You Can’t Spell Media Without “Me”

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

Without question, one of the greatest gifts of the human species is our ability to communicate.  We can create, transmit, and absorb ideas with immense freedom in pictures, speech, writing, music, and more.  And yet, from the earliest days of man until very recently, the state of the art of media has been about as sophisticated as cave paintings.

Taking this a step further:

Truly great communicators don’t start out by focusing on their message.  They start with their audience.  They research, observe, and monitor every knowable detail – from background facts beforehand to micro-reactions during the conversation – and adjust their content and delivery precisely, so it will make an impact.  But it’s not like this is a secret formula.  Even toddlers do it, carefully measuring parents’ reactions and perpetually tuning in to the behavior patterns that get them the attention they want.  That tuning is carefully optimized to achieve maximum effect from each individualized recipient.

Meanwhile, media has virtually ignored its audiences.

But it’s finally beginning to open its eyes and ears to them through personalization. I believe that personalization has the greatest potential to transform the media business.

But before we get to that, let’s start with what’s gone wrong in media that has made us blind to our audiences’ cues.

In the world of print and broadcast, there was fundamentally no data about audience interests or reactions.  It was impossible to “read the room,” because the room was pitch black.  If media leaders’ eyes were closed, I’d be hard pressed to blame them; there was nothing to see.

As a result, there were two operating principles that made sense at the time, but which have since become outdated anachronisms.

First, that an editor should serve as oracle for what the audience desires (I call this the “Editor Fallacy”); and second, that content created in that vacuum of data should then be distributed as broadly as possible (let’s call this the “Broadcast Assumption”).

These two assumptions – even though they came from the print and broadcast legacy businesses – have errantly managed to drive the entire Web media mentality.

And the resulting misguided formula – across the board – has been Prophesize, Publish and Proliferate.

The big hope with this media Ouija Board has been that the guesses will be right, and that those who broadcast widely will then draw a big audience.  When the guesses miss the mark with audiences (no surprise there), publishers turn up the volume or amp up the sensationalism. To some degree, this is why the Huffington Post succeeds with its brash and blaring headlines, and it explains why, thanks to Henry, we’ve collectively Blodgetized Web 1.0 media.

But to make room for the new media model of the next 100 years, we need to let these old assumptions fall by the wayside.  The new vision is for media to start doing the work that each member of the audience already does; and that means deliberately selecting and contextualizing the media we each consume.

Putting it simply: media’s great opportunity is to bring the right content to the right person at the right place and time.

And this is where things get very interesting.

Bring Me My Very Own World

The social transformation of the Web has already taken us half way down the road toward a personalized future.

We finally recognize that the Web is made up of people, and Facebook and others have made people and relationships the key “nodes and edges in the graph” of the Web, replacing pages and links.  The social Web is now people-centric; and, increasingly, social is becoming the operating system for the Web at large.  Most impressively, “what my friends like” is already proving to be a good starting point to predict “what I like,” and so much of the Web is beginning to get at least a clue of how to serve us.

Despite this tremendous progress, however, when you go behind the scenes, the Web is still organized by data, not by people. Server data is affiliated with accounts; cookies are associated with Web browsers; and activity logs are tethered by IP addresses.

And yet, as the social revolution has proven, the real value of the transformation has been to stop looking at me as an IP address, a browser, or an account; and to start holistically realizing that I’m a person – I am me.

So, the great opportunity is to move from a Web of sites to “my” Web of me.

Media is at a critical transition point today, because we are about to completely redefine our sense of the audience. Starting now, the audience is no longer one massive opaque agglomeration. It’s not a “them” or an “us”; it’s a lot of individual “me’s.”  (This must-watch from Monty Python paints the picture.)

In this context, the Broadcast Assumption of content creators is completely out of touch with the 21st century zeitgeist.  It revolves around the played-out maxim of “create once, distribute everywhere,” which made sense when audiences were opaque and distribution channels were just big dumb pipes.  But it totally ignores the “me’s” in the audience – when it comes to both creation and distribution.

The bottom line, then, is that media experiences, which used to be one-size-fits-all, must now be customized so they’re just for me.

In other words, the media experience of the future must take a cue from Facebook, and bring my world to me – regardless of where it originated. 

The Six Elements of Ultimate Digital Personalization

Social represents progress toward this vision of fully personalized media, but it’s only one part of the game.

