Paid Media Pyramid - Old and New

Seth Godin's got an interesting blog post on "The erosion in the paid media pyramid."  He starts with the suggestion that since the development of media, there's been a model of value and pricing options for paid media.

   Basically, he differentiates paid media into 4 groups, with value and pricing related to supply, or the breadth of demand.  At the bottom of the pyramid is Free content.  He describes this kind of content as including content that is delivered to anyone who is interested in consuming it - primarily as a draw for sales of something else.  Chris Anderson's Free covers the same ideas.
  Mass content includes media products where the cost of replication and delivery are relatively low, allowing lower prices with the development of mass markets.  With mass markets, value can be aggregated over larger numbers.
Limited content, Godin suggests, is rare and thus expensive.  This can be the result of higher costs of replication and delivery, requireing higher pricing and limited markets, or can be a decision that inherent value is high enough that income can be mazimized by restricting the size of the market.
At the tip of the pyramid is Bespoke content - which for any media product is the most expensive, as it needs to recoup the whole cost (and value) with a single exchange rather than averaging costs over a larger market.
  Godin suggests that with the rise of competition, convergence, and the digital network economy, three things have occured that have eroded, or upset, the pyramid.

1. Digital media have significantly reduced replication and distribution costs, and have also expanded the availability of content.  He suggests that this has led to an explosion of choice, or from the point of traditional media content producers, an explosion of competition and clutter.
2. As a result, attention is worth more than ever before.  In the old model, attention was the important value in Free, or even some Mass content, but was low compared to most other costs, and therefore didn't have a big impact.
3. Again, as a result of #1, the marginal cost of one more copy in the digital world is zero (or close enough that nobody cares).  This is important because general economic theory recommends setting price at marginal cost.

Godin argues that as a result, there's a "huge sucking sound" of value leaving the media model (or at least prices and revenues from sales falling dramatically).  The new media pyramid, he suggests, will be a whole lot flatter, with a whole lot of free, and a little bit of high end limited content trying to subsidize everything.
  I'm working on my own pyramid for this new environment, which I'll post as the first in what I hope will be a series of targeted reports/analyses.  Look for a new header in the sidebar in a day or two.

Source -  The erosion in the paid media pyramid,  Seth Godin's Blog

Microsoft Launches Xbox TV

Microsoft has announced that it will be integrating a new user interface for its Xbox gaming system that will let users to access music, movies, TV shows, and games - and to navigate among options - with a wave of your hand or the sound of your voice.
  Xbox owners with the Kinect motion controller can use it to swipe through screens of options, simply by waving a hand in the air.  It also responds to direct voice commands and incorporates Microsoft's Bing search engines.

In a demonstration for The Associated Press, a Microsoft employee demonstrated how saying, clearly, "Xbox. Bing. 'Iron Man,' " brought up a selection of movies, TV shows, games and soundtracks related to the title. Saying "Xbox. Show. Movies," brought up places to rent or buy the movie, including Microsoft's Zune store, Wal-Mart's Vudu, Netflix or pay TV channel Epix.
Separate subscriptions are required for services like Netflix, and much of the content also requires being a gold member of Xbox Live, a connected Internet service that costs $60 a year.

Microsoft anticipates having about 40 content partners, who will be added to the system over time, but for now, there are no broadcast network partners, so that content will not be available on the system.

   If successful, I can foresee a whole new level of fighting for control over what to watch.  No longer will possession of the remote dictate control.  If all it takes is a loud voice or a waved hand, how long before all that shouting and waving degenerates into a rumble?

Source - Microsoft rolls out Xbox TV platform,  Broadcast Newsroom

Spotify - New Player in Music Streaming

Post contributed by Brittany Hood -

What happens when you mix the idea of people who have stopped wanting to buy an album of a particular musician because of the one song they hear on the radio, add in the ease of downloading the song via the internet, then throw in the idea of not having to pay for said song?  Ladies and gentlemen, you get a rise in online music streaming.  Sites like Pandora were the first to successfully utilize online music streaming, but now the idea of steaming music for little to no cost has taken a new form with Spotify.

  Spotify was launched in Sweden in 2008 by Daniel Ek and Martin Lorentzon because they wanted to develop a better, more convenient and legal alternative to music piracy, while also making sure that the artists get a fair deal.  The International Federation of Phonographic Industries (IFPI) reported in April 2011 that Spotify is now the second single largest source of digital music revenue for labels in Europe.  According to Spotify’s website, they have more than 10 million registered users and more than 1.6 million paying subscribers across seven countries in Europe and the United States, which became their eighth territory on July 14, 2011.

  Spotify offers users three different subscription options.  There is Spotify for free; Unlimited Spotify ($4.99 a month), and Premium Spotify ($9.99 a month).  As the price of the subscription increases, so do the perks.  For example, with the free Spotify, one must put up with the constant advertisement intrusion as well a limited amount of access time, which may only be accessed through the user’s computer via the internet; however, with the premium subscription, users get everything, which included access via a mobile device, unlimited streaming access, offline mode for playlists, and no advertisements.

