Wetpaint CEO Ben Elowitz on the Future of Digital Media
As you know, I’m obsessed with figuring out the future of digital media. And to do that, there’s nothing better than putting stakes in the ground – based on the best available information and sharpest analysis I can muster – and then checking back to see how they held up.
In the last couple of weeks, two of the calls I made have come true; and that offers us a great opportunity to re-visit them, and see what we can learn from them.
Hulu Plus: Great Experiences Worth Paying For
First, Hulu Plus, which is thriving with over 1 million consumer subscriptions.
A year ago, when success seemed far from likely, I went out on a limb and estimated that Hulu Plus would have huge traction with consumers, surpassing $100 million in revenue in 2011. As it turns out, Hulu’s growth with its subscription product has been even faster than I expected – albeit with lower revenue per customer, given to CEO Jason Kilar’s smartly aggressive pricing, and the resulting much higher consumer adoption. The result has been substantial corporate revenues that have helped make Hulu market itself, enticing suitors to break it free of its complicated parent-company structure.
Content licensing agreements may still represent the greatest complexity of Hulu’s business under any ownership scenario, but what’s been a fascinating expectation exceeder is that by delivering the most desirable content and consumer experience, Hulu has gotten consumers to open their wallets in droves. That’s something that we can all learn from.
PayPal Acquires Zong: Making Payments Easier
And second, EBay’s PayPal, which recently bought mobile payment company Zong for $240 million.
Back in June 2010, I strongly recommended this deal and pointed out its many advantages. Indeed, Zong’s payment system makes it easy for consumers to pay – leveraging the addictive relationships people have with their mobile phones.
As my newsletter readers know, I recently updated my formula for consumer spending on digital media.
The Consumer Media Spending Formula:
(Desire + Relationship + Ease) X Scarcity = Spend
Now both of these transactions are reinforcing it for me.
The Future of Consumer Paid Media
Beyond that, these two announcements also tell us something important about the rapidly approaching future of digital media: increasingly, the industry will be relying on consumers to contribute toward its profitability.
Now it’s up to us to create great content and meaningful experiences that are worthy.
A Bonus Prediction: Apple Versus Facebook in 2012
And that’s why I’ll take this opportunity to make a bonus prediction.
By this time next year, we will be in the early stages of what will later become an all-out war over who will be the master payment and currency provider for digital media. Even as Paypal has made significant upgrades with the Zong acquisition, they won’t be enough to ignite Paypal as the leader in the key venues: on the social networks and in mobile applications. Instead, this online conflagration will, I believe, be waged primarily between Apple and Facebook Credits.
What do you think? And what’s your favorite digital media prediction for 2012?
It’s dangerous to evaluate a product’s ability to change the destiny of a Fortune 100 company based only on a press release, a couple of videos, and other reviews.
But even though Google’s latest small step forward onto the social Web indicates that it’s moving in the right direction, I have an extremely hard time imagining that Google Plus will help the search company of the 20th century win back the Web in the 21st century.
Considering the scale and stakes that Google plays at, a social application or two – even if very successful – simply isn’t enough to reverse the company’s antisocial position in the digital marketplace. What Google really needs to do is leapfrog the notion of a social operating system (SOS) altogether. That’s the only way it can gain Google-sized ground in social; and it’s the only way it can protect its future in search.
And yet, the Google Plus that has just launched – while certainly a tremendous improvement over Google’s past failures in social – falls far short of what it needs to be. Rather than offering a vision for a social operating system, Google has introduced a collection of lab projects and apps held together by a very nice rubber band.
The problem with this – and the problem for Google – will be that these projects and applications can’t succeed without broad adoption underneath. The success of a social network hinges on getting all, or nearly all, of the right people on it. Without that, it can’t serve users’ basic needs for communication. And, at this point – from my perspective, at least – even the most prodigious of Google’s Plus project applications would be better off running on Facebook’s network.
In looking at where Google went wrong, I wonder whether the company’s focus on real-world sharing could be a misguided principle. Facebook is hugely successful, but I don’t think it’s because it mirrors real-world behaviors. In the real world, people don’t invite everyone they know over to look at their photos and videos; nor do they broadcast every move they make in games they play. No, Facebook wins because Mark Z. and his colleagues have figured out what behaviors work online, not offline. And I wish Google had the vision to lead us to the next generation of these sharing behaviors. It’s tried this with Hangouts, but it seems to have missed out in the core of its Circles concept.
That said, Google has, in fact, pushed the category forward in a significant way.
First off, it looks like Google took a different approach from Facebook’s “home base.” This is a high-stakes bet in and unto itself: Since Google is already a frequent touchstone for most users with its search, email, and other products, the toolbar says that Google Plus isn’t a destination; rather, it’s just “in the water.” That’s controversial, and seems pretty Jedi of Larry Page. I admire him for finding a way to avoid competing with Facebook as a destination, and for allowing Google to win on different terms. If anything, this one decision has the potential to be the beginnings of Google’s social operating system.
If Google is right, the toolbar could become Larry P’s secret weapon. He would be in a position to distribute that toolbar on top of every publisher’s Web pages in order to offer a true network effect; and, in the process, Google would be gathering extremely valuable user data as well as encouraging social actions that power the benefits of its system all around. If this is the way things turn out, Google would also get its highly profitable search box on every page of the Internet, too. So, in the end, Google Plus could become a great way for Google to leverage its market power and dominate social on the publisher side.
Of course, what powers the social operating system is the network (having all the right people on board) and the value for consumers to both share and read. And, unless Google can convince a whole population that participation and engagement in what it’s offering is a must, it won’t get critical mass.
That’s not going to happen right now – at least, not from the looks of these applications alone. Indeed, as a general utility, Google Plus is more ambiguous, and it’s hard to see how it will gain major, broad-based, and passionate consumer traction in its current form.