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.

Google’s Struggle for Relevance

One of the great truisms of being a successful technology company is that just when you reach the top of the heap, if you sit down, you’ll slide off.

And that’s why, in a month where we’ve just seen HP disassemble itself, I have to hand it to Google: It really and truly is pulling out all the stops in order to be relevant as the social / mobile Web takes hold.

Faster than digital predecessors who have championed a technology generation and then found themselves in peril, Google seems to be reconciled to the fact that, as my Chief Operating Officer Rob Grady would say, “What got them here, won’t get them there.”

In this case, the victory of desktop search is already proving to be hollow as we approach a change in technology generations.

I’ve been reading Steven Levy’s “In The Plex” over the last couple of weeks, and what’s most remarkable to me about this love letter to Google is the genuinely revolutionary orientation and nature of the company. Indeed, Googlers are happy to set aside convention in order to reinvent.

It’s a high-risk attitude, but hopefully it can generate high rewards in a time of change.

In recent months, Google has tried to reassert its revolutionary culture and transform itself, in order to avoid the stale fate that has befallen Microsoft and so many other technology behemoths that just couldn’t flow gracefully into the future.

I’ve tried to add analytical context and dimension to this sad syndrome in three recently published articles in Fortune:

My sense is that Google must confront formidable challenges; and yet, it’s way too early to run Google down, or write it off.

Judgment Day on the desperately wanna-be social Google+ still awaits Larry Page and his executive team. And Android, Google’s mobile platform that so wants to be as cool as Apple’s iPhone, has increased its share of the smartphone market – from 17 percent to 43 percent – over the past year.

Which leads us to Google’s recent $12.5 billion acquisition of Motorola Mobility.

This deal was expensive. And visionary. And, more than anything, it reflects Google’s fierce — and creative — spirit toward its competitors.

There are arguments about whether the Motorola transaction was offensive, to help Google drastically accelerate its Android bet; or defensive, to amass patents that will enable Google to block the competition and defend its own advantages.

But, more than anything, the deal demonstrates the most remarkable gene sequence in the Google DNA: Google recognizes how things change; and it stops at nothing — even multi-billion-dollar acquisitions — so it can be a huge part of what’s new.

With smartphones overtaking PC’s, Google, a desktop search company, clearly recognizes the danger it faces, and absolutely wants to move on to the next big thing.

But the central question as Google tries to innovate for the impending five-year cycle is whether the company can see the next visible technology horizon, which extends decades out, and whether it can adapt the rest of its DNA to meet the market.

Unfortunately, I’m just not certain that Page & Co.’s vision extends that far.

But time will tell.

Google’s Nagging Media Problem

This article was featured recently as a contributed piece at Fortune.com, regarding Google’s need to manage itself through a leadership and business transition.

Since Google’s early rise, this question has consumed hordes of those watching it: Is Google a technology company or a media company? Paradoxically, Google has continuously defied the dichotomy, seeming to succeed in media precisely by maintaining that it is solely a technology company.

Can Google (GOOG) keep defying (or denying) reality?

Today’s Web is very different than yesterday. When Google was born, the basic technologies of devices, browsers, protocols, sites and apps were still in development. Now the Web is much more meaningful and mature: it links real people to the other people and things they care about in a socially connected environment. The question is, where and how does Google fit in to this new digital eco-system?

It’s important to note that Google’s world view is dominated by a utilitarian ethos, as though its product is mere software created just to provide the quickest route from point A to point B, or, in the case of search, from Q to A. For Google’s flagship, search, this made for a perfect match with an ideal user experience. It also provided a competitive advantage over other products, which forced people to enter simple questions into complicated experiences. In this way, Google became an accidental media company, answering queries with utilitarian search results and basic classified ads.

But the DNA that has made Google successful in search has made it more difficult for the company to excel in the next, more social, phase of digital media. Digital publishing isn’t a service or function; it’s all about immersing people in rich and rewarding experiences that make them want to linger and then keep coming back for more. The social Web values human connection and experience, not just functionality or speed. And that difference has led to Google’s multiple false starts — Buzz, Wave and Orkut — as well as its current attempt, Google+.