In my view, there are six key elements that contribute to ultimate digital personalization – and these elements are the basis for the ultimate success model in digital media:

  • It’s social – What happens to people close to me is important, because these people are important to me.
  • It’s curated – People aren’t just content sources themselves; they’re also curators. To know me is to know my tastemakers.
  • It’s an experience, not just a stream –Newsfeeds and timelines are a meager start.  Twitter’s 140-character format is great for insiders, but it’s inscrutable for Grandpa. Personalized media should come in all formats – not just a feed.  And it will be more powerful (and more profitable) when it creates an immersive experience.
  • It’s incredibly, incredibly smart about what it recommends, and what it doesn’t – But better than today’s Facebook and Twitter, it brings me the right content, not all content. I trust it to filter the world for me, and to highlight what’s important to me out of billions of pieces of information.
  • It’s self-refining – Speaking for myself, it would know to bring me news about digital media; about my company; about my friends’ reviews of great restaurants in Seattle, LA, and New York; and, in the winter, a helpful article or two on snowboarding tips would be greatly appreciated. It would also turn down articles about Glenn Beck, and turn up the latest find from Brian Stelter. And, before you cry (or scream) “filter bubble,” let’s get it straight that this is what I do already.
  • It’s not just the content that’s personalized – It’s the advertising, too. Today’s version is very primitive: I go to a Web site once and its ads follow me around for weeks. But, instead, my demographics, interests and intent should all combine to inform what ads to show – and not show – me.

After considering these six elements as a whole, I’m most inspired (and encouraged) by Facebook, Twitter, AOL Editions, the recent Flipboard clones, NetFlix, and the potential of a new Siri-powered Apple TV.

Each of these demonstrates the central aspect of this new vision for media: bringing my world to me.

Data Is the Currency of Personalization

To be successful, we all need to be data companies – as data is the clear way to know what our audience wants.  Data is the currency of personalization, and so it is our best path to delighting our audience.

News sites should know by now what topics and stories to program for whom; and no sports site should serve a balanced home page when no sports fan likes all teams equally.

It’s an approach that, of all companies, Yahoo! ‘gets’– and for them it’s been paying huge dividends for a long time.   And so it should for the rest of us.

What this means for media is that it’s not all about the content – instead, it’s all about the audience.  And that means the nature of media has changed.

It’s all about you. It’s all about me.

That’s the digital media future. And we need to start going there today – because audiences are asking (and even demanding) that we pay attention to them, that we really know them, as true individuals.

So, if you’re a publisher, here’s the challenge as you try to create meaningful content experiences today: Each member of your audience – no matter how vast it is – has to become the most important person in the world to you. Or, looking at it in a slightly different way, you have to become deeply involved and digitally intimate on a global scale each and every day.

The Coming Video War Between Apple and Google

This follows my recent post about how a new TV interface from Apple could decimate the television landscape.

Even though Steve Jobs never talked about changing the face of search with Siri, its natural language interface.

But doing so would certainly be a riveting Hollywood screenplay in which Jobs, the uber-innovative, uber-inventive CEO, ultimately gets revenge on a corporate rival he views as a “copy cat.”

In this fictional script, that rival would be Eric Schmidt, one of the top executives at search giant Google. It’s Google, after all, that’s breathing down Apple’s neck with its rapidly expanding Android phone platform – a platform that, according to Jobs and his lawyers, mimics Apple’s breakthrough iPhone technology.

Putting this Oscar dream aside, there’s intensifying competition heating up between Apple and Google, even though Jobs is –sadly – no longer on the scene.

Indeed, even though Google has had voice-enabled search for some time on iOS and Android devices, Schmidt has said it’s possible that Siri could be a real and radical game-changer.

Schmidt may be right.  And if he is, then Google will be facing a serious threat as Apple reinvents Google’s home turf of search.

With a “personality” that displays a unique understanding of humanity, Siri’s digital chromosomes enrich the user’s experience. This sets it apart from Google’s more mechanical offerings, and shows why Apple’s consumer-obsessed culture is so different from Google’s corporate DNA, which is as robotic and algorithmic as the “Android” name suggests.

There is rich irony here, as Apple disintermediates the greatest disintermediator of all time.  When Google’s superior search service started, it practically single-handedly reduced the brand-driven experience that consumers had thereto relied on with directories and a fully editorialized Web.  Google replaced those channels and home pages with 10 blue links.  And in the process, became users’ destination of first resort 13 times per day.

