web sites, like those of News Corp.’s Fox News, Cox Enterprises Inc.’s Atlanta Journal-Constitution and Hearst Corp.’s Popular Mechanics magazine. That marks a departure from a long-observed tradition in the print medium of keeping editorial content separate from advertising. “Journalism ethics counselors decry the trend. “It’s ethically problematic at the least and potentially quite corrosive of journalistic quality and credibility,” says Bob Steele, the senior ethics faculty member at the Poynter Institute, a journalism school in St. Petersburg, Fla.”

More recently, Tim McGuire from the Walter Cronkite School of Journalism in Arizona wrote about its use in the Arizona Central web site:

Michael Coleman, Vice-President of Digital Media for AzCentral, told me late Friday that the site has been using Vibrant Media for “two or three weeks.” Coleman described the relationship as a test and said this is not a “Gannett roll-out” of the concept even though some Gannet papers are using the system. “We’ve got a pretty non-committal contract with them, Coleman said. “The publisher made the call, and we decided to try it and see what happened.” Coleman said the experimental aspect of the deal explains why nobody has announced this deal.

Business Week wrote about the phenomenon in December:

Many journalists believe that selling the words in a story blurs the line between editorial and ad content. Some worry it creates an incentive to insert ad-linked words or order up certain types of stories. Forbes’ online arm caused a ruckus in 2004 when it rolled out in-text ads. After an outcry among the editorial staff and negative media coverage, Forbes ended the practice. (…)

Publishers are paid by Vibrant and other marketing companies based on how many times readers scroll over a word. Advertisers only pay Vibrant for how many times a reader actually clicks on an ad. In-text ads draw a higher response than traditional Web ads: About 0.2% of Web users click on posterlike ads known as banners; Vibrant CEO Douglas Stevenson says 3% to 10% scroll over and click on in-text ads, depending on the category.

I think the use of in-line text ads might be problematic thus far because newspapers have been using the technology to better monetize their destination site. I would suggest that the better use of this new ad vehicle would be to monetize a smaller atom of content, i.e. the news article, decentralized from the destination site. Embedding in-line text ads within RSS feeds or other distribution mechanisms might be a small price to pay to allow readers to access news article outside of the newspaper’s site. Another option would be to have RSS ads, like the Feedburner Ad Network.

I think the general takeaway here is that newspapers shouldn’t look at the same business models to monetize centralized and atomized content.

Update: The Kelsey Group discussesNewspaper Next 2.0, a “progress report” by the American Press Institute on the evolution of newspaper companies beyond the print edition.” I took a quick glance at it (it’s a 110-page document) but it does not seem to address many of the business model issues that newspapers are facing. As my friend Peter K. says in the post, “The report has a better fix on consumer-oriented solutions than business solutions. But that’s not surprising for a newspaper industry (i.e. editorial-driven) product. If the Yellow Pages Association commissioned similar research, it would probably be the other way around.”

“My exit strategy is death”

Craig Newmark, talking at the Google Local Markets Symposium, when asked if he was thinking of selling his craigslist business eventually.

(via SpringWise)

What do you get when you cross online classified ads with web-based video? Realpeoplerealstuff.com is equal parts Craigslist and YouTube—a whole new way for customers to reach out to one another to sell their used appliances, automobiles, collectibles, concert tickets and countless other goods and services. “Realpeoplerealstuff.com combines the hottest internet trends in one, easy-to-use site: e-commerce, snarky writing, funny videos, everyone’s desire to be a star and video sharing.”

realpeoplerealstuff Video Classifieds

With a few clicks of a mouse, customers can upload their own video commercials, recorded on their camcorders, webcams, digital cameras or cameraphones. Ads are organized by category and location, and users can enter text descriptions, prices, thumbnail photos and tags along with their video clips. For best results, users are encouraged to engage their personality, creativity and sense of humour when filming their commercials. And who knows? One may well turn out to be the next average Joe or Jane launched into internet stardom. The service is entirely free—for now at least, though there may come a day when, like Craigslist, modest charges apply to select portions.

