Tag Archive for 'new media'

Thank you 2008, you finally gave New Media a name

Earlier this year Stephen Collins and Chris Saad had flown to Sydney for the Future of Media summit, and in front of me were having heated discussions on how come nobody invited them to the Social Media club in Australia. As they were yapping away, I thought to myself what the hell are they going on about. It turns out things I used to call "blogs", "comments" or "wikis" were now "social media". Flickr, Delicious, YouTube? No longer Web 2.0 innovations, but social media. Bulletin boards that you would dial up on your 14000 kbps modem? Social media. Online forums discussing fetishes? Social media. Everything was now bloody social media (or Social Media: tools are lower case, concept uppercase) and along with Dare Obasanjo I was asleep for the two hours when it suddenly happened.

social media bandwagon

However it turns out that this is a term that’s been around for a lot longer than we give it credit for. It hung low for a while and then as some significant events occurred this year the term became a perfect fit to describe what was happening. It’s a term that I’ve been waiting to emerge for years now, as I knew the term "new media" was going to mature one day.

Ladies and gentlemen, welcome to our new world and the way of defining it: 2008 is when the Information Age’s "social media" finally displaced the Industrial Era’s "mass media". Below I document how, when and why.

Origins of the term and its evolution
The executive producer of the Demo conference Chris Shipley is said to have coined the term during a key note at the Demofall 2005 conference on the 20th September 2005. As she said in her speech:

Ironically, perhaps, there is one other trend that would at first blush seem at odds with this movement toward individuality, and that is the counter movement toward sociability.

As one reporter pointed out to me the other day, the program book you have before you uses the term “social” a half-dozen times or more to describe software, computing, applications, networks and media.

I’m not surprised that as individuals are empowered by their communications and information environments, that we leverage that power to reach out to other people. In fact, blogs are as much about individual voice as they are about a community of readers.

The term gained greater currency over the next year, as Shipley would use the term in her work and various influencers like Steve Rubel would popularise the term. Brainjam which popularised unConferences first had the idea of a Social Media Club around the time of Shipley’s keynote and eventually formed it in July of the following year, which created more energy towards pushing for the term. Other people starting building awareness, like the Hotwire consultant Drew Benvie who from April 2006 has been writing the Social Media Report (and created the Social media Wikipedia page on 9 July 2006). Benvie said to me in some private correspondence: “When social media emerged as a category of the media landscape in 2005 / 2006 I noticed the PR and media industries looking for suitable names. The term social media came to be used at the same time of social networks becoming mainstream.” Back then it was more a marketing word to conceptualise online tools and strategies to deal with them, which is why there has been distaste for the term that prevented its adoption.

It was 2008 however when several news incidents, innovations, and an election entrenched this term into our consciousness. Later on, I will explain that, but first a lesson.

web2_logos

So what is Social Media?
A debate in August 2008 created the following definition: "social media are primarily Internet and mobile-based tools for sharing and discussing information among human beings. " I like that definition, but with it, you could arguably say "social media" existed when the first e-mail was sent in the 1970s. Perhaps it’s going to suffer the fate of the term “globalisation” where in the 1990s people didn’t know the term existed – but by 2001 in high school, I was told it had been around since the 1980s and by my final year of university in 2004 I was told "globalisation" started in the 1700s. Heaven forbid it turns into a term like "Web 2.0" where no one agrees but it somehow becomes a blanket term for everything that is post the Dot-Com bubble.

The definition is off-putting unless you have a fundamental understanding of what exactly media is. It might shock you to hear this, but a newspaper and a blog are not media. A television and a Twitter account, are not media either. So if you’ve had had trouble getting the term social media before, it’s probably because you’ve been looking at it in the wrong way. Understand what media really is and you will recognise the brilliance of the term "social media".

Vin Crosbie many years ago answered a question I had been searching half a decade ago on what was new media. Crosbie’s much cited work has moved around the Internet, so I can’t link to his original piece of work (update: found it on the Internet archive), but this is what he argued in summary.

  • Television, books and websites are wrongly classified as media. What they really are, are media outputs. We are defining our world on the technology, and not the process. Media is about communication of messages.
  • There are three types of media in the world: Interpersonal media, mass media, and new media.
  1. Interpersonal media, which he coined for lack of an established term, is a one-on-one communications process. A person talking directly to another person is interpersonal media. It’s one message distributed to one other person, from one person.
  2. Mass media is a one-to-many process. That means, one entity or person is communicating that one message to multiple people. So if you are standing in front of a crowd giving a speech, you are conducting a mass media act. Likewise, a book is mass media as it’s one message distributed to many
  3. New media, which is only possible due to the Internet, is many-to-many media.

I highly recommend you read his more recent analysis which is an update of his 1998 essay (can be seen here on the Internet archive ).

That’s a brilliant way of breaking it down but I still didn’t get what many-to-many meant. When the blogosphere tried to define social media it was a poor attempt (and as recently as November 2008, it still sucked). But hidden in the archives of the web, we can read Stowe Boyd who came up with the most accurate analysis I’ve seen yet.

