Viggle + Wetpaint, and a Vision For the Future of Media

Which do consumers want? To tune-in live for their favorite TV shows?  Or to get news about them all day long? The answer, my friends, is both.

Not coincidentally, I have big news: My company Wetpaint has just been acquired by Viggle, the entertainment platform that rewards users for watching their favorite TV shows.

Viggle and Wetpaint make an excellent match — we both bring cutting-edge technology to serving the passionate audience of television fans — and in this partnership there is incredible potential for synergy. But that’s not the only reason I’m excited: By combining forces, Viggle and Wetpaint are creating a media company that has what it takes to become the ultimate digital media company. Together, we have the potential to overcome the problems that the media industry has been struggling with since the dawn of the digital age.

Digital Quarters readers know that all of my waking hours (and probably most of my REM cycles, too) have been spent developing a vision for the future of media. And I know lots of other media CEOs who are losing sleep pondering the same. Everyone’s been dying to know: How do you build a sustainable (let alone wildly successful) media company in the digital age?

If my years in this business have taught me anything, it’s that there are three key things a media company must get right in order to succeed today:

  1. Create an amazing consumer experience
  2. Grow your audience and expand your reach
  3. Give your audience a reason to be loyal

That’s why Viggle and Wetpaint make for such a powerful combination. Viggle is a master at incentivizing audience loyalty — their 4 million registered users earn points toward real-life rewards (gift cards, electronics, vacations) every time they log in to their favorite television shows. Meanwhile, Wetpaint’s expertise lies in rapid and sustained audience expansion — with our original content and social publishing technology, we built an audience of 12 million in less than three years.

Above all, Wetpaint and Viggle are committed to delivering brilliant consumer experiences. We are constantly innovating with the aim of better connecting with our audiences, and better connecting them in turn with the media they’re most passionate about. The future of media will be defined by this kind of transformation in the consumer experience — it will be about bridging the online and offline worlds by taking cues from what’s happening in real life and enhancing the moment, rather than distracting from it.

There’s been a lot of buzz recently around the “second screen” concept, which is supposed to do just that. But the second screen experience of Twitter and Facebook is insufficient, to say the least. When I need to log into my Twitter account and type “watching #RealHousewives!” in order to participate, the burden of weaving social media and television together is falling too heavily on the consumer. But Viggle takes it to the next level and actually meets you in your living room — their audio verification technology can automatically recognize the show you’re watching just by listening.

While in the old days your favorite television show was a once-a-week affair, the future is about extending that experience before and after showtime — it’s there whenever you want it to be. Wetpaint’s original content and sophisticated distribution technology make it easy for fans to check in with their favorite shows and stars 24 hours a day, 7 days a week.

This “always on” entertainment experience is good for consumers, and it’s good for marketers as well. Together, Viggle and Wetpaint provide an unprecedented level of access to the television viewing audience, allowing marketers to send targeted messages across multiple platforms before, during, and after programming. And combining real-time entertainment with great editorial content is a winning formula in all kinds of new areas that our teams have been dreaming about.

We know that consumers want digital technology to supplement and enhance the entertainment that they love. This will be the key going forward — the second screen that doesn’t pull you out of the moment, but makes the moment (and the moments before and after) even better. That’s what Wetpaint and Viggle are doing together. That’s the future of digital media. And much more than TV is in our sights.

The Race to Become the New EPG for Media

This article was published as a guest post in AdAge, and is republished here for Digital Quarters readers. 

I wrote not too long ago about Facebook’s potential to become the new Electronic Programming Guide for our digital world.  People check Facebook an average of 14 times per day to see “what’s on” in their lives, and they spend one in and spend one in four minutes of their small-screen time looking for things to like, click, or comment on.  For hundreds of millions of people, Facebook has become the destination of first resort when they have time to go nowhere in particular.

But when it comes to supplanting the good ol’ TV Guide-style program grid in directing our media diets, there are increasing signs that Twitter could get there first.