And Apple has always been a curator extraordinaire – developing collections and exercising famous (and occasionally notorious) judgment to determine who deserves to be in its directories of songs and apps.

But now, Siri stands ready to flatten the world of entertainment.

In all fairness, Page and his team are now trying hard to enrich the user experience by aligning their YouTube brand with media companies like Disney, and doling out big dollars for proprietary programming. The hope here is that YouTube can create dozens of lucrative user-friendly / user-favorite Web channels featuring comedians, sports stars, musicians and other entertainers.  The company is building stocks of its ‘own’ media weapons in preparation for the coming war.

But, as always, it will be hard for Google to win the hearts of consumers when it comes to content; and it will be especially daunting because Apple is already so completely connected to users.

Meanwhile, with its enviable consumer connection, Apple will undoubtedly extract a toll from media companies, who still want to bathe in the warm digital light that emanates from the inviting and engaging brand Jobs built.  And, as it has in every other media category, Apple stands to capture an outsize share of profits for delivering content into a magical consumer experience.

Jealous much, Google?

With Siri TV, Apple Will Dismantle the TV Networks

This article was published as a guest post at All Things D, and is republished here for DigitalQuarters readers.

Steve Jobs died without fully transforming television, but the day after he passed away, Apple unveiled Siri, its natural language interface. Though it’s currently only embedded in the new iPhone 4S, Siri could eventually change the face of the TV industry.

Notice I said “TV industry.”

But from my perspective, Siri’s greatest impact won’t ultimately be on users, or on device manufacturers (though they certainly risk losing market share to Apple). It will be on the TV industry’s content creators and packagers. Why? Because a voice-controlled television interface will fundamentally disrupt the six-decade-old legacy structure of networks, channels and programs. And that’s a legacy that — until now, at least — has been carried forward from analog to digital.Most observers and analysts believe that Siri’s voice commands could eliminate the need for those clunky TV remote controls. With the blurring and exponential proliferation of television and Web content, telling your TV what you’d like to watch, instead of scrolling through a nearly infinite number of program possibilities, makes a lot more sense.

There’s an important underlying precedent here.

If the Internet can be generalized to have one effect across every industry that moves online, that effect would be disaggregation. Choices go from finite to infinite. Navigation goes from sequential to random access. And audiences choose content by the item far more than by the collection. We’ve gone from the packaged and channelized to the unbound and itemized. Autonomous albums are fragmented into songs; series into clips; and magazines and newspapers into articles and individual photos.

As much as we may think that has already happened with video, it is nothing compared to the great leveling that will occur in the voice-controlled living room. Voice-controlled TV means direct navigation to individual episodes, programs and clips. And it will almost certainly lead to a discernible deconstruction of the network and channel structure — not to mention the decomposition of even the aggregated marketplaces like Netflix, Hulu and YouTube.

Here’s the simple reason: No one is going to sit on their couch and say, “Siri, show me NBC’s ‘Community.’” In a voice-activated world, monikers like “NBC” become useless. They don’t stand for anything meaningful to the consumer. They’re just remnants of a decrepit channel structure that’s unraveling. And, in the end, they’ll simply connote the fast-fading allure of mid-20th century mass appeal.

To be sure, the TV majors will lose much of their ability to realize network effects. Already, you’re hearing less about “lead in” and “lead out.” What you are hearing more about, however, is disconnected videos. A program on YouTube, for instance, will sit on a level voice-controlled playing field with an NBC show, and that field will soon become even more level, because Siri will eliminate the menus that structure the artificial hierarchies of content collections.

So how will we be able to get network effects back in video? Let’s look at four possible ways:

  • Branded Content — Players can build a strong brand that stands for something with their audiences. Break.com, Discovery and Oprah are all meaningful and build long-term customer loyalty. (“Siri, show me new TED Talks.”)
  • Curation — Brand the collection with a curation strategy so that the curator’s name and stamp of approval means something to the audience. (“Siri, show me Jason Hirschhorn’s latest movie suggestions.”)
  • Social — In the fully social world that we expect to see, focusing on the virality of content means you tap the human distribution network and social operating system. (“Siri, show me what videos my friends are watching.”)
  • Personal — We’ve already seen the extraordinary value of well-tuned personalized recommendations, with Netflix’s notable prize and other famed stories of the benefits of great recommendations. Increasingly, our own patterns of individual videos and the brands we affiliate with, along with recommendations from friends, will be combined into personalized recommendations we won’t even have to ask for. I have no doubt that Siri will be as good a “Genius” as iTunes is at recommending what else to watch. Ultimately, in the age of data, whoever knows the most about us will be able to give us the best experience.