  1. Social Media Is Not A Broadcast Medium: unlike traditional publishing — either online or off — social media are not organized around a one-to-many communications model.
  2. Social Media Is Many-To-Many: All social media experiments worthy of the name are conversational, and involve an open-ended discussion between author(s) and other participants, who may range from very active to relatively passive in their involvement. However, the sense of a discussion among a group of interested participants is quite distinct from the broadcast feel of the New York Times, CNN, or a corporate website circa 1995. Likewise, the cross linking that happens in the blogosphere is quite unlike what happens in conventional media.
  3. Social Media Is Open: The barriers to becoming a web publisher are amazingly low, and therefore anyone can become a publisher. And if you have something worth listening to, you can attract a large community of likeminded people who will join in the conversation you are having. [Although it is just as interesting in principle to converse with a small group of likeminded people. Social media doesn’t need to scale up to large communities to be viable or productive. The long tail is at work here.]
  4. Social Media Is Disruptive: The-people-formerly-known-as-the-audience (thank you, Jay Rosen!) are rapidly migrating away from the old-school mainstream media, away from the centrally controlled and managed model of broadcast media. They are crafting new connections between themselves, out at the edge, and are increasingly ignoring the metered and manipulated messages that centroid organizations — large media companies, multi national organizations, national governments — are pushing at them. We, the edglings, are having a conversation amongst ourselves, now; and if CNN, CEOs, or the presidential candidates want to participate they will have to put down the megaphone and sit down at the cracker barrel to have a chat. Now that millions are gathering their principal intelligence about the world and their place in it from the web, everything is going to change. And for the better.

So many-to-many is a whole lot of conversation? As it turns out, yes it is. Now you’re ready to find out how 2008 became the year Social Media came to maturity.

How 2008 gave the long overdue recognition that New Media is Social Media
The tools: enabling group conversations
MySpace’s legacy on the world is something that I think is under-recognised, that being the ability to post on peoples’ profiles. It gave people an insight into public communication amongst friends, as people used it more for open messaging rather than adding credentials like the feature originally intended when developed on Friendster. Yes, I recognise public discussions have occurred for years on things like forums and blogs, but this curious aspect of MySpace’s culture at its peak has a lot to answer for what is ultimately Social Media. Facebook picked up on this feature and more appropriately renamed it as "wall posts" and with the launch of the home screen that is essentially an activity stream of your friends, it created a new form of group communication.

The image below shows a wall-to-wall conversation with a friend of mine in February 2007 on Facebook. You can’t see it, but I wrote a cheeky response to Beata’s first message at the bottom about her being a Cabbage-eating Ukrainian communist whose vodka is radioactive from Chernobyl. She responds as you can see, but more interestingly, our mutual friend Rina saw the conversation on her homescreen and jumped in. This is a subtle example that shows how the mainstream non-technology community is using social media. I’m currently seeing how non-technology friends of mine will share links that appear on the activity stream and how they jump into a conversation about it right there. It’s like over-hearing a conversation around the water-cooler and joining in if you want.

Facebook | Elias, Beata, Rina

This is what made Twitter what it is. What started as a status update tool for friends, turned into a chat-room with your friends; you can see the messages posted by people you are mutually following, and you can join in on a conversation that you weren’t originally a part of. Again, simple but the impact we have seen it have on the technology community is unbelievable. Like for example, I noticed Gabe Rivera a few days ago had a discussion with people about how he still doesn’t get what social media is. I wasn’t involved in that discussion originally, but its resulted in me partially inspired to explore the issue with this blog post. These are subtle, anecdotal examples but in sum they point to this broader transformation occurring in our society due to these tools that allow us to mass collaborate and communicate. The open conversation culture of Web 2.0 has helped create this phenomenon.

Another Internet start-up company which I think has contributed immensely to the evolution of Social Media is Friendfeed. It essentially copied the Facebook activity screen, but made it better – and in the process, created the closest thing to a social media powerhouse. People share links there constantly and get into discussions in line. In the mass media, an editor would determine what you could read in a publication; in the Social Media world, you determine what you read based on the friends you want to receive information from. Collectively, we decimate information and inform each other: it’s decentralised media. Robert Scoble, a blogging and video super star, is the central node of the technology industry. He consumes and produces more information than anyone else in this world; and if he is spending seven days a week for seven hours a day on Friendfeed, that’s got to tell you something’s up.

The events: what made these tools come to life in 2008
We’ve often heard about citizen journalism with people posting pictures from their mobile phones to share with the broader Internet. Blogs have long been considered a mainstay in politics this last decade. But it was 2008 that saw two big events that validated Social Media’s impact and maturity.

  1. A new president: Barack Obama has been dubbed as the world’s first Social Media president. Thanks to an innovative use of technology (and the fact one of the co-founders of Facebook ran his technology team – 2008 is the year for Social Media due to cross pollination), we’ve seen the most powerful man in the world get elected thanks to the use of the Internet in a specific way. Obama would post on Twitter where he was speaking; used Facebook in a record way; posted videos on YouTube (and is doing a weekly video addresses now as president-elect) – and a dozen other things, including his own custom-built social networking site.
  2. A new view of the news: In November, we saw a revolting event occur which was the terrorist situation in India (and which has now put us on the path of a geopolitical nightmare in the region). However the tragic event at Mumbai, also gave tangible proof of the impact social media is having in the world .

What’s significant about the above two events is that Social Media has robbed the role played by the Mass Media in the last century and beyond. Presidents of the past courted newspapers, radio and television personalities to get positive press as Mass Media influenced public perception. Likewise, breaking news has been the domain of the internationally-resourced Mass Media. Social Media is a different but much better model.

What’s next?
It’s said we need bubbles as they fuel over-development that leave something behind forever. The last over-hyped Web 2.0 era has given us a positive externality that has laid the basis of the many-to-many communications required for New Media to occur. Arguably, the culture of public sharing that first became big with the social bookmarking site Del.icio.us sparked this cultural wave that has come to define the era. The social networking sites created an infrastructure for us to communicate with people en masse, and to recognise the value of public discussions. Tools like wikis both in the public and the enterprise have made us realise the power of group collaboration – indeed, the biggest impact a wiki has in a corporation from my own experience rolling out social media technologies at my firm, is encouraging this culture of "open".