  Being a source of social interacting is one of the key ideas and even a perk that Spotify offers.  With its launch in the United States, Facebook and Spotify decided to create a way that the two could be integrated. Once an individual downloads the Spotify software on their computer, he or she will have the option to either create an account or log into the program via Facebook.  If the latter occurs, then the new user will see a list of his/her Facebook friends and can find other users that are also part of the growing Spotify community, which allows for the sharing of [public] playlists or favorited artists or songs.  Even if an individual has not downloaded the Spotify software, they are able to see Facebook friends that do have it and the music they are listening to on the program; this allows for non-Spotify users to sample and discover new music and more than likely, it will lead them to downloading it and experiencing it for themselves. 

  Another incentive for users to download Spotify is the massive musical library that the program offers.  They have been able to achieve what other media, like Apple’s Ping and Pandora, have not been able to succeed in.  Also, unlike many related sites and programs, Spotify allows users to listen and sample songs in its entirety, as opposed to a thirty-second clip which can be cut from anywhere in a song.  Spotify can do this because they have signed deals with four of the major, international music labels, which are EMI, Warner Music Group, Universal Music Group, and Sony Music Entertainment.  And unlike Pandora, you don’t get cut off after you decide to skip a certain amount of songs that it plays for you.

  Another thing that Spotify has the potential to do is combat musical piracy.  According to Jason Gilbert of the Huffington Post, “Spotify lets you feel good about listening to absurd amounts of new music every week while simultaneously making you feel as though you are supporting the artists somehow.”  As a music lover and as a person looking to enter a career in the music industry, I find this particularly important.

Sources - “7 Reasons I Left iTunes ForSpotify” The Huffington Post:

Spotify’s Official Website: http://www.spotify.com/us/

Post contributed by Nick Spooner -


It is no secret that advertisers have often sought out children to be their market demographic. Children are so valuable because they are easily influenced and provide a loyal following for their whole life.
  A recent Wall Street Journal article mentioned the fact that Nickelodeon has been struggling recently with viewership. But this has started to change. Viewership has increased 1.7% since last year. So Nickelodeon would think that advertising for their shows would increase with their ratings.
  This has not been the case. Reported Nielsen ratings have been falling, and its unclear whether audiences are remaining with long-time running shows like SpongeBob SquarePants or moving to newer shows like Kung Fu Panda. Also, Nielsen's ratings have seen a change in children's viewership. Kids are less likely to watch TV during the day now and are also watching more nonkids networks.  {On the other hand, there have been reports of serious problems with the last few sets of Nielsen ratings - BJB).
  Nickelodeon has begun to change because their viewership has dropped 19% from a year earlier. They plan on releasing over 500 new episodes next year in hopes that kids between the age of 2 to 11 will come back. More "reality-based" channels like upstart network, The Hub, which is owned by Hasbro and Discovery have seen a 50% increase in viewership. This people wonder whether kids have started to change from the Saturday morning cartoons to the Saturday morning History Channel program. This might lead kids to become smarter but evidence of that has not been proven yet.
  Where the ratings are high, the money follows. This provides a challenge for these kid friendly networks on how they plan on keeping their loyal fan base.

Source -  TV Draws More Pre-Teens, WSJ.com

Comment - Don't worry too much about Nickelodeon,  A recent Kagan report found that Nickelodeon had the highest cash flow margin of any leading cable network (near 65%) - BJB

Google and Apple offer Mobile Wallets

Post contributed by Lauren Loy -

 

When credit cards were introduced to the global economy, people everywhere were enthralled. How could small pieces of plastic operate on such a scale that one could pay for goods with them? Well, it seems a new payment method is in the works that may be much easier than even credit cards. 

  Mobile wallets are new payment systems that consumers can use to pay for goods with their smartphones. These systems are still in their early stages, but Apple has announced that it will be a player in this monetary evolution, most probably claiming market shares from other carriers like Verizon Wireless who offer similar services. These mobile payment programs will not launch until 2012, but ABI says that users will grow to 594 million by 2016. Not only will carriers like Google, Apple, and Microsoft overwhelm the market with mobile wallet-capable smartphones, but merchants will offer deals that will cater to consumers with this mobile wallet service. Google and Apple will cause a drop in carriers' market shares from 75 percent to 63 percent by 2016, due to the strong branding both Google and Apple have created with their customers. 

  Google Wallet lets consumers in San Francisco and New York City buy goods from places like Macy's and Toys R Us by tapping the phones against check-out terminals. Google is also offering its Google Offers daily deals service, which provides more incentive for carriers who do not want to contribute money to develop mobile wallet infrastructure. Apple has not launched a mobile wallet system yet, but rumors in the industry say that they will add this feature to their smartphones in 2012.

Source -  Google, Apple to Challenge Carriers With Mobile Wallets: ABI,  eWeek.com

Dark Side of Clouds?

