About Ben Elowitz
About Ben Elowitz Ben Elowitz is co-founder and CEO of Wetpaint, a next-generation media platform company that is reinventing the media model on the social web. The company platforms attract more than 16 million unique visitors monthly. In addition to Digital Quarters, he writes Media Success, a bold and forthright newsletter for digital media thought leaders. His work has been featured in FORTUNE, TechCrunch, All Things D, The Huffington Post, Forbes, TIME, CNNMoney, paidContent, and CNBC.com, among others. Prior to Wetpaint, Ben co-founded Blue Nile (NILE), the largest online retailer of luxury goods. Ben was also an early employee at Fatbrain.com (FATB), an ecommerce company that went public in 1998 and was sold to Barnes & Noble in 1999. Ben holds a B.S. in Electrical Engineering/Computer Science and a B.A. in Applied Mathematics from the University of California, Berkeley. He is an angel investor in a number of media and ecommerce companies, and is a frequent conference speaker on digital media, social content, and entrepreneurship.
Archive for the ‘General’ Category
How Facebook Is Crushing Search
2 Feb2012
by Jeff Berman
This piece from Jeff Berman is the second in a series of 10 posts about the future of the media industry contained in a report titled: Rebooting Media: The Digital Publishing Revolution for a Fully Social Web.
Q: How does the rise of Facebook change the relationship between media and its audience?
Radically. The conversation has historically been pretty much one way – media to audience or audience to audience. And it hasn’t been at scale. In the new world, however, the conversation is scaled and omni-directional. Since Gutenberg, or at least since Marconi, media has had a massive megaphone. But the audience hasn’t had real power. Thomas Paine and his patriotic pamphlets may be the exception; Paine had a voice and a platform, but it wasn’t a scalable model and it lacked speed. Today, everyone is a publisher, and there can be millions of Thomas Paines, reaching tens of millions of people instantaneously. Everyone who wants to create compelling content, or a movement, now has the tools. This is a very different world from even seven years ago.
Q: What’s changed fundamentally about media with the rise of the social Web, and what do publishers need to do to adapt?
First, if you’re involved in a one-way discussion, you’re not taking advantage of the social Web opportunity, and you’re leaving a ton on the table. Another advantage if you’re a legacy media property – let’s say The Wire or The Godfather – is that you now have a chance to stay in the conversation and continue it, so you’re alive and you remain active in the culture. You can keep the property and the franchise in front of new and existing audiences, thanks to the new digital tools. If the show is taken off the air, for instance, it can still be all over Facebook. Audiences are empowered today, and folks want to participate in the conversation. No one may be able to control the conversation, but people do want to shape it – and they can. The social Web gives them choices, and it provides options and alternatives for publishers and media players, too.
Q: We’ve gone from SEO (Search Engine Optimization) to SMO (Social Media Optimization), so how will search change as the Web becomes more social?
Here are some powerful numbers from a recent Forrester report. In 2004, 83 percent of Internet users deployed search engines to find content. That was before the rise of Facebook. By 2010, it was 61 percent. So, we saw a drop of a quarter in a six-year time frame, the same time frame in which social media took off. This isn’t a coincidence; it is, however, a causal relationship – and it makes sense, given what we know.
On a more sweeping level, we’ve historically learned about shows to watch and diapers to buy because we’ve spoken to friends and family. Now we’re taking these word-of-mouth conversations to the digital networks. And we’re not just using Google to search for the answers; we’re going to our friends’ Facebook pages (and, increasingly, to Twitter, particularly for real-time multi-platform engagement). This is trusted referral at scale, and it’s fast and reliable. That’s why Facebook represents such a monumental shift.
But let’s not forget that Facebook is just seven years old; You Tube is six years old; Groupon is three years old; the iPad is 18 months old – so anyone who proclaims a clear vision of the digital world even five years into the future is either a prophet or a fool. Broadly speaking, you will see evolution in SMO, and a continued deep integration of social functionality. The key point here is that Facebook is a part of today’s Internet operating system, so the efficiency and reliability of social sharing and peer reviews is going to increase big-time. In other words, the 83 percent, which fell to 61 percent, will fall even further as the social Web grows.
Finally, I’m especially interested in what Apple does with TV, and what will happen when Web TV is connected at scale and social functionality is built into the experience. The ability to share in real-time straight from whatever screen you happen to be viewing will meaningfully change the way we choose what content we engage with and how we engage with it.