It has taken a long time to get to this point. The technologies have taken time to evolve (ie, connectivity and a more interactive experience than the document web); our cultures and societies have also needed some time to catch up with this massive transformation in our society. Now that the infrastructure is there, we are busy concerning ourselves with refining the social model. Certainly, the DataPortability Project has a relevant role in ensuring the future of our media is safe, like for example the monitoring the Open Standards we use to allow people to resuse their data. If my social graph is what filters my world, then my ability to access and control that graph is the equivalent to the Mass Media’s cry of ensuring freedom of the press.

Elias Bizannes social graph
Over 700 people in my life – school friends, university contacts, workmates and the rest – are people I am willing to trust to filter my information consumption. It will be key for us to be able to control this graph

Newspapers may be going bankrupt thanks to the Internet, but finally in 2008, we now can confidently identify the prophecies of what the future of media looks like.

Advertising on the Internet needs innovation

On the weekend, I caught up with Cameron Reilly of the Podcast network , and he was telling me about his views on monetising podcasts. It got me thinking again about those things I like to think about: how content can be monetised. Despite the growth in online advertising which is tipped to be $80 billion, I think we still have a lot more innovation to go with revenue models, especially ones that help content creators.

Advertising is a revenue stream that has traditionally enabled content-creators to monetise their products, in the absence of people paying a fee or subscription. With the Internet, content has undergone a radical changing of what it is – digital, abundant, easily copied – whilst the Internet has offered new opportunities for how advertising is done. However, the Internet has identified the fundamental weaknesses of advertising , as consumers can now control their content consumption, which allows them to ignore embedded advertising altogether. Content on the other hand, still remains in demand, but means of monetising it are slipping into a free economy which is not sustainable. I make that point to illustrate not that professional content creation is a sunset industry – but rather there’s a big market opportunity as this massive industry needs better options.

time mag

"Hey man, there’s this new thing called the Internet. Sounds pretty cool"

One of the biggest innovations in advertising (and enabled by the Internet) is of contextual search advertising. This has been popularised by Google, which now makes 98% of its $17 billion revenue from these units. This advertising dominates online advertising (40% of total) because of its pull nature, whereby key-words stated by a consumer in effect state their intention of what they are interested or would like to purchase. Whilst this is a highly efficient form of advertising, it also has its weaknesses – for example, it is not as effective outside of the search engine environment. Google makes 35% of its revenue from the adSense network , where these contextual ads are placed on peoples personal websites. Evidence from high traffic bloggers suggests they barely make enough money through this type of advertising. Another point to consider is that aspects of the Google network include significant partnership agreements like the one with AOL which accounts for 10% of Googles revenue (this is a 2005 figure which has likely changed, but Google does state in their 2007 report "Our agreements with a few of the largest Google Network members account for a significant portion of revenues derived from our AdSense program. If our relationship with one or more large Google Network members were terminated or renegotiated on terms less favorable to us, our business could be adversely affected.". AOL most recently reported for Q1 2008 half a billion dollars largely from search advertising ).

Other attempts at creating more efficient advertising which have existed for over a decade, have come in the form of profiling or behavioural tracking. However, these forms of advertising has also highlighted the growing awareness of consumer privacy being eroded, and is under heavy scrutiny by activist groups and government. Facebook is a company that is best posed to deliver new forms of advertising because of the rich profiling data it has, but it itself has faced massive backlash .

My view is that the majority of online advertising for successful individual publishers at least, has largely come from traditional approaches to advertising – a masthead blog with a sales team that uses display advertising. How effective this display advertising is is debateable with widespread banner blindness and consumer control over their content, but it would appear that this is more a case of advertisers seeing this as the least bad on the overall scale of opportunities. The fact it replicates the mass media approach of number of unique consumers viewing the content, and not the types of users, means this isn’t anything new other than being done in a digital environment.

Digital content is in need of a better monetisation system.
Targeted advertising is the most efficient form, yet consumer privacy is a growing force preventing this. What we need, is not a new advertising technology, but a new way of thinking about advertising – in a way that can help the content economy rather than riding on it without giving benefit. Contextual advertising sounds great in theory as it calculates key-word frequency of words on a website, to match it to a key word ad – but it’s proving in practice these ads are not very relevant. Yet trying to think of a smarter way to advertise, may be the wrong question – perhaps half the problem itself is advertising as a concept?

perspective

Are we running down a tunnel, only to find there is nothing there?

Content which comes in the form of news (historical and breaking), analysis, and entertainment can be monetised via a persons attention or through a transaction (ie, subscription, fee, etc). Both this approaches have different barriers.

– Attention: The key driver is increased dollars per unique person, over a period of time. The barriers to this approach is the challenge of identifying the individual in a way that gives advertising that is highly relevant and will result in a conversion. In other words, privacy privacy privacy.

– Alternative payment: Requiring consumers to pay for content is a barrier due to the paid wall. What is more problematic for digital content, is that the ability to replicate it freely makes it not just easy to do for the masses but has created a culture of if it’s not free, it’s not worth purchasing unless its really necessary. There needs to be a strong value proposition for a consumer to purchase content, and in the absense of a brand and marketing, the restriction of what value the content offers is a barrier for consumer demand as they don’t know what they are missing out on.

So as you see above, content creators are in a difficult position. Charging people reduces their opportunity unless they are really established, but even then, due to the digital environment they don’t have any control over subsequent distribution (with rampant piracy). Yet advertising is fraught with being irrelevant and hence not effective (so advertisers go to other forms) and any attempts to make it more relevant, gets held back by the concerns of privacy advocates (and rightly so). Whilst the Internet parades itself as an advertising growth machine, it’s growing in new areas but not the old areas that have traditionally been the medium for advertisers.

