Pandora Trying to Get Local Ad Dollars

In the New York Times yesterday, we learn about the new “local” strategy for Pandora, the music streaming service.

Pandora’s pitch to advertisers is that its technology can cater to consumers with far greater precision than radio — it can pinpoint listeners by age and sex, ZIP code or even musical taste — and that as it grows, Pandora will effectively be the top station in many cities.

This year, Pandora has had 400 local advertising campaigns across the country. One new client was Planet Honda in Union, N.J., whose president, William Feinstein, said he gave up on terrestrial radio years ago because he felt it cast too wide and expensive a demographic net.

viaPandora Courts Local Advertisers by Reaching a Narrow Audience – NYTimes.com.

What it means: as radio gets atomized (i.e. the atom is now the song), the future of this media goes through mass customization (or mass personalization), this ability to listen to the music you like whenever you feel like it. Pandora provides consumers with that experience. In today’s world, that’s probably a better experience for consumers and it puts Pandora directly against local radio stations and ad dollars. Four hundreds local campaigns is still a very small number but it shows the potential. As always, the challenge will be getting these ad dollars through a local sales force. Expect radio companies to eventually start reselling Pandora ads as part of their Internet package.

Complex Business Models Collapse Because it's the Last Remaining Method of Simplification

When the value of complexity turns negative, a society plagued by an inability to react remains as complex as ever, right up to the moment where it becomes suddenly and dramatically simpler, which is to say right up to the moment of collapse. Collapse is simply the last remaining method of simplification.

via The Collapse of Complex Business Models « Clay Shirky.

What it means: must-read for anyone working in a traditional media company today.

Complex Business Models Collapse Because it's the Last Remaining Method of Simplification

When the value of complexity turns negative, a society plagued by an inability to react remains as complex as ever, right up to the moment where it becomes suddenly and dramatically simpler, which is to say right up to the moment of collapse. Collapse is simply the last remaining method of simplification.

via The Collapse of Complex Business Models « Clay Shirky.

What it means: must-read for anyone working in a traditional media company today.

On the Verge of Another Local Media Industry Shift?

For every kid that I bump into who is wandering the media industry looking for an entrance that closed some time ago, I come across another who is a bundle of ideas, energy and technological mastery. The next wave is not just knocking on doors, but seeking to knock them down.

Somewhere down in the Flatiron, out in Brooklyn, over in Queens or up in Harlem, cabals of bright young things are watching all the disruption with more than an academic interest. Their tiny netbooks and iPhones, which serve as portals to the cloud, contain more informational firepower than entire newsrooms possessed just two decades ago. And they are ginning content from their audiences in the form of social media or finding ways of making ambient information more useful. They are jaded in the way youth requires, but have the confidence that is a gift of their age as well.

via The Media Equation – For Media, a Sunset Is Followed Quickly by a Sunrise – NYTimes.com.

What it means: David Carr describes what happens to an industry (newspaper, magazine, book publishing in this case) when it waits too long to change and innovate. Reading this, I can’t help but think of my recent blog post on Niklas Zennstrom and Janus Friis (founders of Kazaa, Skype and Joost) who chose to work against and with media.  These two paragraphs also makes me think of the vibrant energy felt in the Web industry circa 1997-1999.  It also reminds me of this article Kevin Kelly wrote post- dotcom bust, when everyone in the digerati was licking their wounds.  Let’s not forget the Dotcom bust lead to what we call today Web 2.0 and the rise of social networking.

You know what? It’s all intuition at this point, so I can’t back this up with data, but we’re probably on the verge of another major shift in local media. The year of mobile is happening right now. Location is the hottest topic amongst techies.  The Kelsey Group invites people to attend ILM ’09 conference (you should!) by saying “Get Ready for the Post Recovery Digital Shift”. I think they’re right. Expect investments in disruptive local technology and startups to pick up once again next year and traditional media companies need to be ready for this new game.

Update: don’t believe that VC investments are coming back? Read this post written today on the True Ventures corporate blog. Excerpt: “Over the past few weeks we’ve seen extremely high activity in new venture investments. Starting in September, we witnessed the return of multiple term sheet deals, short fuse situations, and a renewed urgency to most fund-raisings. (…) Venture is back. And it’s back because of one word: exits.”

Did Joost Fail Because They Wanted to Work With Traditional Media Companies?

Seeing Niklas Zennstrom’s name on LeWeb’s list of speakers along with the news that Joost’s assets were being acquired by Adconion Media Group got me thinking about the dynamics of that specific startup. Joost was founded in 2006 to build a online video portal with the core idea that legal video streaming would be more efficient if it was built on peer-to-peer technology. The company signed content licensing agreements with major media companies, they had major funding ($45M), 150 software developers and experienced founders/entrepreneurs (Zennstrom and Janus Friis) who had had major successes with Kazaa and Skype. It seemed they would be successful once again.