While Facebook has been building a content strategy in fits and starts, Twitter has been remarkably determined and consistent in their moves toward becoming a hub for all of our entertainment needs.  Did you know that the 5th season of Modern Family premiers next week?  Have you heard the new Britney single?  Are you up on the latest Silicon Valley deal?  If you logged on to Twitter at all today, the answer is most likely yes.

You might counter that the same could be said for Facebook – but the chatter only goes so far.  Facebook contacts may throw out just as many hot tips; but because of Facebook’s decision not to prioritize third-party content partnerships, those hot tips send users away with a link instead of encouraging media consumption within the Facebook platform itself.  That’s where Twitter pulls ahead:  they are actively making deals with key content providers to build out the media experience for users on the Twitter platform.

Partnerships with iTunes, Rdio, and Spotify are a key component of Twitter #Music, an app launched this spring that plays entire tracks (that you discover via your social graph) instantly on demand.  As for news, Twitter has long maintained a good relationship with journalists; and now that they’re hiring a Head of News and Journalism, we can expect an even bigger build-out of the Twitter news experience in the near future.

But it’s in television that Twitter has made the greatest strides – and sees the greatest potential.  Partnerships with ESPN, NCAA, NBA, NASCAR, and MLB (to name just a few) brought video clips from live sports into your Twitter stream, and a recent deal with Viacom allows certain networks to tweet show highlight clips along with video ads to their followers.  And this is most certainly only the beginning:  this year’s acquisition of Bluefin Labs and the high-profile hiring of Google’s Jennifer Prince signal that Twitter is gearing up to become a much, much stronger force in television going forward.

In fact, we don’t even need to read between the lines:  CEO Dick Costolo has been very vocal about his second-screen ambitions.  He sees Twitter as a natural complement to real-time viewing – and that’s where it gets interesting.

Most new technologies in the last decade (TiVo, Netflix, Hulu) have encouraged the trend toward “off-lining”: watch what you want, when you want it.  But Twitter reverses the flow:  activity on Twitter actually drives real-time television viewer tune-in.  It makes sense; if all of your Twitter friends are quipping about the new episode of Real Housewives as it airs, you’re much more likely to turn on the TV so you can join in the conversation.

The tune-in effect has often been a talking point for Twitter execs in attempts to woo television advertisers, but a recent independent study from Nielsen actually confirms the phenomenon:  an increase in Twitter commentary about a show can cause a statistically significant increase in ratings for that show.

This is a big deal for television in a time of declining ratings, and it’s a very big deal for Twitter.  Twitter is the only one who’s come close to making social TV a reality, and recasting the Internet as friend rather than foe to the television industry.  And that is powerful.

Unlike Facebook, Twitter is building a long-term, symbiotic (the data says!) relationship with the major networks.  And the more Twitter can entwine itself with television, the better for their bottom line:  the biggest advertising spend today still belongs to TV, and no new digital media company has been able to siphon a sizable share.  Twitter just might be the one to bridge that gap.

With hundreds of channels on the cable dial, thousands of news outlets, tens of thousands of films available for streaming, and an almost infinite number of other entertainment options online today, media companies are having a hell of a tough time competing for audience attention – and consumers are similarly challenged with an overabundance of choices.  The more Twitter can direct users to “what’s on” based on their interest graph, the more valuable the platform will be to all parties involved.

The next link in the evolutionary chain of mass media will be a technology that helps us navigate the whole digital media landscape – one that combines the best of TV, books, radio, movies, and news with data about your personal interests and preferences.  Twitter certainly has a ways to go yet, but if they continue to work side-by-side with the most important content providers, they have a strong shot at becoming the new EPG:  our go-to destination for all of our media-hungry moments.

Brands Should Stop Trying to Be Publishers

This article was published as a guest post in AdAge, and is republished here for Digital Quarters readers.

If buzz implies truth, then there is absolutely no doubt about it:  Every brand must be a publisher.  It’s the clear mantra for advertising in this social age.

If you believe that, then every brand should have a newsroom watching for flashes of cultural Zeitgeist and coming up with witty retorts.  Oreo is heralded for telling people to dunk in the dark when the Super Bowl’s lights went out, and I won’t deny that they earned a lot of impressions and a bunch of new Twitter followers from that clever and timely tweet.