This advertising growth is largely being driven through utility computing products that aim to make information retrieval more efficient (ie, search). However, the growth for the content creators, is not happening. As Cam was telling me, in a market like Australia – small content organisations like TPN and Bronwen Clune ‘s Norgs , don’t have access to the big end of town for a sales team. And he didn’t have to tell me, those Google ads for the smaller guys, are not enough to pay the bills. That small to middle end is not being really catered for.

But before you jump on the phone and create some mid-tier advertising network that caters for a niche, think about the real problem: content creators need a better solution to monetise their content. But advertisers also need a better way of selling, other than some slick-talking sales person who can sell ads on pageviews (a broken model with weak alternatives ) They need advertising that is suited for their product, but the market now includes other products media outlets never had to compete with like marketplaces now happening online and utility computing products. Whilst the technology community obsesses about search , let’s also remember we have yet to see a new way to monetise content that is superior to the old world. Contextual advertising of text is the latest new thing area, but that technique is nearly a decade old. As I prove above, outside of the search environment, it is showing to not be that effective.

Where is the innovation going to come from? Not through technology but with a new paradigm shift like how content creators operate . New ways of thinking about the way we ‘sell’ like what the VRM Project is challenging. But perhaps more fundamentally, is an understanding that the holy grail of targeted advertising has got a speed hump called privacy – and that may actually be a sign of not going faster towards better targeting, but changing the vehicle all together.

Emerging trends? Nope – its been a long time coming

When I read the technology news, concepts about cloud computing still seem to be debated . I think to myself: you are kidding me right? I take a step back and think maybe the future won’t be like the current mantra, but then again, trends take time to materialise.

Scanning through my hard-disk, I could not help but laugh after I found a document I wrote to a friend in February 2006 – and as I said in the document "Those six points, as rough as they are, form core elements in my thinking on how I approach business on the Internet …[I’ve been thinking about it] since November 2003"

So below, is literally a copy and paste of that document that has seeds from way back in 2003 when I submitted a grant application for a business idea (ahem, no response obviously…). The fact that nearly half a decade has passed since I first synthesised these ideas (and no doubt, from reading of the thinkers of the day not just me being imaginative) means they are not flake predictions: they are real. Ready?

1. Digital future. All information – news reports, television shows, educational text books, radio shows – are being digitalised, coexisting with their analogue versions. Whether the digital replicas replace their analogue counterparts is pure speculation. But one fact we cannot ignore is that the possibility is there – all content is now digital. And consumers will switch to the digital version if the value of the content consumed is better realised in digital form

  • Quick case study. Many pundits believe newspapers will not exist in 15 years. I know they won‚Äôt exist in 15 years, and I have spent three years thinking about this very point. At first I used to think digital replicas, as shown by http://www.newsstand.com, was what was going to transform the newspaper business. What I didn‚Äôt realise, is that the current newspaper experience far exceeds the digital replica (I was hung up on the idea of electronic paper [www.eink.com] ‚Äì which still remains a big possibility). But I knew the digital future was going to make the current newspaper business obsolete ‚Äì there is more value out of digitial. It only just hit me recently by observing my own behaviour‚Äì traditional newspapers are not going to be replaced by digital versions ‚Äì rather, the method¬¨ that people receive their news is going to change. And this fact is embodied by the recent acknowledgment of the world‚Äôs great newspapers of not being in the newspaper business anymore, but in the information business now. I used to read every single major newspaper, and several international newspapers, as I was a debater ‚Äì I was a heavy news consumer, and I still am. Today, I still follow the news very closely ‚Äì but I have not read a newspaper all year. Why? I receive all my information needs through websites, RSS feeds and blogs. A new method, made possible by the digital future. People means of consuming content will change because of digital.

2. Internet as infrastructure. It doesn’t take a genius to realise that the internet will be the core infrastructure of anything to do with information and communications. The power of the internet as infrastructure to communications and information unlocks opportunities that are transforming the world. Radio, TV, phone calls – you name it – can be done via the internet protocol now.


3. Content is king, distribution is queen – but advertising is what pays for the cost of that sting. Google now makes more revenue than the three prime time television stations in the USA. In monetary terms, that’s about $10 billion a year. And yet, 99% of that revenue comes from one thing – Google’s click-through advertising (about 45% from Google results, the rest from the Google network of publishers through adsense). HarperCollins announced last week that they are trialling a new business model of providing books for free but supported by advertising – the consumer book business up until then was literally the only segment of media not reliant on advertising as a revenue model. Whilst broadcasting organisations make money from several sources, advertising is literally the backbone of their revenue. To make money out of any content, you place a huge reliance on advertising.
In short, if you want to make money out of content, you need to understand advertising

4. One-to-one advertising is the superior form of advertising. Partly due to technological factors, the mass media could only advertise through a one-to-many medium – meaning one message to many. The digital-internet future has transformed that ability, by customising content on a one-to-one basis. If advertising, and content can be targeted to an individual’s personality profile and preferences, it allows for the value of the content to be maximised, with 1-to-1 advertising returning a higher return on campaigns Рfar superior than any other form of advertising. Superior because it can make advertising more relvant for consumers (ie, higher response rate), it can increase advertising inventory (mass media advertising is a bit like throwing pamphlets out of a plane, hoping the right people catch them Р1-to-1 means the right people get it at minimal cost and best of all, it creates better accountability which is what advertisers now demand.