Post contributed by Ali Griffin -


Cloud computing and newer technologies are becoming something that is integrated into our everyday lives. We used to find it inconvenient to have to switch cds in a walkman, or actually write things in two different calendars. Smaller companies that provided service such as these in a more convenient way are now facing threats of being bought up by larger companies such as Apple and Microsoft.
  Technology is no longer serving us with a specific service. Instead, it has become a part of personal and professional every day life. With technologies such as the iPad and iPHones people are using technology in every part of their lives. For instance people don't use phonebooks, people don't wait to hear reviews of restaurants from friends, they are now getting this information through technologies.
  Schedules can now be made and coordinated without having to take the time do it ourselves. For this reason, smaller companies such as NetSuite and Workday are slowly being faded out and bought up by larger companies.
  Cloud computing comes at a very high price so these smaller companies simply cannot afford to buy into new technologies such as cloud computing. Paper and simple software are no longer the way to conduct business. According to the New York Times big companies such as Amazon are attempting to sell software simply over the internet. Devices such as the Kindle Fire will also eventually be developed so that companies will be able to use them as a primary way to conduct mobile business.
  One problem that many critics may have is that since these larger companies are buying up these smaller technology companies, there won't be a place for new businesses in the industry. With the large amount of money it costs these days to stay up to date and have the latest technology it is hard for emerging companies to enter the market.

Source -  Cloud Computing Endangers Older Tech Companies,  NYTimes.com

Glamour tests interactive mobile

Post contributed by Krystyna Barnard -

In a recent Folio post, TJ Raphael wrote about how “interactive mobile tactics drove social engagement for content and advertisers.” The magazine did this by implementing Social SnapTag technology into both print and digital editions of their magazine, which enabled readers to access packaging or promotional deals they see in the magazine. It also enabled the magazine to target various consumers and increase consumer communication via social networking sites through a sense of mass marketing. Raphael writes that the Social SnapTag is similar to the QR code, however, users don’t need a QR scanner or smartphone to interact with the program. As a result of Social SnapTag, approximately 67 percent of consumers who used the program also “liked” the magazine, Raphael also wrote. It just goes to show how prevalent social media has become in today’s technologically advanced society, not only for consumers, but for producers as well. 

Source - Glamour Gets 50,000 ‘Likes’ From Social Media Campaign,  Folio.com

Smartphone Apps Aid Black Friday Madness

Post contributed by Asia Farmer -

Every year Black Friday takes the Thanksgiving holidays by storm, tornado, and even typhoon. What better way to increase that experience than having your handy dandy smartphone. Smartphones. Many Black Friday applications such as Black Friday by Fat Wallet, Inc., TGI Black Friday, Black Friday by BradsDeals and many others have provided shoppers with many ways to fulfill shopping. Shoppers are able to get and stay in the loop on great deals and coupons that will save them money. These applications break down deals by store and company, show comparisons in prices, filters items by brand, rebate, doorbuster, online availability and free shipping. Websites like www.freepricealert.com are constantly updated 24 hours to guide shoppers in the right direction on deals.
  These websites and applications via smartphones have made Black Friday an easier challenge for consumers. In the past consumers could only rely on television commercials and advertisements in the stores and newspapers to know what deals were available. Now consumers are able to know in advance what is out there and what to expect before leaving there homes. This even provides consumers with some sort of a game plan prior to Black Friday to prepare for a day of shopping in madness. Technology yet again serves a great purpose in making things much easier.

Source - New Technology Helps Black Friday Shopping  Yahoo News

Online Video Continues to Boom - Ads, Too

The latest comScore Video Metrix report found that American TV viewers are consuming an average of 21.1 hours of online video a month.  More than 86% of Web users watch online video at least once a month, consuming some 42 billion videos.  All are new highs.
But that's not the big news in the report.  In addition to those 42 billion videos, Americans viewed another 7.5 billion video ads in October, providing a strong foundation for the booming online video advertising market.  Video ads reached more than half (53%) of the total U.S. population an average of 47 times a month.
In terms of which sites people use to view online videos, the various Google sites (YouTube, GoogleTV, etc.) continue to dominate, reaching 161 viewers (87.5% of all those who watch online video) and accounting for almost half of all videos watched.  Facebook came in second (59.8 million unique viewers), followed by music video site Vevo (57 million)..

Sources - Ad-Supported Streaming Soars, Generates Huge Viewership,  Online Media Daily
comScore Releases October 2011 U.S. Online Video Rankings, FierceTelecom

Thanksgiving Broadcast Tradition

Post contributed by Jacob Haskew - 


  One of the biggest Thanksgiving traditions for 43.7 million people is the Macy’s Thanksgiving parade. This parade is 2.5 miles long utilizing 22 HDTV and a production staff of over 200 people. Through the years this parade has gotten bigger and bigger this year will be the 85th annual Macy’s Thanksgiving Day Parade. The parade uses a helicopter that sends back transmissions via microwave. The Street will close down the night before for the people participating to practice and do run-throughs. This event is important because it is an annual television event using 22 different live cameras. The revenue raised by NBC for commercial spots during this event must be very pricey.

Source -  A Thanksgiving Broadcast Tradition,  TV Technology