It didn’t happen. Why? CNET explains that their technology choice of a downloadable application certainly impaired their chance of success. The arrival of Hulu, a big hit with users, also didn’t help  but I was specifically struck by this other reason: “Some of the big-name content partners seemed to be putting in a halfhearted effort with Joost, offering up reruns and esoteric programs instead of the new programming that people actually wanted to watch”. Hmmm…

Think about Kazaa and Skype. What did Zennstrom and Friis successfully achieve with these new initiatives? They directly attacked major players in large mature markets using industry weak points. Kazaa was an assault on the music industry, Skype took on telcos. They didn’t say “let’s work with these guys”. They just did it and leveraged the fact that these two industries were very profitable and slow to innovate. They foresaw the disruptive impact of technology and created a lot of value for their shareholders. Venture capital firms usually love these startups. When they created Joost, they changed their entrepreneur paradigm and it failed. Zennstrom and Friis’ new startup Rdio is in the online music space and it looks like they’re going to be working with the music industry. Will it impair their chance of success or has the music industry matured enough in the last 10 years to embrace innovation?

It got me thinking about newspapers, directory publishers, the movie industry, radio, magazines, and other traditional media companies. At one point or another, all these industries (who generate or used to generate fat profit margins) fought technology and we’re slow to innovate. I think it’s getting better (still not fast enough in my own opinion) but I was reminded it is still very slow in Canada by this blog post (in French) written by Yannick Manuri. He says that 40% of all online advertising spent in the country benefited foreign media companies and anecdotally he doesn’t see the sense of urgency in Canadian media companies. It’s a reality in other countries as well.

Why do we need industry disruptors to stimulate innovation in media? Couldn’t it happen by itself?

Of Hub and Spokes: Why The Next Great Media Company Won't Have a Web Site

Conceivably the next great media company will be all spokes and no hub. It will exist as a constellation of connected apps and widgets that live inside other sites and offer a full experience plus access to your social graph and robust community features.

via The Next Great Media Company Won’t Have a Web Site – The Steve Rubel Lifestream.

What it means: Brilliant quote from Steve Rubel. He hits that one right out of the park.  He understands that content and features want to be atomized (or de-portalized) and that has a major impact on the way media companies operate online.  This is the main reason why we built our Praized platform on a hub & spoke API model, where activities are happening at the edge and aggregated at the hub level. And when you add the social graph on top of those spokes, you get local verticals + friends, probably the most relevant experience possible.

Of Hub and Spokes: Why The Next Great Media Company Won't Have a Web Site

Conceivably the next great media company will be all spokes and no hub. It will exist as a constellation of connected apps and widgets that live inside other sites and offer a full experience plus access to your social graph and robust community features.

via The Next Great Media Company Won’t Have a Web Site – The Steve Rubel Lifestream.

What it means: Brilliant quote from Steve Rubel. He hits that one right out of the park.  He understands that content and features want to be atomized (or de-portalized) and that has a major impact on the way media companies operate online.  This is the main reason why we built our Praized platform on a hub & spoke API model, where activities are happening at the edge and aggregated at the hub level. And when you add the social graph on top of those spokes, you get local verticals + friends, probably the most relevant experience possible.

Morgan Stanley: "Teenagers Don't Use Business Directories". Nothing New Except…

Morgan Stanley, the US research firm, released a report this week titled “How Teenagers Consume Media“. Written by a 15 year-old summer intern, the document explains what is relevant and what is not in today’s media/technology world from a teenager’s point of view.

Highlights:  

On newspapers: “No teenager that I know of regularly reads a newspaper, as most do not have the time and cannot be bothered to read pages and pages of text while they could watch the news summarised on the internet or on TV. ”  The intern adds that most of his friends do read the free newspapers like Metro.

On radio: “Most teenagers nowadays are not regular listeners to radio. ” They listen to online radio though.

On social networking: ” Most teenagers are heavily active on a combination of social networking sites. Facebook is the most common, with nearly everyone with an internet connection registered and visiting >4 times a week. Facebook is popular as one can interact with friends on a wide scale. On the other hand, teenagers do not use twitter.”

On directories: ” Directories Teenagers never use real directories (hard copy catalogues such as yellow pages). This is because real directories contain listings for builders and florists, which are services that teenagers do not require. They also do not use services such as 118 118 because it is quite expensive and they can get the information for free on the internet, simply by typing it into Google. “

On mobile phones: ” Mobile Phones 99% of teenagers have a mobile phone and most are quite capable phones. “

What it means: more anectodal than data-driven evidence, this report nonetheless confirms many things we take for granted now but it still holds a few surprises. The observation that teenagers don’t listen to radio regularly is, to a certain extent, a surprise to me. Radio used to play a very important social role when I was young but this might explain why we hear so much ’80s music on commercial radio these days. The industry don’t cater to youngsters. They’re trying to hold on to listeners from 20 years ago. A bit of a surprise on the cold reaction to Twitter as well but then again, they’re not prepared to build a second social graph after having spent so much time building one on Facebook.