5. The best business practice for one-to-one advertising is not there yet. The internet is the platform that enables one-to-one advertising, and yet, this opportunity has still not been fully exploited. There is a massive need in the market, for a means of providing personalised advertising far superior to the current technologies and methods. Google populised an innovative form of advertising through click-throughs. However internet click-throughs, despite providing more accountable and better targeted advertising, still lacks the ability to unleash the real power of one-to-one advertising. The power of the internet as a one-to-one advertising platform is still in its infancy

6. Privacy matters. Privacy is the right to determine what information is available about you, when you want it to be available, and to whom you want it available to. Current practices of companies who gain as much information about you through your sales history, your activity on the web, and the like – are often doing so without the full knowledge of the consumer. It is information collected by spying on a consumer, and whilst some people retaliate by various measures (ie, fake information, anonymous proxies), there is great mistrust by the public in providing personal information, or rather, too much to one organisation. If information is to be used about people, there needs to be proper approval – both for legal reasons (a business model cannot rely on consumer stupidity) but also for the integrity of the data (ie, a cooperative consumer will provide more reliable data)

  • Companies like Double Click who would collect your surfing history relied on placing a cookie on your computer ‚Äì what happens if you delete that cookie? And what happens if your dad, mum, and cousin from Brazil, use the same computer as you? That creates a fairly inconsistent ‚Äúprofile‚Äù of a person that is to be targeted

I had totally forgotten I had written that. And reading it now it’s a bit lame and I could probably extend on things a little bit – actually there are things I have actually written in blog posts this last year. Better still, I can provide actual evidence that validate these trends as advancing like the existence of the VRM project for advertising, the big clash with Facebook and privacy (and lets not forget the first time ), and Microsoft’s recent announcement about moving away from software (to pick but a few examples).

If this is what I was seeing in November 2003 as a naive university student absorbing what the industry trends were back then; February 2006 when I wrote to my friend what I thought he needed to consider about the future; and the fact I still agree with it in May 2008 – I think things are beyond speculation: these are long-term trends that are entrenched.

Information overload: we need a supply side solution

About a month ago, I went to a conference filled with journalists and I couldn’t help but ask them what they thought about blogs and its impact on their profession. Predictably, they weren’t too happy about it. Unpredictably however, were the reasons for it. It wasn’t just a rant, but a genuine care about journalism as a concept – and how the blogging “news industry” is digging a hole for everyone.

Bloggers and social media are replacing the newspaper industry as a source of breaking news. What they still lack, is quality – as there have been multiple examples of blogs breaking news that in the rush to publish it, turns out it was in fact fallacious . Personally, I think as blogging evolves (as a form of journalism) the checks and balances will be developed – such as big names blogs with their brands, effectively acting like a traditional masthead. And when a brand is developed, more care is put into quality.

Regardless, the infancy of blogging highlights the broader concern of “quality”. With the freedom for anyone to create, the Information Age has seen us overload with information despite our finite ability to take it all in. The relationship between the producer of news and consumer of news, not only is blurring – but it’s also radically transforming the dynamics that is impacting even the offline world.

Traditionally, the concept of “information overload” has been relegated as a simple analysis of lower costs to entry as a producer of content (anyone can create a blog on wordpress.com and away you go). However what I am starting to realise, is the issue isn’t so much the technological ability for anyone to create their own media empire, but instead, the incentive system we’ve inherited from the offline world.

Whilst there have been numerous companies trying to solve the problem from the demand side with “personalisation” of content (on the desktop , as an aggregator , and about another 1000 different spins), what we really need are attempts on the supply side, from the actual content creators themselves.

info overload

Too much signal, can make it all look like noise

Information overload: we need a supply side solution
Marshall Kirkpatrick , along with his boss Richard McManus , are some of the best thinkers in the industry. The fact they can write, makes them not journalists in the traditional sense, but analysts with the ability to clearly communicate their thoughts. Add to the mix Techcrunch don Michael Arrington , and his amazing team – they are analysts that give us amazing insight into the industry. I value what they write; but when they feel the stress of their industry to write more, they are not only doing a disservice to themselves, but also to the humble reader they write to. Quality is not something you can automate – there’s a fixed amount a writer can do not because of their typing skills but because quality is a factor of self-reflection and research.

The problem is that whilst they want, can and do write analysis – their incentive system is biased towards a numbers system driven by popularity. The more people that read and the more content created (which creates more potential to get readers) means more pageviews and therefore money in the bank as advertisers pay on number of impressions. The conflict of the leading blogs churning out content , is that their incentive system is based on a flawed system in the pre-digital world, which is known as circulation offline, and is now known as pageviews online.

A newspaper primarily makes money through their circulation: the amount of physical newspapers they sell, but also the audited figures of how many people read their newspaper (readership can have a factor of up to three times the physical circulation ). With the latter, a newspaper can sell space based on their proven circulation: the higher the readership, the higher the premium. The reason for this is that in the mass media world, the concept of advertising was about hitting as many people as possible. I liken it to the image of flying a plane over a piece of land, and dropping leaflets with the blind faith that of those 100,000 pamphlets, at least 1000 people catch them.

It sounds stupid why an advertiser would blindly drop pamphlets, but they had to: it was the only way they could effectively advertise. For them to make sales, they need the ability to target buyers and create exposure of the product. The only mechanism available for this was the mass media as it was a captured audience, and at best, an advertiser could places ads on specialist publications hoping to getter better return on their investment (dropping pamphlets about water bottles over a desert, makes more sense than over a group of people in a tropical rainforest). Nevertheless, this advertising was done on mass – the technology limited the ability to target.

catch the advert

Advertising in the mass media: dropping messages, hoping the right person catches them

On the Internet, it is a completely new way to publish. The technology enables a relationship with a consumer of content, a vendor, a producer of content unlike anything else previously in the world. The end goal of a vendor advertising is about sales and they no longer need to drop pamphlets – they can now build a one on one relationship with that consumer. They can now knock on your door (after you’ve flagged you want them to), sit down with you, and have a meaningful conversion on buying the product.