But one-in-a-million viral success stories like this one obscure the real truth:  Being a publisher is not for the faint of heart.  It requires a huge investment in content, most of which will yield negative returns; its performance is inconsistent, unpredictable, and often immeasurable; and even your greatest ‘wins’ will inevitably draw jeers from the nay-sayers.  99% of the brands I know wouldn’t even consider taking that kind of a risk.

 

Good Publishing Alienates

Successful publishers have a strong point of view.  TMZ and Perez Hilton can snarkily tear down celebrities at every turn on the red carpet, but could Chanel and Pantene ever call out even the tiniest flaw in Heidi Klum’s outfit when it’s their turn to comment on the Oscars?  Not a chance.

An authentic point of view draws a line.  It has both praise and punishment to meter out.  Without an edge, it would have nothing to stand for, nothing to relate to.  The social world is one of conversational marketing – but how boring is the conversation where all one party says is, “I’m really great!”?  Get me out of that ego-fest – fast!

Of course, there are exceptions to the rule that brands can’t have a point of view:  companies like Virgin and Red Bull actually built their brand identity on standing out from the crowd.  These are some of the most delightful and engaging brands, but they are few indeed – most brand managers I know would be fired for pulling those sorts of stunts in their own hallowed halls.

 

Hopelessly Devoted to Me

One of the premises driving the current “brands must be publishers” mania is sound:  Brands do need to earn a spot in consumers’ media plans to stay on the radar.  And to earn that spot, they need content that has a point of view, and is relevant to their audience.  But most importantly, they need to move beyond talking only about themselves.

Try reading Oreo’s current Twitter feed – you’d have to really love Oreo shtick to want to subscribe.  Since the Super Bowl, Oreo’s been tweeting little mini-ads about twice a day, cute and benign and edgeless…and so hopelessly devoted to itself.

But just what else does Oreo have to talk about?

A lot, actually.  They could write about the joy of being a kid, sharing moments with friends, or finding sweetness in life.  What if they could move the cookie out of the spotlight and focus instead on delivering meaningful, exceptional content to their customers’ newsfeeds?  Their audience size, conversational relevance, and impact would improve by tenfold.

Crazy?  Not really.  American Express has devoted tens of millions to supporting small businesses with content, events, tools, and resources.  L’Oreal would be well served by offering consistent beauty help to its audience.  And for a delicious chocolate cookie that begs to be twisted, opened, and licked, it’s not crazy to delight people with lots of other examples of those sweet moments in life.

 

Content Can Never Be an Afterthought

But to write about sweet moments twice a day with anything of substance would require a whole publishing operation.  And oy, the approval cycles from the marketing department!

It quickly sounds expensive, not to mention hard to pull off reliably.  Most TV show pilots flop.  Over 80% of Hollywood movies earn back less than they cost to make.  And that’s just the tip of the iceberg that the public actually sees – the greatest hidden cost of creation lies on the cutting room floor.

Few marketing departments have even long odds of being able to handle the pace, volume, and risk profile of publishing.  Successful publishers on the web post dozens of times a day, while a single piece of marketing creative can take weeks to be approved in most organizations.

 

Where Do Publishers and Brands Meet?

Creating all that content in-house is messy and risky – so why not leave the sausage-making to the experts?  But there’s another way to bring great content to your customers:  Be a curator.  Being a curator allows you to:

  • Let other people take the blame.  Brands don’t have to fully “own” the POV of curated content.  As Jason Hirschhorn loves to say in his curated daily news for media execs, he’s “just” the curator.  That means he assembles a collection of great stimulus for his readers every day.  But it doesn’t mean he is agreeing with them all.  Rather, he is just declaring them relevant and thought provoking.
  • Let other people do the work (and pay the bills)!  Creating truly standout content isn’t easy – that’s why ad agencies obsess for months to get each campaign’s worth of creative just right.  And it doesn’t happen every day.  After all, have you seen any other notable Oreo tweets since the Super Bowl?  Creating great content is hard and expensive.  Selecting it, on the other hand, is a skill that can be exercised with daily perfection.
  • Let customers know the real you.  Consumers know that marketers are marketing to them – and for Oreo to say that their purpose in life is to publish moments of sweetness with a journalistic credo would be dubious at best.  But a sponsorship role is accepted – and, frankly, appreciated.  Oreo can say that these sweet moments are brought to you by Oreo, because hey, that’s just what we cookie guys and gals are like.  It’s believable and real.