Q: How do you build a brand in publishing when, with greater frequency, media is distributed through social channels?
There’s an apparent conflict out there right now. The brand world has never been more crowded than it is today. And yet it’s never been easier to build a massive new brand. The reason? As the universe gets more crowded, brand-building tools are being disintermediated. Spotify is a good example. All of a sudden, it’s skyrocketing, in no small part, because its offering is social. The same is true for LivingSocial and Groupon. These businesses have exploded like we’ve never seen before largely because of social functionality. People find it easy to share their experiences about the products, and they like having others show them the way to the marketplace. This is authentic social content.
Q: What are the critical success factors in publishing as we look to 2020; and who will be the winners?
The old axiom that you have to fish where the fish are holds true so it starts with platform ubiquity. We’ve seen this already with the explosive growth of mobile, and it’s just going to intensify as a necessary success factor over the next decade. For the vast majority of publishers, you will have to empower your audience to experience your content where, when, and how they want.
For startups, this is in their DNA. But the recent history of media suggests such change is not easy for mature publishers. You simply may have to cannibalize profitable (but declining or soon-to-be-declining) businesses to build for the future. That, or risk watching a newcomer come along and eat your lunch.
Jeff Berman is the General Manager of Digital Media for the NFL. He previously held a series of positions at MySpace, ultimately serving as President of Sales & Marketing. Prior to entering the digital media space, Berman was Chief Counsel to United States Senator Charles E. Schumer and a public defender representing children charged in the District of Columbia’s adult criminal courts. He also held an adjunct professorship at the Georgetown University Law Center.
To download the complete report, please click here: “Rebooting Media: The Digital Publishing Revolution for a Fully Social Web”
by Ben Elowitz
This week, we made some announcements about our achievements at Wetpaint, and it has prompted me to take a look back at 2011. It’s easy to be proud of the 6.4 million unique visitor audience we have built at Wetpaint Entertainment monthly. It is a significant accomplishment in just 15 months since we launched, and the Wetpaint team has worked passionately to get us here. But even a number like that is, well, just a number. The real value of what we did in 2011 lies in the all the learning we had about how to build, run and monetize a successful media property online.
And that learning makes me feel grateful – because as successful as we have been this year, it’s been against a context of upheaval in the industry. Media is not easy. Old formulas from print and broadcast are no longer working. And even the just-minted generation of seemingly successful digital companies, from Demand Media to Zynga to Facebook itself, are having to constantly innovate to stay on top of the wave that they’re on as they hope to catch the next.
Clearly, the most important keys to financial success in media are building audience and monetizing that audience – and we’ve made significant progress on both here at Wetpaint. Our greatest strength has been the data engine we’ve built to acquire, assimilate, and apply every possible insight about our audience. We learned that smart and targeted analysis can improve everything we do; that lots of rapid experimentation is critical; and that social traffic is far more valuable than search.
We also learned more about the Kardashians and the people on the The Bachelor/Bachelorette than anyone in this world should. Our editors did a bang-up job capturing the liveliness of the entertainment industry and they definitely deserve plenty of credit.
But while all our great content and social mojo would succeed in delighting audiences, it wouldn’t be enough to make a strong business without excellent monetization. And so I’m equally excited to note that as we get ready for 2012, we’ve found that our formula of great content and social mojo is just as valuable to advertisers as it is to our audiences. I’m pleased that we will be working with the team at Cambio Group via their joint venture between AOL, Jonas Group and MGX Lab. Together, we will be serving outstanding advertisers with some of the most innovative offerings around.
With this partnership in place, we are able to turn amazing traffic into amazing financial results. It will mean strength for our model and our company into 2012 and beyond.
But the implications are even broader for the industry, and that’s because we are setting a model that others can follow as well. And that is what I’m most excited about: What media needs most is a model that can be scaled and repeated – and our latest results make it clear we are on the right track to build it.
Introducing the Social Leaderboard
5 Oct2011
by Ben Elowitz
As I have shared previously, our goal at Wetpaint is to be the leader in building media properties on the social Web. That’s because I am seeing the web’s nature fundamentally change to become fully social. 
It’s not just theory – it’s data.
As I shared recently at AllThingsD.com, the social Web is capturing a dramatically increasing share of users’ attention – with internet users collectively increasing the amount of time they spend per month on Facebook by 69% over a one-year period – while usage for the entire rest of the Web, excluding Facebook, shrank by 9% over the same period.