Beyond disaggregation, personalization is ultimately the most powerful consumer value of digital media. My mother’s TV experience was to walk over to her TV set and turn a dial to select among three channels to satisfy her individuality. But in the next generation, no two people will receive the same recommendations from the millions of content choices available.

Before he died, Jobs now famously told Walter Isaacson, his biographer, that he had finally cracked the TV code. It’s unclear what Jobs meant, what this entailed or what he thought it would lead to in the years to come. So, barring further posthumous disclosure, Jobs’s own predictions of his ripple effects will be a media mystery for now.

One thing that’s clear, though, is that Jobs’s Siri will start the dismantling — or creative destruction — of the TV industry as we’ve known it for the last 60 years.

6 Lessons For the Key Players In New Media

This post was originally as a contributed piece to Fortune.  It is republished here for Digital Quarters readers.

Tech’s top firms — from Apple and Google to Amazon and Netflix — are vying to reshape media with different game plans. Here’s what they each need to know.

Digital media has the power to change the world. Actually mastering this 21st century business (and art) is unbelievably hard, however. That begs the question: The top media companies all know they need to make changes — but how do they find the right change and execute well? Let’s look at this question through the lens of six key players in the digital media revolution.

Apple (AAPL): Transform the rest of our digital experience.
It may seem arrogant to give advice to the one company that has surprised everyone again and again by being light years ahead of the industry — as well as the consumer. Yet, in a new era of leadership, the most important thing for Apple will be holding on to Jobs’ core values and strength. As corporate leaders go, Jobs was always the best change agent on the planet, and he was never willing to accept the status quo. That’s why Apple is a perennial leader when it comes to devices and distribution for premium media content like music and movies.

The Apple crew must extend its golden touch to the rest of the digital media device world. It’s time to supply the living room with a first-class TV experience; and to seamlessly flow all entertainment between the mobile, iPad, TV, and desktop worlds. AirPlay, iCloud, and AppleTV aren’t all the way there yet. Apple’s next challenge is to make devices that leap forward and bring entertainment and applications wherever I am, and to know me as one person across all of these environments. To do so — and to do so well — will take a huge imagination. And, even without Jobs himself, it’s clear that if anyone can do it, it’s still Apple.

Facebook: Be everywhere the consumer is.
More than any other company on the Web — even Apple — Facebook has changed the nature of digital experiences. It’s already established itself as the dominant social operating system for consumer audiences. And yet it has the potential to go much, much farther. If you need more proof, just this month Facebook announced that it will be facilitating the spread of mobile applications, not to mention linking into them — finally bridging the gap between Web and app. It’s invading Apple iOS’ and Google Android’s territory, providing the cross-application linkages that have always unequivocally been the job of an operating system.

Increasingly, Facebook has the opportunity to wire consumers, applications, data and devices together. But for Facebook to do this, Mark Zuckerberg will need the kind of imagination that Steve Jobs had. Indeed, Zuckerberg will have to imagine a whole new ecosystem, this time one where Facebook facilitates all connectivity. He’s proven he can execute already. But can he take on a vision this big?

Google (GOOG): “What got you here won’t get you there.”
This trademark phrase from Wetpaint COO Rob Grady is particularly apt in Google’s case. Google is the undisputed king of finding answers to questions — as long as they’re being asked from desktop and laptop computers. But when it comes to applying its great search strength to mobile environments, tablet devices and communications, Google is still lost. While the Android operating system is clearly one of the winners, it doesn’t give Google the essential financial success in mobile that it has on the desktop. Google needs to reinvent itself. It needs to make a bold “burn-the-bridges” move, adopting a Reed Hastings-like philosophy that the company cannot rely on search alone. Only, in Google’s case, it’s even harder.