Don’t buy the hype that every brand must be a publisher.  Remember that your brand is a brand.  You don’t need your customers to know what you think about the latest political scandal – you need them to know why your product is awesome.  You don’t measure success based on engagement the way publishers do – you measure success based on sales.

Connect with your customers on a personal level by becoming the honored convener and even patron of great content.  Relate to your audience via the dreams that you stand for, beyond just your product attributes and flavors.  What do your customers want to hear about, and what have you earned the right to discuss?  Find third-party publishers who have something to say of meaning that you can really put your brand behind…and I mean behind!  Lead with the content, not the cookie.

Be a brand, and use a chorus to back up your own voice.  Let others who are experts spend money filling the cutting room floor.

 

The Scarcity Index: A Predictor of the Most (and Least) Valuable Content in Media

This article was published in Ben Elowitz’s Media Success newsletter and is republished here for Digital Quarters readers.

As digital modes have transformed media, whole sectors have lost something fundamental and valuable:  scarcity.  With an explosion in new content creation and effortless replication of so much of what is produced, we have gone from scarcity to surplus.

And we all know the economic implications of that.

 

The Problem With Abundance

With every byte duplicated in nanoseconds and every outstanding original article summarized into so many blog posts, this duplication and substitution has commoditized the media industry’s greatest asset – its content.  And as a result, monetization of digital content is lower and revenue has suffered, without proportional relief on production cost.

Is there no last refuge of scarcity in media anymore?  I’ve been thinking about the elements that can still command a premium in the digital era, by virtue of their ability to make us pay attention with something that can’t be replicated:  live sports, concerts, transformative experiences.  If of no other value to media, Snapchat is proof at least that we still value the ephemeral “right now.”

 

Finding Scarcity

For a media company, the key to surviving in this age of abundance is finding and capitalizing on those once-in-a-lifetime experiences and not-so-everyday moments in a way that commands audience attention.

With that in mind, here’s a look at various content categories arranged from extreme scarcity (and thus highest value) all the way to extreme abundance (aka the Swamp of Sadness and Devalued Content), via the ever ownable and attention-getting format of the infographic:

 

 

Are you sitting pretty at the top, or drowning at the bottom?  How have you been able to capitalize on scarcity in media?

Google May Beat Netflix to Live TV

Just a couple of days ago, I wrote about what will happen when over-the-top video providers start broadcasting live events – and how that will be a large, spreading crack in the dam that holds up the cable TV bundle.   And then yesterday, Peter Kafka at AllThingsD reported that discussions are underway between Google and the NFL to make it happen.

How’s that for timing?

Notably, the biggest objection to my prognostication came (via tweets, of course) from Mark Cuban and others who argued that bandwidth would be a huge obstacle.  Live means millions of people logging on at once, and sending millions of simultaneous yet personalized streams in real-time without glitches is both hard and costly.  How could an Internet connection possibly offer the quality of service to do justice to a brand as tony as the NFL?

Or, as my head of strategy and business development, Chris Kollas, asked aloud yesterday:  “I wonder what Google has to promise to the NFL in order to win an exclusive?”  The answer to that is almost certainly “very high quality service.”

The bandwidth problem is one that Google is in a unique position to overcome – and in that sense, it’s not surprising that Google can and should be more aggressive than its online competitors in pursuing live events.  In particular, Google has at least three advantages over other video companies:

1. Google has the muscle for the job.  When it comes to the advanced computer science and engineering required for outstanding and reliable video delivery, Google has some of the best and most experienced talent on the planet.  Google has the expertise, the resource base, and the DNA to solve problems like this creatively – through zany combinations of hardware, software, infrastructure and imagination that others can’t or wouldn’t even consider.