Social is the most strategic medium for our industry. And yet we haven’t established how to track our collective progress.
So, I’d like to introduce to you the first industry effort to do so. I’ve released it this week, so that we can all compare ourselves with other top publishers and see our individual and collective progress.
Below you’ll find the “Media Industry Social Leaderboard”, a scoreboard and chart that was developed by tabulating the top 50 media publishers, based on monthly unique visitors, and then determining which were best at generating traffic from Facebook and Twitter. Of course, I’ve included Wetpaint Entertainment on the list because we are so committed to social that we are going to make our progress public. (And it doesn’t hurt that we are already significantly better at reaching audiences on these two key social platforms than many major media brands such as The New York Times, The Huffington Post, CNN, Fox News, TMZ and others. My mother should finally be proud!)
This Month’s Findings
This month, we found that MTV’s website leads the pack with 14.3% of its traffic from Facebook and Twitter, indicating the shareability of their content (especially video, which is inherently more viral), and the heavily socialized audience they serve – not to mention their great execution. In fact, MTV beat average performance by a factor of two, and were one of only four out of the top 50 that were in the double digits. Sadly, over half of the Web’s top 50 had less than 4% of their traffic from social, making them menial performers on the medium.
Social Success Could Triple Your Audience’s Value
Lest you think that MTV’s 14.3% is anything to sneeze at, we dug a bit deeper to look at the true value of social. Beyond the boost to audience attraction, we also looked at audience retention. Measuring the visit frequency to each of the publishers (excluding the portals), we found a striking correlation to their sociability. The performers above median in social saw an average of more than five times as many “addicts” (visitors who come 30+ times per month) as a proportion of their audience, according to data from Quantcast, compared to those below the median; and they saw a corresponding reduction in their “passers-by” (visitors who come only once) by 16 percentage points. These patterns map overall into more than three times the visit frequency per audience member overall for these top performers. That’s three times the value per unique.
A Leading Indicator of Long-Term Success
One thing is clear from the growth trends of the social web: Those publishers that figure out how to capture and maintain a leadership position in social will win over the next decade. For Wetpaint, it’s a critical strategy for us to be a leader among the media industry. Which would make my mother very proud.
Speaking of which, in this debut month, my company Wetpaint came in #4, bested only by MTV, People, and ESPN. Not bad for a debut… we’ll be #1 within six months.
For those interested, detailed rankings of all Top 50 are included below.
| Rank | Name of Publisher (Owner) | URL | Monthly Uniques | % from Social |
| 1 | MTV | mtv.com | 17,101,841 | 14.3% |
| 2 | ESPN | espn.com | 33,242,207 | 13.7% |
| 3 | People | people.com | 12,671,101 | 13.2% |
| 4 | Wetpaint Entertainment | wetpaint.com | 2,532,044 | 12.4% |
| 5 | TMZ | tmz.com | 14,575,713 | 8.8% |
| 6 | Yahoo | yahoo.com | 172,269,418 | 8.6% |
| 7 | Patch (Aol) | patch.com | 10,610,327 | 8.6% |
| 8 | Major League Baseball | mlb.com | 15,552,415 | 7.9% |
| 9 | Aol | aol.com | 51,659,415 | 7.7% |
| 10 | Discovery Channel | discovery.com | 11,170,738 | 6.7% |
| 11 | Break Media | break.com | 9,166,220 | 6.3% |
| 12 | IGN (News Corp) | ign.com | 10,112,530 | 6.1% |
| 13 | Us Weekly | usmagazine.com | 10,970,162 | 5.9% |
| 14 | CNN | cnn.com | 56,595,377 | 5.3% |
| 15 | FOX News (News Corp) | foxnews.com | 26,900,038 | 5.0% |
| 16 | BBC News | bbc.co.uk | 14,863,384 | 4.8% |
| 17 | MSN | msn.com | 115,933,138 | 4.6% |