Here’s why: Hastings had already clearly identified the next wave’s product at Netflix (NFLX) — streaming video over the Internet — but Google has to find a new vision altogether. This is not to say that Google needs to exit the search market by any means. But, instead, it must reinvent its own search portfolio, the way Intel (INTC) reinvented the microprocessor generation after generation, always allowing its newest chip to put the last one out of business, before the competition did. Indeed, Intel’s sustained success was built, in part, on destroying what worked and replacing it with something that worked even better. Google’s new vision should surely have three components: mobile, search and social. The good news is that, thanks to Android, Google already has A+ platforms to build on the first two.

But search needs to get beyond the query box, and the mobile device can be more than a phone plus PDA. Google’s challenge — and its opportunity — is to reinvent it as a completely connected device that is woven into the fabric of daily living. It should know where I am, who I’m with, and what I’m doing — or at least have some educated guesses. It should make the next interface leap that helps us leave the thumbs behind. And, it should be a digital companion that picks up on environmental cues and helps me live my digital life. Siri has opened our imagination; but Google has amazing voice recognition, algorithmic and platform strength to accomplish these things. Now it sorely needs to understand people. That’s the most pressing — and most problematic — task for Larry Page and his team in 2012.

Amazon (AMZN): Fully bridge digital media and commerce.
If Facebook is the ultimate platform for social connectivity, it’s pretty clear that Amazon should be the ultimate platform for media and commerce. Amazon has already made amazing progress in redefining itself. It started as a bookseller, became a retailer, began representing other retailers and, most importantly, has morphed into a media and device company. And, as if that’s not enough, its Web Services power tons of other companies that make the Internet fascinating.

That said, a scattershot approach won’t help Amazon become the single defining platform that bridges digital media and commerce. Amazon has tremendous assets in its catalogue, in terms of both physical and digital goods. And it also has devices that give it a unique channel to the consumer — for the time being, at least. But to fulfill its true potential, Amazon needs to extend its platform all the way to commercial transactions, wherever they happen.

Beyond digital goods, Amazon should be working on digital currency and customer management; an acquisition of Square would be a tremendous accelerator here, and it would ultimately help Jeff Bezos and his team power transactions wherever in the world they take place. What Facebook is to our social transactions, Amazon should be to our commercial ones — an OS for commerce. Indeed, Amazon has the opportunity to provide OpenTable-like services, for all commerce, not just for the restaurant industry. It’s already got the goods and the customer relationships. <ow it just needs the focus on the bigger opportunity.

Yahoo (YHOO): Decide what the brand really stands for.
On one hand, Yahoo is the most impressive all-digital media company there is. It has tremendous access to a huge audience of consumers, a broad product portfolio, an unrivaled heritage as a first-generation superstar and a unique reach into Asia. And yet, it’s also the most disappointing digital media company in the marketplace, so much so that its brand increasingly stands for nothing in particular to most of its audience.

Of late, attention has been focused on Yahoo from a financial point of view. But whoever eventually buys the company must look beyond integration, splitting and cost cutting. Instead, the acquirer will have to figure out what to do with Yahoo’s core. And it all comes down to one key question: What can Yahoo provide to its audience to earn their attention every day?

To date, the hook has been email. Yahoo Mail is responsible for about 75% of Yahoo’s media traffic. But Yahoo Mail isn’t growing. In the last year, it shrank slightly (<1 %), according to data from comScore. So, for Yahoo, the choices are to innovate in communication to leapfrog Gmail, Skype, and the lot; or else to do the hard work and start figuring out again what Yahoo really stands for. The company has great roots. It has a natural brand for serendipitous discovery, for fun and interesting news to make your day. The bottom line is that Yahoo should be able to execute on both the options listed above, hopefully without waiting for the financial dust to settle.

Washington Post (WPO): Re-inventing media’s most ravaged category.
If we had to name the most ravaged sector of media, it would certainly have to be newspapers. Don Graham recently said the industry is “collapsing.” But, he’s not just watching it happen; he’s actively and energetically intervening. I’ve been incredibly impressed by the way Graham and his team are up for re-inventing the category, especially as I’ve talked to other organizations that are nearly paralyzed. Instead, WaPo is applying the greatest growth trend of the Internet — social media — to its business. With its inordinately valuable and trusted brand at stake in the Washington Post, the risks are clearly high. Rather than acting out of fear, Don and his Chief Digital Officer, Vijay Ravindran, are taking aggressive advantage of opportunities to engage, grow and retain their core audience. At the same time, they’re downshifting to the younger audience that just isn’t buying newspapers. The Washington Post Social Reader is the flagship example, and it’s a bold move to jump ahead of the consumer and create a new experience for people that they didn’t know they needed, all on the social Web. [Full disclosure: My company Wetpaint works with the Post.]