2. Google has aligned financial incentives.  Unlike anyone else on the planet, Google actually monetizes network performance – and they do so quite handsomely.  Every time Google makes an investment in high-performance infrastructure that reduces response times, they see search revenues climb.  Witness Google DNS, a service designed expressly for the purpose of speeding up the Internet so consumers will search more times per hour, and Google Instant, a search feature that delivers results (and don’t forget the ads!) to users posthaste so they will click sooner.  Not to mention a spendy investment in high speed fiber in Kansas City.  Whereas Netflix gets its flat $7.99/month for any above-threshold performance, Google sees outsized returns whenever they improve their delivery.

3. Google has a stronger motive.  Google has more to gain.  Despite tremendous efforts, YouTube hasn’t yet achieved critical mass as a go-to destination for top-tier programming, the way competitors like Netflix, Hulu, iTunes, and Amazon have.  Instead, it is still capturing the long tail of video – which means it is capturing the long tail of advertising revenues, too.  Google has already indicated its ambitions for both top-tier advertising and subscription revenues; and yet it hasn’t earned broad recognition on either of them.  As I discussed in this week’s post, premium packages like NFL Sunday Ticket can certainly anchor content offerings to consumers – and more importantly, earn a right for YouTube to be the start page in everyone’s living room.

In the long term, Google won’t be the only Internet video provider to be able to serve up live events.  The cost and capability of providing such service could easily become commoditized with a future generation of architecture, infrastructure, and content delivery services – the Akamai’s of the next generation.  It may take years, but in the meantime, those who innovate and have the muscle and talent to apply to this problem have the chance to earn outsized market share before the others catch up.

Cord Cliff Coming: What Happens to TV When Netflix Streams Live Events?

This article was published as a guest post in AllThingsD, and is republished here for Digital Quarters readers.

Netflix has never streamed a live event, and Reed Hastings says they never will.

Now that’s a wise comment for a disruptor to put unambiguously on the record – especially since the TV networks could immediately pull their content from Netflix if they ever heard otherwise.

But we all know that occasionally CEOs change their minds.

So that’s why I decided to imagine what would happen if Netflix took on live events.

And as soon as I played out the scenario, it became obvious:  sooner or later, they will.

 

Live Is the Lifeline of Television

Television incumbents wouldn’t need to wave off cord cutting if they weren’t genuinely scared of it.  New data shows that 30% of US Internet users would consider cutting their expensive and relatively despised cable subscription to watch TV exclusively online.

But even with as much content as digital pure-plays like Netflix, iTunes, and Hulu now offer, there’s one outsized variable that’s holding the whole cable bundle together:  live events.

Live events are inordinately valuable.  They have ultimate scarcity:  they happen “right now,” they provide a focal point around which hordes of people come together, and they give their viewers an “I was there!” experience beyond just the content itself.  They are one of the few must-haves in consumers’ media diets.  Personally, I can vouch that the Olympics, the Oscars, and the Boston Marathon news are the only television in the last year that drew this cord cutter’s rabbit ears out of the cabinet.

Live events are what cable and broadcast TV have that Netflix doesn’t:  news, talk shows, and – most importantly – sports.  “The biggest question we get from potential cord cutters is how to watch live sports without paying for cable,” reports GigaOm.  There’s still no feasible alternative.

At least, not yet.

 

Netflix’s Massive Audience for Mass – and Niche – Media

With 29 million streaming subscribers in the US, Netflix has more video subscribers than Comcast.  And not only do they have the reach, but they also command an enviable share of viewers’ daily attention:  according to BTIG analyst Richard Greenfield, if Netflix were a cable network, it would be the most-watched cable network on the air.

Even more powerful than their reach is Netflix’s legendary ability to target niche audiences with a long tail of content.  Netflix won’t need to spend a billion dollars on NFL rights (though, as Peter Kafka notes, one certainly could).  Instead, they could start organically, with a live stream of the White House Correspondents’ Dinner Roast served up to their political documentary fans and comedy buffs.  It wouldn’t surprise anyone if Netflix found that those most likely to watch the Tony Awards are exactly those who have streamed more than their share of Les Misérables.  And voracious consumers of Pelé and Beckham documentaries would certainly be an easy target for a new offering of pro soccer matches.