| 18 | Nickelodeon (MTV Networks) | nick.com | 10,716,354 | 4.6% |
| 19 | The New York Times | nytimes.com | 33,034,269 | 4.4% |
| 20 | MailOnline | dailymail.co.uk | 15,747,179 | 4.4% |
| 21 | IMDB (Amazon.com) | imdb.com | 39,778,499 | 4.4% |
| 22 | CBS Local | cbslocal.com | 11,039,512 | 4.4% |
| 23 | TIME | time.com | 10,024,132 | 4.2% |
| 24 | Cartoon Network (Turner) | cartoonnetwork.com | 10,794,764 | 4.2% |
| 25 | The Washington Post | washingtonpost.com | 17,818,260 | 4.1% |
| 26 | New York Daily News | nydailynews.com | 9,931,052 | 3.9% |
| 27 | The Guardian | guardian.co.uk | 10,283,648 | 3.8% |
| 28 | CBS News | cbsnews.com | 12,144,917 | 3.7% |
| 29 | Food Networks (Scripps) | foodnetwork.com | 14,324,933 | 3.5% |
| 30 | Allrecipes (Readers Digest) | allrecipes.com | 17,986,031 | 3.4% |
| 31 | The Huffington Post | huffingtonpost.com | 36,701,275 | 3.3% |
| 32 | TODAY / MSN (NBC/Microsoft) | today.com | 23,323,684 | 3.3% |
| 33 | Los Angeles Times (Tribune) | latimes.com | 18,618,265 | 3.2% |
| 34 | WebMD | webmd.com | 12,048,444 | 2.6% |
| 35 | The Wall Street Journal | wsj.com | 16,643,499 | 2.5% |
| 36 | Forbes | forbes.com | 12,356,124 | 2.4% |
| 37 | FOX Sports | foxsports.com | 18,346,185 | 2.2% |
| 38 | USA Today / Gannett | usatoday.com | 16,979,964 | 2.2% |
| 39 | Reuters | reuters.com | 12,726,776 | 2.2% |
| 40 | ABC News | abcnews.com | 19,876,129 | 2.1% |
| 41 | CNET (CBS Interactive) | cnet.com | 27,602,379 | 2.1% |
| 42 | Sports Illustrated (Time Inc.) | si.com | 9,304,012 | 2.1% |
| 43 | LIVESTRONG / (Demand Media) | livestrong.com | 9,650,128 | 2.0% |
| 44 | MSNBC Digital Network | msnbc.com | 44,198,985 | 1.9% |
| 45 | About.com / NY Times | about.com | 36,978,618 | 1.4% |
| 46 | Bloomberg | bloomberg.com | 10,592,480 | 1.4% |
| 47 | Mayo Clinic | mayoclinic.com | 10,944,436 | 1.1% |
| 48 | eHow (Demand Media) | ehow.com | 48,624,976 | 1.0% |
| 49 | ThePostGame | thepostgame.com | 12,017,913 | 0.9% |
| 50 | CNN Money | cnnmoney.com | 16,643,785 | N/A |
Source: Wetpaint.com analysis, comScore, Compete.com.
SOS – The Social Operating System
26 Sep2011
by Ben Elowitz
Facebook F8 has made clear that the digital world is now powered by social operating systems. It’s all changed. The below post was previously published at paidContent, and is republished here for DigitalQuarters readers.
SOS – The Social Operating System
How the Social Web Has Rewired the Digital World From the Ground Up
In the wake of Facebook’s F8 mega-event, with its parade of product, feature, and platform announcements, I’m struck by the recent major inflection that has social networking penetrating more and more completely into our digital lives.
Indeed, social networking has moved from something that’s a destination activity, to something that is ever-present throughout every digital experience. And, no doubt, Facebook will continue this rapid progression.
My awareness that social networks have seriously and profoundly journeyed into our lives began with the startling statistics that I published in June: the searchable Web is shrinking (by 9% in consumers’ monthly time spent over a recent one year period); while the social Web is growing (with a matching 69% increase in time spent on Facebook specifically).
But the change has since intensified, as Facebook’s share of consumer attention has increased even further, and as Web sites the world over race to recruit Facebook “fans” and “likes.”
In addition, the trendline has also become increasingly clear and sharply etched in recent months with the LinkedIn IPO; and with the Google+ Project, as even mighty Google vies for relevance as a social fabric that helps weave our world together.
Putting it all together, I’m seeing a restructuring of the stack: a new layering of how media is created, distributed, and experienced, different from the first generation of the Internet.
It’s the rise of what I’ve come to view as the “social operating system (Social OS).” And I think it changes everything for media and other companies online.