“Pageviews” are pamphlets being dropped – a flawed system that we used purely due to technological limitations. We now have the opportunity for a new way of doing advertising, but we fail to recognise it – and so our new media content creators are being driven by an old media revenue model.

It’s not technology that holds us back, but perception
Vendor Relationship Management or (VRM) is a fascinating new way of looking at advertising, where the above scenario is possible. A person can contain this bank of personal information about themselves, as well as flagging their intention of what products they want to buy – and vendors don’t need to resort to advertising to sell their product, but by building a relationship with these potential buyers one on one. If an advertiser knows you are a potential customer (by virtue of knowing your personal information – which might I add under VRM, is something the consumer controls), they can focus their efforts on you rather than blindly advertising on the other 80% of people that would never buy their product). In a world like this, advertising as we know it is dead because we know longer need it.

VRM requires a cultural change in our world of understanding a future like this. Key to this is the ability for companies to recognise the value of a user controlling their personal data is in fact allowing us new opportunities for advertising. Companies currently believe by accumulating data about a user, they are builder a richer profile of someone and therefore can better ‘target’ advertising. But companies succeeding technologically on this front, are being booed down in a big way from privacy advocates and the mainstream public. The cost of holding this rich data is too much. Privacy by obscurity is no longer possible, and people demand the right of privacy due to an electronic age where disparate pieces of their life can be linked online

One of the biggest things the DataPortability Project is doing, is transforming the notion that a company somehow has a competitive advantage by controlling a users data. The political pressure, education, and advocacy of this group is going to allow things like VRM. When I spoke to a room of Australia’s leading technologists at BarCamp Sydney about DataPortability, what I realised is that they failed to recognise what we are doing is not a technological transformation (we are advocating existing open standards that already exist, not new ones) but a cultural transformation of a users relationship with their data. We are changing perceptions, not building new technology.

money on the plate

To fix a problem, you need to look at the source that feeds the beast

How the content business will change with VRM
One day, when users control their data and have data portability, and we can have VRM – the content-generating business will find a light to the hole currently being dug. Advertising on a “hits” model will no longer be relevant. The page view will be dead.

Instead, what we may see is an evolution to a subscription model. Rather than content producers measuring success based on how many people viewed their content, they can now focus less on hits and more on quality as their incentive system will not be driven by the pageview. Instead, consumers can build up ‘credits’ under a VRM system for participating (my independent view, not a VRM idea), and can then use those credits to purchase access to content they come across online. Such a model allows content creators to be rewarded for quality, not numbers. They will need to focus on their brand managing their audiences expectations of what they create, and in return, a user can subscribe with regular payments of credits they earned in the VRM system.

Content producers can then follow whatever content strategy they want (news, analysis, entertainment ) and will no longer be held captive by the legacy world system that drives reward for number of people not types of people.

Will this happen any time soon? With DataPortability, yes – but once we all realise we need to work together towards a new future. But until we get that broad recognition, I’m just going to have to keep hitting “read all” in my feed reader because I can’t keep up with the amount of content being generated; whilst the poor content creators strain their lives, in the hope of working in a flawed system that doesn’t reward their brilliance.

How business is done on the Internet

Day in and day out, the Internet continues to show innovations from people all around the world. Yet for all these innovations, it all comes down to the very core of trying to do business in a new way.

I’ve been doing some research recently for an internal publication my firm produces on the future of the entertainment and media industries, and I wondered what exactly does it mean to do business on the Internet. Whilst there are some brilliant thoughts on what business models on the Net are, I think we lack a proper analysis of what it means to do business.

Below is a summary of my understanding from a consumer perspective of doing business (enterprise is a different beast), but which I think will help people better understand how it all works.

First of all, we need to split the three key factors about business:

  1. Business models: What the structure of a business is.
  2. Revenue models: How the business generates cash from customers to fund its operations.
  3. Product models: What the product is that you provide to your customers to generate the cash

Too often, these three components are mixed as one or the same. Another thing that happens, is we struggle to classify the Internet because it contains so many different types of business. Breaking it down gives us more complete view.

Business models

The first thing to understand, is how a business is structured of which there are three varieties:

  1. Destination: driving consumers to a point ie, a website that you try to drive usage by consumers. This was very much what the early Internet was in the manifestation of the world wide web; websites attempting to get ‘eyeballs’. Your business model is based on the premise of getting people to visit your destination.
  2. Platform: a service that you try to build usage by creating an ecosystem for. Arguably, the web is the platform but in reality we are seeing a different type of platform akin to the Microsoft Windows approach of creating a core service that others can build on. You could classify the web2.0 view that websites are communities in this, whereas there are companies trying to create operating systems on the web for widgets that are a similar thing. Your business model, is built on the premise that people interact on your service or use your platform.
  3. Network: a service that people use regardless of where they are on the Internet. This type of business is about attaching to a user as they use the Internet. It’s almost like the flipside of the above two models: instead of having everyone come to you, this is about following everyone wherever they are. Your business model is built on the premise that people use your service in a decentralised manner.

Revenue models
Revenue models are a key factor to understand as they are what sustain long term changes to an industry that is currently been pushed by venture money and acquisitions from the dominant players. There are four types of monetisation models that I can observe:

  1. Fees: Payment of a fixed amount for access or usage of goods and services over the internet
  2. Subscription: Payment of a fixed amount on a periodic basis for access or usage of goods and services
  3. Commission: Payment of a percentage fee of a transaction
  4. Attention: Consumer gives their time, such as viewing an advertisement, in exchange of goods and services

Product models
There are three types of product models:

  1. Markets is the term I am using to explain when businesses use the Internet as a way to allow others to transact goods and services. The product offered by these companies is effectively a mechanism to do commerce. For example, eBay offers a product model that gives the ability for people to auction goods. Their product is to offer the facility for vendors and consumers to transact. They are like a shopping centre, giving space for vendors to sell and centralising the space so that consumers know where they can buy from these vendors. Markets offer the ability to perform trade of some sort with other parties
  2. Hypermedia is the term I am using to describe any type of content offering to people. Philosophically, it falls under the “new media” category that I have previously linked to and I use the term coined by Ted Nelson which is the broader term coined at the same time as “hypertext”. Effectively, you are offering content to a consumer in an Internet environment. Formally defined, it is access or supply of content via visual, audio and/or text over the Internet
  3. Utility computing is what you can call search engines, web applications, and the software as a service variety, which essentially is about providing computing services for information. Maybe a better way to define the concept is that they are computing services that allow for productivity through information retrieval, creation or management.