We will see other awesome and amazing talents emerge in digital media over the next decade. These greats-in-the-making will help build on the staggering changes that technological change has wrought.

SOS – The Social Operating System

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.

 

 

 

An Inflection Point for Consumer Spending on Digital Media: Who Will Be the Web’s Master Currency Provider in 2012?

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?

 

 

Why Rupert Murdoch Is Right About The Daily

This article was published as a guest post on paidContent.org

There are plenty of naysayers who point out that Rupert Murdoch’s new initiative The Daily — the first major-media publication created expressly for tablet computers like the iPad — is an expensive and risky bet.

But here are four reasons why Rupert is right:

1) Rupert knows the ad model of publishing is doomed. Print and broadcast command the heftiest premiums, and both are at risk of price and volume erosion as consumers cut their ties to offline media. In the digital environment, online advertising is highly commoditized: the explosion of content publishers is outpacing the shift in demand, while technologies target audience ever more efficiently. Advertisers have plentiful ways to reach a consumer.

For his part, Rupert knows that his offline publications are at risk from decreasing ad revenues, and web-advertising models are hardly an adequate solution. Whether it’s out of desperation or vision, Rupert is willing to break through — and lose money in the short term — in pursuit of a better model.

2) Rupert can afford a long-shot bet — and can’t afford not to make one. He’s leveraging his considerable influence by putting something out there that can be truly cutting-edge. A $30 million investment may seem ridiculous for a new publication — and it is. But even with that hefty price tag, this is an insignificant bet relative to the industry and consumer behavior Rupert is trying to move. Throwing money at this is OK, because the possibilities are so great; if The Daily succeeds — or even provides the key insights so his next venture can succeed — it will be worth billions.

3) Rupert has influence to change consumer and industry behavior. He beat his drum loudly last year to get paywalls on the agendas of other publishers’ boardrooms. And it’s worked; just look at The New York Times’ pending move to a metered system. This is what I love about Rupert: Unlike other leaders in publishing, he uses his voice — and his treasury — to influence the industry and consumer behavior. He’s all about trying to get to a more successful model.

4) Rupert has a friend in Steve. Steve Jobs has a lot riding on this, too. Is Apple (NSDQ: AAPL) in the device business or the media business? To date, the lion’s share of its revenue and growth has come from the sales of ever-more-advanced devices. But as device categories mature, Jobs knows growth will get harder to come by: iPod sales grew at just 2% for Apple in 2010, as the venerable device line nears saturation.

In a world where mobile devices are ubiquitous and fiercely competitive, the fat margins of media revenue-share arrangements can powerfully fuel profits. But even more attractive is the tremendous expanse of the pool:  Apple’s media revenues are currently around $5 billion — a paltry sum compared to the global media and entertainment market that PricewaterhouseCoopers pegs at $1.3 trillion.

Apple has already proven that in its remarkably successful closed media ecosystem, the company’s store can earn an estimated 30% of the top-line for media sales — without having to produce any media. This happens when Apple creates compelling devices, exciting user-experience platforms, and fresh marketplaces. For Steve, the upside here is huge. And so he should be happy to tie that upside with anyone who is as crazy-aggressive as he is about getting legions of consumers in the habit of paying for media. And that list has just one name on it: Rupert Murdoch.

A fresh start and a new division — with a new concept and a new design for a new platform — is the only way someone like Rupert can have the freedom he needs to reinvent media for a new age. And only Rupert can do this — without falling into the ruts of compatibility with existing businesses or holdover assumptions from old models.

Kudos to Mr. Murdoch for summoning up the courage, and putting up the money.

Missed Opportunity: New York Times Losing Its Pulse Again

It’s been a week of dancing for Apple and The New York Times as they played hokey pokey with an app that offers a new, fun way for consumers to experience media:  First, Steve Jobs put the acclaimed Pulse News app into his Worldwide Developers Conference talk, then took it out of  the app store, and then put it back in again, but only after the developers took The New York Times out of it.

