Wetpaint CEO Ben Elowitz on the Future of Digital Media
I’ve written a far-reaching analysis of Facebook’s new features announced at today’s F8 conference.
The original is at AllThingsD.com, republished here for Digital Quarters readers.
The most confusing thing about the so-called “social Web” has been that it’s too often thought of as an entirely separate Web unto itself. It’s as though Facebook and Twitter are different planets in the solar system – digital orbs that we can shuttle to and from with the flick of a click. And, sometimes, it’s almost as if they aren’t even in the same cyber-galaxy.
That’s because Facebook today advanced its “Open Graph” integration with the rest of the Web, releasing a new set of media-oriented features, and finally tying its own planet inextricably to — if not outright annexing — the rest of the digital universe.
Over the last several months, as a Beta partner in this initiative, it’s become clear to me that this is far more than just an end-user feature. If you look closely at these enhancements, and use them — as I have — you realize that Facebook is making a giant leap forward in the media cosmos; and you sense, meanwhile, that Google could easily be left on its Earth-bound launchpad, held back by commercial gravity.
What makes all this so Earth-shattering?
Simply said, with a few extra lines of code on any Web page, Facebook now becomes the hub for every user’s action — watching a video, reviewing a recipe, clicking a page, reading an article, and much more.
But beyond that, those same lines of code are driving a powerful and fundamental transition underneath the pages themselves: transforming them from the bits and bytes of abject HTML code, text, and images into much-needed, and much sought-after, meaning. In essence, Facebook is taking these enhancements and initiating the first major advance in deciphering the Internet since the hyperlink itself.
And, in the process, Facebook is confirming the fact that it’s the new and undisputed “social operating system” on today’s people-centric Web.
To be sure, Facebook now controls the ebb and flow of human connectivity, inter-personal sharing and relationships on the Internet.
The end result is that Facebook will now do what Google can’t. Or, put another way, Facebook will now be able to fulfill Google’s very own mission better than Google itself can, succeeding at a whole new level of organizing and making accessible all the world’s information — not to mention its activities and human participants.
A Networked Rosetta Stone for the Semantic Web
With the new enhancements for its “custom” Open Graph, Facebook will now be wiring its Web to capture every page, every user action, and, eventually, every significant detail — all recorded and categorized.
Unlike previous notable attempts to predict, or even define, a “semantic” Web — a Web where actions and objects are identified, categorized, and have meaning — I believe that Facebook’s will succeed. At first, however, it will do this one action and object at a time, gradually adding each one into its ever-expanding repertoire.
For its semantic approach, Facebook has two incredible advantages: it knows the people of the Web intimately; and, unlike any other system in the world, it records a true timeline of activity.
Let’s look at the people. Facebook knows more about most people than even top law enforcement agencies.
For activities, though, its vocabulary may start out relatively basic; but already it forms the structure to identify what actions can be applied to what entities.
As for the objects themselves, Facebook has initiated a data collection system that will populate the world’s largest representation of things.
Ultimately, however, Facebook will succeed where others have failed for one even more powerful reason than structure, and that’s because it offers a compelling incentive to the millions of parties who will provide this data: By participating, publishers will increase their traffic in the form of clicks from other users earned via meaningful semantic data instead of SEO acrobatics — and Facebook is one of the top traffic suppliers on the Web. Never before has anyone offered such a valuable payback for codifying all the world’s information systematically. And, in the process, Facebook is leveraging subject matter experts on every topic in the universe.
This approach means we are creating relationships; not between words, the way previous semantic Web conceptions have conceived of them – but between real people and objects. Everyone, even a basic rules engine, can figure out that I have a mother (who doesn’t?). But Facebook will know something far more important: whether I send her a birthday card annually (I do), or whether I make her dinner weekly (she wishes!).
Just as importantly, Facebook has the cooperation of 750 million people around the world, each of whom is recording some portion — the portion they want to share — of their lives in Facebook.
So, while the traffic and social capital accrue to the participating publishers and users, the greatest asset — the massively linked database of all the world’s information and most of online humanity’s activities — becomes proprietary to Facebook itself.
In sum, this is an incredibly bold play that the world has never conceived of before.
The Most Valuable Data in the Universe
And the resulting Facebook database will have similarly unprecedented value. Beyond the value of Facebook’s existing social capabilities, it has the potential to power the greatest discovery engine since the power of sight itself.
By knowing us intimately — who we are, what we do, and what our interests are — Facebook is in a position to answer our every desire. Yes, we populate its dataset, but Facebook’s dataset can also populate our lives, by suggesting movies, music, reading, restaurants, and, increasingly, ideas and answers. This massive dataset not only knows us and our friends, but it can use our similarities to people we won’t ever know to help intuit what’s of value to us.