The New Way News Travels
Unlike the analog world, where content and distribution companies have largely fixed channels (licensed spectrum; contracted cable distribution; stable subscription bases; theater outlets; and other distribution power), digital content isn’t channelized. It’s itemized.
That means digital content has to earn an audience – item by item. The first generation of digital media publishers turned to search engine optimization to solve that, with an endless and constantly escalating set of editorial and technical tricks to bait search algorithms to rank them highly. This became de rigeur for every digital publisher; even as it spawned an arms race to find an audience.
But now that social is ubiquitous, the nature of distribution changes for media companies. And now, instead of having to reinvent the distribution wheel every day for every page, publishers can rely on a system far more powerful than the search engine to sort, select, and rank content. That system is part human, and part technology – but it is 100% social.
The Social OS sits at the boundary between content and the people who consume it. It provides a layer of functionality that lets Web companies focus on their unique content and the experiences that they offer – while earning distribution, not via channels, but via people. And, in the process, they earn, not a mechanistic relationship with an algorithm, but a real relationship with their audience.
None of this was possible until very recently.
The Internet was too immature: both in terms of technology, and audience. Indeed, it’s only since this decade started that we’ve had the social network and mobile technology in combination with literally billions of users online; this mix lets people connect to each other, and allows content to flow effortlessly from one consumer to the next.
And it’s this combination of technology (networks like Facebook and Twitter); content (with providers like Apple, NetFlix, and YouTube, not to mention the hundreds of blogs and media companies); and, most significantly, real people online to spread all that goodness, which makes the Social OS work.
The New Common Medium For Transmission
That’s why each Social OS is defined, first and foremost, by who’s on it, and what the connections mean. But beyond that, each social operating system can make identity, personal information and interests, relationships, and other data and actions available to applications. And third, and most importantly, is the role of the Social OS as distributor. Because Social OS’s have transformed the primary navigational coordinates of the Web from document-to-document links to person-to-person, the Social OS becomes the medium for propagation.
As recently as a few years ago, large media companies saw some parts of this wave coming, and they thought the answer was for each of them to build their own proprietary social network. But relationships between people aren’t proprietary to media; rather, they are the conduits through which all media travels.
And that puts in perspective what Mark Zuckerberg recently said, about how media is the next big application for his Facebook Social OS:
“Some of the earliest examples we’ve seen are with games. It just leads to massive disruption. And I think, over the next 2, 3 years, we’re going to start to see that in more and more industries, and the next ones I would expect are going to be media-type industries.”
Or, as we say at my company, Wetpaint, we are becoming the Zynga of publishing, leveraging social operating systems like Facebook, Twitter, and YouTube to build a powerful media business on top of them.
Reinventing the Media Industry For a Social World
The rise of the social operating system has two implications for old (and even some new) media companies, who are mostly still trying to figure out what to do with all this. If the idea isn’t to be a social network, then how do they use Social OS’s to make their business more successful?
Social maven Jonah Peretti, co-founder of Huffington Post and CEO of BuzzFeed, points out that different social networks specialize in different content: Facebook users share “what you want your friends to think you like … content you can wear as a badge of honor,” while Twitter is a platform for topic curators and wholesalers in the information trade, and LinkedIn has a strictly professional domain.
For its part, YouTube has its own character: with most consumption anonymous, it’s largely an open public repository, and much of the networking that forwards YouTube videos from person to person happens via email, Facebook, and other networks.
And, as Google gets into the fray with its Google+ Project, presumably it is meant to specialize in closed groups, when full public exposure isn’t in order. If it works, it will likely find its best traction in topics like health & wellness, parenting, or certain hobbies.
For media companies, the key is knowing which Social OS’s to bet on; and then tuning content, packaging and distribution for them.
For celebrity entertainment and gossip at Wetpaint, we know Facebook is a natural match for mass consumer promotion. On the other hand, for industry analysis, like my blog posts, I’m not surprised that Facebook is relatively unimportant: for most of my readers, my posts wouldn’t fit in among family photos and Farmville accomplishments. Twitter and LinkedIn do far better for heady topics like the future of media.
High Stakes: The Future of an Industry
The last decade of audience fragmentation and content de-bundling on the Internet has ravaged media, particularly in a world characterized by fierce competition for the love of Google’s robots.
When Mark Zuckerberg recently spoke at a Facebook event in Seattle, he said:
“The last 5 years have been about connecting all these people. The next 5 years are going to be about all the crazy things you can do now that these people are connected, and I think it’s going to be cool.”