If live events and movie reruns sound like the Felix and Oscar of television programming, consider this:  the very first two programs aired by HBO when it launched in 1972 were a Paul Newman movie and a New York Rangers game.

Just as HBO started with hockey, bowling, and wrestling, Netflix could insert the thin edge of the wedge under various niche interests – and as the audience expands, so can the programming.  With TV network ratings shrinking these days, at what point does Netflix surpass NBC in viewership and become a credible bidder for streaming rights to the Olympics?  NBC has those rights locked down through 2020, but if the audience continues to shift online, we could be just two more Summer Olympics away from the first completely cordless Games.

 

Premium Content Means Premium Revenues

Why would a low-priced, all-you-can-eat subscription service add mass media events to the bundle?  Because eventually they’ll need a new revenue stream – and they can’t justify premium pricing without adding new premium content.

Providing exclusive access to must-have programming like House of Cards and Orange Is the New Black is a great way for Netflix to earn a larger subscriber base in the short term.  But in the long term, more (and more varied) exclusive programming will give Netflix the ability to increase their revenue per user, too.

If Netflix can capture an even greater share of viewers’ consumption hours, they’ll be all the more able to justify raising subscription fees in the future.  And not only that, but they’ll be able to leverage the strength of their content into entirely new revenue streams.  A certain segment of the audience would surely pay a few extra dollars per month for a live streaming pass to view all NHL games, and Netflix could use exclusivity to attract more special interests to join their growing audience.  And then someday, once they’ve turned pro at making original productions, Netflix could put some of their best content into a premium package that truly competes with HBO.

The old cable standby of subscription plus advertising isn’t the only way to pull in dual revenue streams.  Selling ads may never make sense for Netflix, but a revenue boost from premium programming is certainly in their DNA.

 

Netflix Live Will Be the Cord Cutting Catalyst

When Netflix starts streaming live events, the results for incumbent industry players could be catastrophic, as it rips the rebar out of the dam holding back cord cutters.  Consumer behavior has already begun tilting away from TV, and the fragmentation of TV audiences means we’re depending less and less on the major networks for our entertainment.  The tipping point for the mass exodus will be the arrival of better alternatives for viewing live events.

If Netflix listens to their customers (something that cable companies seem to be categorically poor at doing), they’ll realize that Netflix Live would not only bring new “must haves” to its offering, but could potentially convert tens of millions of unhappy cable customers into Netflix subscribers.  It would also give Netflix the edge to charge more for added value down the road.  After all, the economics of cable have proven one thing for certain:  people are willing to pay more for more.

Reed Hastings recently told investors to expect a “redefinition and broadening of what Netflix is.”  With its original programming, we’ve begun to see the power of adding exclusive original content to the package.  The next big step will be live and unplugged.

Facebook’s Chance to Redeem Platform

Facebook squandered their opportunity to become a true platform company, argues Hamish McKenzie in 6,000 words at Pando Daily.  He describes how Facebook raised expectations sky-high at the f8 conference in 2007, only pull the rug out from under the developer ecosystem by repeatedly changing the rules in the years to come.

Hamish is right:  Facebook made a huge mistake with Platform, and it hasn’t achieved anything close to its full potential.  But the biggest obstruction wasn’t the ever-changing developer rules.  Rather, the problem was that developers were able to win eyeballs but not earn revenues.

But Hamish’s eulogy is premature – Facebook could still become the platform company that it set out to be.

All Facebook needs to do is get monetization right – then return to Platform.  And Facebook is now showing signs that they’re at an inflection point in monetization.  Once that monetization matures, Facebook will have a platform of significant interest for app developers.  All they have to do is share the wealth.  No developer would ever have installed Google’s AdSense if the links came without a payment.

Just like Google figured out how to monetize with AdWords before they rolled out AdSense, Facebook needs a credible model with clear economic incentives before app developers will give them a second chance.  But bad feelings notwithstanding, as soon as Facebook comes back to the table with a robust platform that enables apps to generate real profits, even jilted developers will be back – and Facebook will get a second shot at becoming the ultimate platform, the social operating system of the web.