It is important to note that a business doesn’t have to restrict itself to just one of the above sub-categories. A business must have at least one business model, one revenue model, and one product model (or rather, they should – web2.0 startups seem to forget the revenue model bit). But within those groupings, it doesn’t have to be just one.

Take for example Facebook, which was initially a destination business – people logged in, viewed peoples profiles and their news feed, and the company generated value for the user by them ‘visiting’. With the launch of the applications platform, Facebook became a platform, because it allowed other entities to build on top of its core service. In this regard, Facebook generated value by creating an ecosystem of applications within its confines. As for a network model, Facebook is yet to to this, but imagine if they created an ad network like Google’s – whereby information about you in Facebook is used to determine what advertising to see across the entire internet. Here the value is that Facebook helps add to your experience across the entire Internet (despite being off the actual site)

So as a concept, below is my matrix of doing business on the Internet (I’m graphically inept, but I want to illustrate the three dimensions conceptually). What do you think?

business on the net

If you can draw better than me (not hard), I’ll credit you on this post!

Update May 27 2010: Rethinking this two years on, I think this still stands as a rough analytical framework. But I now believe that business model makes sense for the overall discussion above (ie, the combination of all the components), and what I term as ‘business model’ in the post is actually more like the ‘operating model’ of a web business.

A casual chat with a media industry insider

Today I had the chance of picking the mind of Achilles from the International Herald Tribune, who last year was appointed Vice-President, circulation and development. Achilles is a family friend and I took the opportunity to talk to him about the world of media and the challenges being faced.

The IHT is one of the three daily financial newspapers of the world, along with the Wall Street Journal and the Financial Times. It is currently owned by the New York Times, and has a global circulation of 240,000 people. I had a great chat on a lot of different themes which could have me blog about for a week straight, but here are some of the facts I picked up from our discussion, which I will summarise below as future talking points:

  • On Murdoch’s acquisition of the Wall Street Journal: “very interested to see if he will remove the paid wall”.
  • The IHT experiemented with a paid wall for it’s opinion content, but they will be removing that later this year
  • He says the Bancroft family sold it because they are emotionally detached from the product. It was just an asset to them.
  • A lot of the content is simply reedited content from the NYT and internationalising it. For example, replacing sentences like “Kazakhstan in the size of New York state” doesn’t work well for an international reader who has no idea how big New York state is.
  • On the threat of citizen journalism with traditional media: “they are a competitive threat because we are competing for the same scarce resource: the attention of readers”
  • The problem with citizen journalism and bloggers is the validity of their information – behind a newspapers brand, is trust from readers of the large amounts of research and factchecking that occur. They have no credibility.
  • A blog may develop credibility with an audience greater than the New York Times. But this poses problems for advertising as advertisers might only advertise because of its niche audience. Blogs are spreading the advertising dollars, which is hurting everyone – it’s become decentralised and that has implications which are problematic.
  • The IHT’s circulation is spread thinly across the world. For example, it has 30,000 readers in France and six in Mauritius.
  • Their target market is largely the business traveller, which has its own unique benefits and problems. For example, a business traveler will read it for two days but when they get back home, they will revert to their normal daily newspaper. It’s not a very loyal reader.
  • Readership is a more important concept than circulation as it tells advertisers how big the actual audience of a publication is. For example, the average newspaper has 2.7 readers per copy. However due to the nature of the IHT’s readers, despite having high circulation, they have low readership.
  • IHT is in a unique position of relying on circulation revenue more than advertising. For example, a normal daily relies on circulation revenue as 20% of its total revenue; the IHT counts on it for 50%.
  • It’s hard to get advertising because a readership of university professors is less desirable than fund managers that might read the WSJ. Advertisers prefer to target key decision makers.
  • It doesn’t rely on classifieds as a revenue source – a key thing hurting the newspaper industry currently.
  • Although they place more reliance on circulation revenue, they still get some good advertising opportunities as a lot of readers are politicians and government decision makers.
  • They get a lot of advertising for fashion
  • Psychographic data is more important to advertisers than circulation and it shows what type of readership a publication has.

Half the problem has been solved with time spent

On Thursday, I attended the internal launch of the Australian Entertainment & Media Outlook for 2007-2011. It was an hour packed with interesting analysis, trends, and statistics across a dozen industry segments. You can leave a comment on my blog if you are interested in purchasing the report and I’ll see if I can arrange it for you.

One valuable thing briefly mentioned, was the irony of online advertising.
Continue reading ‘Half the problem has been solved with time spent’

Some things will never change: how to create credibility

This weekend in my office with a half dozen colleagues, we toiled away on an (academic) assignment due tonight. When you spend 11 hours in one day around one table, on something that drives you mad – conversation is a aplenty on things not related to what we were doing. And when there as no conversation, procrastination was aplenty with Facebook being the prime culprit amongst all of us.

An interesting scenario happened, which made me revisit something I have long wondered. One of the girls asked how does Facebook make money, and I went on a rant about their $200 million Microsoft deal, how they are heading towards an IPO, and other random facts I just happen to know. They all looked at me stunned, in the sense how could I possibly know such things, and I replied I read a lot – I read a lot of blogs.