In a world powered by social operating systems, the prize is that, when we execute well, we get to be hooked into people’s lives. Media companies can earn constant places in consumers’ newsfeeds, along with a button asking them to consider sharing their experience every time they see us. I think that’s going to be cool.
Netflix – It’s Wall Street’s Error, Not Reed’s
20 Sep2011
by Ben Elowitz
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.
Sound familiar?
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.
Verrrrrrrrry hypocritical.
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.
by Ben Elowitz
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.
Two Truths
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.
One Question
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:
- Use technology to determine the right content – The social Web offers a wealth of real-time data. Use it to see what matters to your constituents. Tools like Newsbeat are helpful moment by moment, and article by article. But you have to go further. The great breakthrough of digital media is being able to connect to your audience as individuals, not just in aggregate. No longer do you have to create for a persona or prototypical user; instead, you can create for real users. Media companies need to develop technologies that give them a proprietary edge when it comes to understanding the specific needs of their potential audience; that way, they can serve consumers better. And the opportunities abound. At Wetpaint, my company, for example, we process Twitter, Facebook, Google, and our own site’s data, all in real-time to know what content matters – and to whom. And yet, we can go much further, to ask and intuit feedback from each user individually. The future is a completely personalized experience from every publisher. It’s not far-fetched; in fact, it mirrors what consumers already patch together with all too much difficulty.
- Take control of your distribution – Reach consumers with the right content at the right time and place (via Web, mobile, video, social, and search). Don’t just have your social media team pump the same content from your Web CMS through Facebook and Twitter. Instead, use technology and research to understand the secrets of what works. Truly engaging your potential audience can improve your results by a factor of two or more.
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.
- Package it into the right experiences – Print is static and flat; but so are too many digital media properties. That’s why I applaud The New York Times for continually looking at how to repackage into mobile apps; and that’s why I like Flipboard, which takes a data-rich, but visually cacophonic, content feed and packages it into an immersive experience. AOL’s riff of ultimate personalization has impressed me even more: they’ve recognized that every consumer should get their own Edition – nailing the concept of personalization better than any media approach before. This is the opportunity for each of us now, as we connect with audience members and try to offer them more compelling experiences in return for loyal usage.
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.
by Ben Elowitz
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?
by Ben Elowitz
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.
- In: General
by Ben Elowitz
The Wall Street Journal and The New York Times both reported Thursday that the Federal Trade Commission (FTC) may be preparing to issue subpoenas to Google as part of a civil antitrust investigation into the company’s search engine business.
If this proves to be true, then Google may finally be forced to face its real moment of truth.
As I’ve been saying, Google is seriously limiting itself – and its future – by sticking with its anonymous algorithm and not finding more significant ways to take advantage of the fast-growing Social Web. Google is also coming under intensifying pressure from Facebook, which is the de facto operating system of the Social Web and increasingly taking share from the searchable web, Google’s previously dominant domain.
If the FTC leans on Google, the company could find itself pinned down in a crippling – or at least debilitating – three-front war. On one battlefield, it would be forced to fight the Federal government; on another, it would be required to grapple with Facebook, which is establishing Social Web supremacy; and then, on a third, a suddenly more limited Google would have to contend with increased competition in search from Microsoft’s Bing.
I like Google CEO Larry Page, but he’s hardly the digital equivalent of Napoleon or General George Patton.
The real question here, though, is whether Google is stuck in search, or whether it can innovate into new markets, social and otherwise.
In some ways, Google’s potential conflict with Washington D.C. is reminiscent of the mid-1990’s, when The Department of Justice alleged that Microsoft engaged in exclusionary (and anti-competitive) actions in the browser market as part of its efforts to maintain muscle in personal computer operating systems. The resulting legal action distracted Microsoft and required a good deal of time and energy that might have been better spent innovating for the surging Internet. And what’s even worse, many saw the ordeal and ensuing similar European legal wrangles as tipping a cultural mindset change from one of fiercely aggressive growth to one of cautious bureaucracy. And that cultural change that seems to have kept the company out of pretty much all the greatest technology growth markets of the last decade.
No one knows if a similar fate awaits Google. But, in any event, it’s becoming quite clear that “more of the same” isn’t going to allow Page & Co. to continue their success of the last decade into the next.
- In: General|Google
- Tags: anti-trust, ftc, Google, larry page, regulation