More than just a social engine for the document Web, Facebook is creating a new engine that powers a whole new Web, one where search and social are fully integrated into a complete service.
This service leaves open one critical question: Will Google’s flat document-oriented search approach maintain its value going forward?
Of course, it will take a while before Facebook’s dataset is fully populated — and even longer for it to be completely codified. But Facebook, already the de facto identity server for 750 million people online, will now start amassing point data for each of the billions of objects in the real world. And these first steps will start transforming a social operating system that links people to one that links our whole world together, people and objects.
To Know Me Is To Speak My Language
In this moment-to-moment process of data accumulation, Facebook will start defining and dimensionalizing a digital world filled with links and pages, as well as an ever-expanding catalogue of billions and billions of choices and decisions made on the Web.
This will help Facebook truly know us, and know us in our real context. We exhibit behavior, and have relationships with the world, and Facebook will now be able to thread these fairly seamlessly, using longitudinal knowledge.
If you read articles in The New York Times, for instance, Facebook will begin to know your interests, your views, your reading habits, your diversity of views, your passions and pursuits, as well as the friends you share the material with. It will know what you encounter — and also what you want to encounter.
This is a massive change from the status quo.
The world’s most popular search engine — Google — uses a flat, transactional search. It can’t tell if “lobster” means you want to read about lobster, cook a lobster, or find a lobster restaurant. And it certainly doesn’t have any way to correlate last week’s lobster recipe with this week’s. But Facebook can link all the activities together. It will know that you cooked a lobster and, further down the road, how well the meal went. It will then be able to include you in circles with other gourmets and seafood enthusiasts, and to offer you the opportunity for a host of customized shared experiences that only start with the kitchen.
The net is that, until now, we’ve lived in the Web’s world; but a fully integrated Open Graph will allow the Web to finally live in our world. This is the power of digital intimacy. And it’s coming closer and closer. The issue is no longer whether we’ll be known by our digital companion; it’s how well we’ll be known.
The importance of this cannot be underestimated — because being known is a huge human drive and need, and technology has thus far never been able to cross this digital divide. Google’s sorting and searching just hasn’t gotten us there; but Facebook’s relationship building between people and objects now can.
Change is hard. Change is scary. Change is costly. Change is essential.
This is no more true anywhere than in today’s unbelievably dynamic digital media business.
In February of this year, I outlined the characteristics that define great leadership in this tumultuous digital media industry – and will determine who ultimately succeeds. I published it in my Media Success newsletter that month (reprinted below), and it has remained a sidebar feature ever since, as the definition of a perfect game.
The 7 Variables For Media Success
Those with these seven attributes will win in media.
His extremely controversial and determined decision this week to split his company in two is both phenomenally ballsy and smart.
Hastings sees where the world is going, and, instead of resisting, he is getting out in front. He knows that his DVD service today is immensely profitable, and yet it is on a long slow ramp toward zero. And, at the same time, Internet-delivered video is a whole new, and far more valuable, business.
It’s the same dynamic throughout most large old media businesses. And yet – unlike many in old media – Reed is doing something aggressive about it.
Rather than playing to short-term profits on the DVD business, he is turning full-tilt to the business with the greatest strategic value. If I’m not convincing on this point, please read Mark Suster’s trenchant analysis.
Yes, Hastings communicated his new strategy poorly. But he admits as much in his widely distributed apology. So, with this mea culpa now delivered and digested, let’s get off Hastings’ back, and get back to the most interesting dynamics at play here:
Far beyond any villainy on Hastings’ part, and far beyond any damage to his customer base for changing his product line, I suggest looking for someone else to blame by pointing the finger at Wall Street.
The Street talks about its desire to see long-term strategic vision; but whenever it’s there, right in plain sight, investors collectively blink – and then sell, sell, sell. Indeed, the current sell-off of Netlfix’s stock is one of the most alarming signs of the Street’s misunderstanding of media’s strategic future. And now, looking forward, I pity any CEO who turns to Wall Street for strategic validation.
Let’s keep the spotlight on Netflix, though.
I wholeheartedly agree with Hastings.
And there’s no question – in my view, at least – that broadband-delivered content represents the much more important and valuable business opportunity for his company. The fact that he decided to split the service lines at Netflix simply confirms openly what was already inevitable, if previously hushed.
For some reason, Wall Street just doesn’t get it. And, in my opinion, its punishing resistance to Hastings’ moves is akin to pummeling AOL for thinking beyond dial-up service; yet, as we all know, that company is a decade overdue in figuring out its next wave.