“…but how do you know that stuff you are reading is accurate?” with reference to that $200 million that I don’t even know where I read that. The funny thing about the question, is that it’s smart and stupid at the same time. The answer seems too obvious – but it isn’t: how DO I know those facts I stated where true?

Why I bring this up, is because this is an issue I have long tried to come to grips with – what makes information credible? How do you know when you read something on the internet, that it is reliable? The answer is we don’t. Sort of.

This “new media” world isn’t the reason why we have this apparent problem: information credibility has long been an issue, first realised by the citizens of western democracy after the Great War when they recognised newspapers could no longer be taken as fact (due to the propaganda efforts). So its been a problem long before computers and hypertext had even been invented – it’s only that with us being in an Information Age, the quality of information has been under higher scrutiny with its abundance.

How do we know what makes something reliable? Is it some gee-whiz Google algorithm? Perhaps it’s the wisdom of the crowds? Maybe – but there is something else even more powerful that I have to thank Scott Karp for making me realise this, back in the days when he was starting out as a blogger: it’s all about branding.

Why makes an article about the New York Times, more credible than one written by a random student newspaper rag? What makes a high profile author, more credible in what they say, than a random nobody who puts their hand up in a town hall meeting? And going back to the question my colleague asked earlier – how do I know the blogs I am reading have any credibility – over say, something I read in an established newspaper such The Economist?

Simple: branding establishes information credibility. And a brand – for any type of entity be it an individual journalist or a news organisation – is dependent on recognition by others. There could be absolutely no credibility in your information (like Wikipedia) and yet you could have a brand that by default establishes credibility – just like how people regularly cite Wikipedia as a source now, despite knowing it’s inherently uncredible.

The power of branding is that no matter how uncredible you are – your brand will be enough to make anything you say, incredible.

Thoughts on attention, advertising, and a metric to measure both: keep it simple

Advertising on the Internet is exploding. Assuming you accept my premise that the Internet will be the backbone of the world’s attention economy – then, I am sure you can see the urgency of developing an effective metric for measuring audiences that consume content online. Advertisers are expecting more accountability online and there is increasing demand for an independent third-party to verify results. But you can’t have accountability and there is no value in audits, if one place measures in apples and the other in bananas.

The Attention Economy is seriously lacking an effective measurement system

Ajax broke the pageview model of impressions, the one billion-dollar practice of click-fraud is the dirty big secret of pay-for-performance advertising, and the other major metric of using unique visitors (through cookies) is proving inaccurate.

It sounds crazy, doesn’t it? The Internet has the best potential for targeted advertising, and advertisers are moving onto it in stampedes – and yet, we still can’t work out how to measure audiences effectively. Measurement is broken on the Net.

(Although I am focusing on advertising, this can be applied in other contexts. An advertising metric is simply putting a monetary value on what is really an attention metric.)

Yet when we look at the traditional media, are we being a little harsh on this new media? Is the problem with the web’s measurement systems just that it is more accountable for its errors? After all – radio, television, and print determine their audience through inference which are based on sampling methods and not actually directly measuring an audience. Sampling is about making educated guesses – but a guess is still a guess.

Maybe another way of looking at it is that the old way of doing advertising is no longer effective. Although we can say pageviews are broken due to AJAX, the truth is it was always an ineffective measurement system, as it was based on the traditional media’s premise of how many viewers/subscribers theoretically and potentially could see that ad. As an example of why this is not how it should be: when people visit my blog via Google Images, they hang around for 30 seconds. People that search for business issues on the web that I write about, like stuff you are reading right now – spend 5+ minutes. If both are equal in terms of page views, but the later actually reads the pages and the former only scans the content for an image – why are we treating them equally? My blog is half about travel, and half about the business of the internet, which is why I have two very different audiences. Just because I get high page views from my travel content, doesn’t mean I can justify higher CPM’s for people that want to advertise on internet issues. Not all pageviews are the same – especially when I know the people giving me high pageviews, arn’t really consuming my content

Another issue is that advertisers are so caught up on who can create the most entertaining 30 second ad, that the creativity to get people entertained has ovetaken the reason why advertising happens in the first place: to make sales. The way you do that, is by communicating your product to the people that would want to buy it. If I placed advertising on this blog, from people who want to do web-business related stuff, they should only pay for the peope that read my blog postings for 5+ minutes on the Attention economy, not for the Google images searchers who are looking for porn (my top keywords, and how people find my blog, makes me laugh out loud sometimes!).

When we create a metric that measures attention, lets be sure of one thing: the old way is broken, and the new ways will continue to be broken if we simply copy and paste the old ways. New ways like click-through ads that appear on search results, and account for 40% of internet advertising is not how advertising should be measured. The reason is because it is putting the burden of an effective advertising campaign, on a publisher. Why should a publisher not get paid, with the opportunity cost of not using another ad that would have paid, because of the ineffectiveness of the advertisers campaign strategy at targeting?

When measuring audience attention, lets not overcomplicate it. It should be purely measuring if someone saw it. As an advertiser, I should be able to determine which people from which demograph can see it my ad – and yes, I will pay the premium for that targeting. If it turns into a sale, or if they enjoyed the content – is where your complex web analytic packages come in. But for a simple global measurement system, lets keep it simple.

Concluding thought

If I stood at the toll booths of the Sydney Harbour bridge naked, some people will honk at me and others won’t. If I can guarantee that they can see me naked, that’s all as a publisher I need to do. It’s the advertisers problem if people honk at me or not. (Not enough honks means as a model I should still get my wage. They just need to hire a better looking model next time!)