But as fun as it is to watch them dance, I can’t help but notice that The New York Times missed the opportunity right in front of Sr. VP Martin Nisenholtz’s eyes:  the Pulse team is exactly the kind of talent that the company should be acquiring, not shunting.  The Pulse founders made an app with a great consumer experience for media,  did it in just a few weeks,  managed to get the attention of the premier technology tastemaker in the world, Steve Jobs, and even made some money.

Message to Martin:  Instead of cutting them down and pushing them into someone else’s arms, make nice and go hire (or acquire) the Pulse team. Or, as my mother once said to my older brother when he was dating someone she actually liked, “There are better men out there than you:  You better marry her before someone else does!”

Apple Stands Alone in Effectively Monetizing Content

With the recent announcement of the iAd advertising platform for iPhone/iPaApple Monetizes Contentd applications, Apple is filling one of the last major gaps in content monetization.    They now have a full spectrum of monetization options for their platform: ad-sponsored free content; free trials; “bite sized” in-app billing for impulse buys, premium apps, and subscription billing.  Publishers can choose the revenue model that best suits their content and audience.

For consumers, the Apple model is remarkably easy.  Granted, the initial iTunes account set-up is somewhat of a hassle, but once completed, consumers can painlessly make purchases thereafter.  Apple solved the micropayment problem years ago in creating the iTunes store for selling songs, and has carried forward that same keep-it-simple philosophy for premium content and applications on the iPhone.

Here is my take on the magic formula for getting consumers to pay for content:

Desire + Relationship + Ease = Spend

Desire is straightforward: how much do consumers want your content?   Desire is a function of the degree to which your content and experience are unique and compelling.

Relationship is a measure of your brand and the extent to which you’ve consistently delighted a customer (or their friends) in the past.

Ease is achieved by making it effortless to pay for content.

Apple has nailed all three of these drivers, resulting in substantial and growing spend from consumers.  On desire, they’ve made a product and a content experience coveted by loyalists and consumers en masse.  On relationship, their platform has proven itself with a billion consumer delights.  And in ease, Apple has set a new standard with the 5-second purchase process consisting of a just a password.

Many publishers and app developers complain about Apple’s closed system (indeed, Adobe has reason to do so), but that same closed system allows a controlled – hence predictable – experience for consumers.   Apple is reducing the friction to purchase by leveraging their relationship and making the purchase easy.

This leaves me to wonder however: why is Apple the only company to innovate a complete platform for content monetization?  The result for publishers is that they are better served by jumping on the Apple bandwagon than by striking out on their own.  But as Apple continues to amass share of eyeballs, the media industry will resist the premium that Apple charges.

Can publishers directly offer consumers such high levels of desire, relationship, and ease and crack the code on getting consumers to pay?  That is their challenge; and if they do, the money- and their independence – will follow.

With “Glo” Launch, BermanBraun and MSN Show Something Rare: Creativity!

One of my favorite questions to ask recruiting candidates is: “What content sites have a unique and differentiated user experience?”

The usual answers are as tiresome as the state of web design:  YouTube (yes, it is fun to keep clicking), Hulu (yes, they got the experience right for TV viewing), and lots of pauses and comments like “I don’t know, it’s kind of all the same.”

Let’s face it:  publishers are formulaic herds.  And the formulas are boring and tired for users.  How bad the state of the art is when Huffington Post gets major props for going with a single full-screen hero shot on its home page – and that’s considered breakthrough!

So that’s why I’m incredibly impressed with what MSN’s Scott Moore and BermanBraun’s Lloyd Braun and Gail Berman have done with their newest creation, Glo.  From logo to flow, the site’s design lets go of the old formulas, tries something new, and most importantly, takes risks.  New layouts, new interactions, and new forms of content all create a feeling that this is not an ordinary website.  Even more, they have defined their own style that is adventurously well-suited for their audience.

To start making money, publishers need to create consumer experiences that stand out.  As MSN’s Scott Moore said in a post by Kara Swisher, “we see a lot of room to grow by offering something different and of higher quality.”  These premium visceral experiences are exactly the path to profit in digital media:  they will attract loyal audiences, premium advertising dollars, and over time create opportunities for upselling to consumers.  And those premium experiences are, after all, the root reason why everyone is so excited about the iPad this week.

Apple doesn’t need to be the only one that can innovate.  This kind of innovation is rare among publishers, and yet all too valuable.

For heaven’s sake, if MSN can do it, everyone can.