What it means: I really like the concept as I’m very visual. But I wonder about the quantity of energy needed to produce a video vs. taking a simple picture, even if there are many video-capture devices out there. I remember when I started selling stuff on eBay in 2002. There used to be some barrier to entry if you wanted to post a product picture. Then, eBay introduced one of their coolest seller function: the UPC code product finder. When listing a product in some categories (like videogames), you just need to enter the product’s UPC code to instantly get the default image attached to the product, usually a cover shot. By removing friction, eBay got me to post more stuff for sale. I think Realpeoplerealstuff.com will have to think about how they can remove some of that friction.

I also think that classified advertising is all about local. Right now, local seems to be a second thought to the whole site. They need to embrace local much more to eventually be successful. There’s also a chicken & egg problem with local content. You need local content to make your site relevant to local users. I think Realpeoplerealstuff.com should be looking at doing backfill content deals (maybe with Oodle.com) to improve their local content breadth and depth.

“This is a time of creative destruction, (…) I do have a great deal of sympathy with the people who run printing presses because I think they’re screwed. … The people who do news and the people who fact check it have great futures ahead of them.”

Craig Newmark (from Craigslist fame) when asked “Does he feel any guilt for being what some call a newspaper killer?”. He was being interviewed by Charlie Rose at the NAA National Convention (reported by PaidContent.org)

Meta-Praized is a collection of links & stories we’ve “dugg” on Digg.com in the last 7 days. Feel free to add us as a friend: PraizedDotCom .

Meta-Praized is a collection of links & stories we’ve “dugg” on Digg.com in the last 7 days. Feel free to add us as a friend: PraizedDotCom .

craigslist_logo.jpgMediaPost reports on a speech Craigslist CEO Jim Buckmaster gave to the investment community at UBS’ 34th Annual Global Media & Communications Conference in New York.

According to the article, it was a “culture clash of near-epic proportions”. When an UBS analyst asked him “How does the site plan to maximize revenue? “, Buckmaster replied “That definitely is not part of the equation. It’s not part of the goal.”

“Buckmaster insisted that the company doesn’t especially want to make money. While it charges for job listings in seven cities ($75 in San Francisco, $25 in the other six) and apartment listings by brokers in New York ($10), those charges aren’t to make a profit as much as to cover expenses and keep out scammers, Buckmaster said. He added that some users requested the fees, in hopes of keeping the listings legitimate.” When asked: “How did the site arrive at $10 for real estate listings”, he responded “Ten dollars sounded like a nice round number”.

He was also asked questions about how the site could make more money, more specifically with text ads from Google. He said they had been approached, that the numbers had been crunched for them and that this number was quite staggering but, no, the site wasn’t interested. “No users have been requesting that we run text ads, so for us, that’s the end of the story. If users start calling out for text ads, we’ll listen.”

The ZDNet blog has more excerpts from his speech: “When asked why Craigslist wouldn’t use eBay technologies such as PayPal (eBay owns 25% of Craigslist), Buckmaster says users haven’t clamored for it. “eBay has fantastic technology but the key difference is that 90 percent of eBay transactions are over a long distance,” says Buckmaster. “Ninety-five percent of our transactions are between people that live near each other. It’s wonderful as a technology but not relevant to what we do.”

According to a joint UBS & Comscore report discussed on John Battelle’s blog, Craigslist was #8 in the US in terms of page views, #6 in terms of Average Minutes Per Day Per Visitor and 3# in terms of Average Pages Per Day Per Visitor.

Update: Mathew Ingram tries to calculate how much Craigslist is worth: “Craigslist currently gets a mind-blowing 5 billion page views or so a month. A premier site like Craigslist — and one that is focused on classified advertising, which is inherently purchasing-type behaviour — would likely command a fairly high CPM rate for ads. Let’s say theoretically it was $10 per thousand. That would bring in $50-million a month (StartupBoy says Craigslist is worth more than eBay, and he doesn’t even include ads).”

What it means: As his bio says, Jim Buckmaster is possibly the “only CEO ever accused of being anti-establishment, a communist, and a socialistic anarchist:-). But kidding aside, if you’re in the same space as Craigslist, what do you do with a competitor that does not play by “your rules”? Do you use the same strategy that you’re using with other “typical” competitors or do you have to play by “their rules”. I think this is yet another example of a company that has always been user-focused and has drastically succeeded like Google. And I think you have no choice but to follow their lead and improve on what they are doing.

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