On the other side, I’m not surprised at all by newspapers and business directories usage. I suspect very little teenagers (except for me!) used to read print newspapers in the past and Yellow Pages usage is usually driven by life events, most of them happening after you leave your parent’s house. So, no surprise there. I think what should concern directory publishers is two-fold. First, teenagers think that Google will provide them with the answers Yellow Pages used to provide to their parents on business searches. So, in effect, as Seth Godin said, “Google is the Yellow Pages”. Second, because they’re heavy users of Facebook, teenagers now bring their network of friends (their social graph) along with them wherever they go (including with their mobile device). That proximity enables easy word-of-mouth recommendations. So, what does that mean for publishers? It means they need to embed themselves wherever these kids will go for references as you might not be able to convince them to use your core web site.

Morgan Stanley: "Teenagers Don't Use Business Directories". Nothing New Except…

Morgan Stanley, the US research firm, released a report this week titled “How Teenagers Consume Media“. Written by a 15 year-old summer intern, the document explains what is relevant and what is not in today’s media/technology world from a teenager’s point of view.

Highlights:  

On newspapers: “No teenager that I know of regularly reads a newspaper, as most do not have the time and cannot be bothered to read pages and pages of text while they could watch the news summarised on the internet or on TV. ”  The intern adds that most of his friends do read the free newspapers like Metro.

On radio: “Most teenagers nowadays are not regular listeners to radio. ” They listen to online radio though.

On social networking: ” Most teenagers are heavily active on a combination of social networking sites. Facebook is the most common, with nearly everyone with an internet connection registered and visiting >4 times a week. Facebook is popular as one can interact with friends on a wide scale. On the other hand, teenagers do not use twitter.”

On directories: ” Directories Teenagers never use real directories (hard copy catalogues such as yellow pages). This is because real directories contain listings for builders and florists, which are services that teenagers do not require. They also do not use services such as 118 118 because it is quite expensive and they can get the information for free on the internet, simply by typing it into Google. “

On mobile phones: ” Mobile Phones 99% of teenagers have a mobile phone and most are quite capable phones. “

What it means: more anectodal than data-driven evidence, this report nonetheless confirms many things we take for granted now but it still holds a few surprises. The observation that teenagers don’t listen to radio regularly is, to a certain extent, a surprise to me. Radio used to play a very important social role when I was young but this might explain why we hear so much ’80s music on commercial radio these days. The industry don’t cater to youngsters. They’re trying to hold on to listeners from 20 years ago. A bit of a surprise on the cold reaction to Twitter as well but then again, they’re not prepared to build a second social graph after having spent so much time building one on Facebook.

On the other side, I’m not surprised at all by newspapers and business directories usage. I suspect very little teenagers (except for me!) used to read print newspapers in the past and Yellow Pages usage is usually driven by life events, most of them happening after you leave your parent’s house. So, no surprise there. I think what should concern directory publishers is two-fold. First, teenagers think that Google will provide them with the answers Yellow Pages used to provide to their parents on business searches. So, in effect, as Seth Godin said, “Google is the Yellow Pages”. Second, because they’re heavy users of Facebook, teenagers now bring their network of friends (their social graph) along with them wherever they go (including with their mobile device). That proximity enables easy word-of-mouth recommendations. So, what does that mean for publishers? It means they need to embed themselves wherever these kids will go for references as you might not be able to convince them to use your core web site.

Yelp's Monetization Strategy

Big fracas in the local social media space today with the publication of a long anti-[praized subtype=”small” pid=”ef0b9b94446693e82f569cf40375566a” type=”badge” dynamic=”true”] article, “Yelp and the Business of Extortion 2.0”, in the East Bay Express. Jeremy Stoppelman, Yelp’s CEO, has many issue with the article and answers on the company blog. You can read Greg Sterling’s analysis on the whole situation here.

What I found interesting in the East Bay Express article is the description of the package Yelp is selling to small merchants.  According to an e-mail sales pitch that was forwarded to the journalist, advertisers receive the following:

  1. Advertisers “can highlight a favorite review to appear at the top of the page about their business.”
  2. “They also show up first in search results for similar businesses in their region (for example “coffee” near “Alameda, CA”).”
  3. “Ads for that business appear on the page of local competitors, while competitors’ ads do not appear on their page.”
  4. “Owners can post photo slideshows, add a “personal message” about their business, and have the ability to update info on special offers and events.”
  5. They also can find out how many users visit their web site, update their page, contact Yelpers who’ve reviewed their business, and have access to an account manager who will help “maximize” their experience with Yelp.”

You can see some of that info on the Business Owner section of Yelp.com.

What it means: people often ask me how you can monetize social media in a local search context.  Yelp seems to have found a combo of items that could be attractive to merchants in such a context. Ranking a review, appearing as a “related merchant”, the ability to upload additional content, and some tracking and reporting appears like an interesting social media ad bundle.  Does this package monetize as well as the traditional “advertiser ranking” model we find in many local search sites?  I don’t think so, but it’s the delicate balance between users and advertisers’ needs that Yelp is trying to maintain.  Not easy!