I’m a believer in facing facts, truth-telling, marketplace opportunity, and getting to the sweet spot first.
So, having said that, I’m putting my money on it. Yesterday, I bought Netflix shares. It’s the first single stock purchase I’ve made in media in a couple of years; and I made the buy after seeing a CEO – who has all the variables dialed in to achieve on the next big opportunity in media – do the absolute right thing.
One of the most important questions publishers are grappling with today is whether they oversee a media company or a technology company. In the following article, which appeared originally in my Media Success newsletter and was subsequently republished at AllThingsD, I explain why every media company has to be a technology company. Then I offer several keys to success in the current digital environment, which is dominated by the rise and evolution of the new social Web. Please take a read, and let me know what you think.
Let’s start with two truths.
First, publishers need cutting-edge technology to hook an audience through today’s digital media channels of the Web, mobile, social, and search.
And, second, the breakthrough technology can’t just be about product design – it’s got to go beyond to create distribution advantages on the new connected Web.
Okay, now that we have the truth out of the way, let me ask you a question:
“Is your company a media company, or a technology company?”
I love getting asked this question. And every digital media leader I know hates answering it.
Discomfort, Uneasiness, Anxiety, Fear
The uneasiness begins with the mistaken idea that the two are separable. And they were – back in the 15th century, when Gutenberg first worked his printing magic, and up until a few years ago. But we all know digital technology has inserted itself inextricably into the guts of publishing, replacing ink with bytes and paper with pipes. And now, over the last two years, technology has transformed the basis of publishers’ relationships with their audience, by connecting them through social operating systems, as we discussed last month.
And yet, our uneasiness escalates to anxiety when we realize we still don’t fully understand the new technology’s potential or impact on our business.
That is a scary thought.
Technology Drives Media
I think we all need to collectively swallow our fear. We know every media company must be a technology company today.
In the first generations of digital media, it was easy. In AOL’s past, technology’s key role was simply to provide basic Internet access over dial-up lines. Today, while that access provides cash flow, it no longer has any strategic value in media. Similarly, Yahoo’s early technology prowess was applied to create significant products like Yahoo Mail. But while Mail still drives 73 percent of the audience to Yahoo’s media properties, it won’t secure Yahoo’s future ability to be a great media destination.
These two companies – as well as the rest of us – need to use technology for something more advanced than access and ancillary products. We need to put it right into the heart of media so that we can create breakthrough user experiences and new connections with audiences.
Millions of Ways to Engage
To do that, let’s start by recognizing what’s changed about the medium itself: In analog days, publishers’ products were two-dimensional; and all we had to work with was ink and some paper. And similarly, distribution was mostly two-dimensional; a subscription list and newsstand sales was all there was to it.
But now, consumers have access to millions of sources at their fingertips, and each one can be rich and interactive, reaching us through several different digital channels. Both our product experiences and our distribution can be much more intricate – and much more valuable. And combining the two gives media the chance to do something it’s always aspired to do before, but never been able to.
The Future Will Be Personalized
We have recently become ready for a whole new vision for media.
And that’s giving every audience member the right content in the right place at the right time.
To do this takes a combination of data – from the social operating system – coupled with media’s greatest power, that of creating experiences and distributing them.
To achieve this, though, we need technology to do more than output HTML pages; instead, it has to chaperone customized content to every individual.
This is a big change from the original Internetization of media, which was, like generations of offline media before it: “If you publish it they will come.” That worked when directories like Yahoo and search engines like Google matched consumers to content. But that attitude was passive; and today’s social Web is anything but. So publishers now have the opportunity – and the challenge – of taking charge of their distribution.
The key is using the emerging social Web to get signals from, and connect to, the audience. And when we do this, we are putting technology in the role of relating uniquely to every consumer in order to create the ultimate experiences they crave.
Now that’s a refreshing concept for media.
Three Ways to Get Ahead
But what does this mean, practically speaking?
I believe the role of technology in media success must embody these three things:
We’ve already seen this at Wetpaint, and the results are still getting better each week. Our database of everything we publish tracks all the distribution causes and effects, so we know what works. We also pay attention to who the influencers are, with technology that identifies them as well as who their influencers are; and now we’re building a “CRM”-like system to help us know more about these individuals and win them over.
Technology Changes Businesses
Let’s circle back to the discussion of whether you’re a media or technology company.
By its very nature, digital publishing is a technical medium. But, beyond that, what makes technology interesting isn’t its ability to carry bits; it’s its ability to change businesses. And we need to change our own by updating our sense of audience, distribution, and experience creation to provide thousands of times more precision than media ever has before.
When we do that, we’re making the content thousands of times more relevant. And I believe that’s how you build a thriving digital media business in the next decade.