The sad truth about Google is that at its core, in culture and technology, the company’s history is one of pathetic indifference to audience experiences; instead, it’s wed to the almighty algorithm.

That’s why I chuckled a bit after reading a recent the back and forth between TechCrunch and Monday Note. First, TechCrunch reported on the $50 million raised by Flipboard — the hot iPad application that searches RSS feeds, Twitter, Facebook or Flickr and aggregates the results in a neat customized book-like layout. Why, asked TechCrunch, would an iPad application start-up need $50 million?

Well, said Flipboard CEO Mike McCue, because maybe Google will launch an attack. Monday Note responded by putting Google’s Flipboard threat in a very rational perspective. Google, explained Monday Note, doesn’t really have the creative culture or experiential mind-set to develop its own version of Flipboard. The reasons?

  • Google’s services “will remain stuck forever in its current Arctic look and feel.”
  • “Inserting ads in a delicate Flipboard-like interface will require more fine tuning than what the powerful by-the-bulk Google system currently provides.”
  • “Flipboard’s attention to execution is way more Apple-like than Google-like.”

I agree wholeheartedly with Monday Note, which also called Flipboard “THE product any big media company or, better, any group of media companies, should have invented.”

It’s regrettable, but based on its history at least, Google doesn’t seem destined to become one of those media companies anytime soon. And the reason is that the very nature of media — building a relationship with audiences by providing them with experiences worth returning for — is that experiences need to be valued based on more than function alone.

As anyone knows from a wonderful dinner at a great restaurant, atmosphere matters. But in search, utility has been the name of the game, and Google’s success here seems to be leading it into a posture and position that is more and more protective of its home field – and more wedded than ever to its utilitarian approach. The more Google tries to support its search empire, the more it will fail in the rest of its media efforts .

On the other hand, if Google wants to succeed in a new era of personalized media, it needs to start by recognizing the human element, beyond the algorithm. It’s no coincidence that the competitors that are rapidly building market value today — like Apple (AAPL), Facebook, Twitter, and even Flipboard — are doing so with tremendous attention to the human factor. As the Web turns more social, Google needs to abandon its historical disregard for the human touch.

With Google+, it appears that Google is showing the first signs of doing so. Its Circles interface, and its approach to Hangouts, indicate that Larry Page and Vic Gundotra are beginning the change in priority. Its proposed acquisition of Motorola Mobility, which manufacturers hardware for consumers, adds another set of similar questions. But it remains to be seen whether the change will metastasize: can Google change its company’s DNA to value the human above the machine?

After all, in this increasingly social Web, the connections that Google needs to make are not between question and answer, but between people and their desires. And that has been the formula that has always worked in media.

Is Google Suffering From The Microsoft Syndrome?

This article was featured several weeks ago as a contributed piece at Fortune.com, regarding Google’s need to manage itself through a leadership and business transition.

From early on, Google seemed determined to be more than a search company. And one of the most admirable traits of Google’s structure has been its decentralization: The company’s deliberate decision to forego synergies to give product groups the freedom of independent thought and action has created tremendous product variation and innovation. Distinct product groups and a culture that prized fresh original thinking created great products like Gmail, Google Apps, and Google Maps; and all of these products delighted users even as they initially passed up the value of synergies that big companies often tout.

And yet, it seems that those at the Googleplex are increasingly giving in to the temptation to integrate new product development into a “synergistic,” if monstrous, whole. Integrating new products into existing ones, the story goes, should give a new product a boost with a built-in user base and in-product feature merchandising, not to mention enhanced “strategic” and “platform” value, which basically translates to customer lock-in.

I understand the attraction of this. And it makes sense in principle. But the trend is concerning, because it sacrifices the essence of Google’s (GOOG) greatness: its focus on the simplest possible product to meet user needs. Instead, products are increasingly being morphed into tack-on feature sets of bigger products.

But the downside here is that the influence of the core product consistently invades – even where it shouldn’t – and this overwhelms what could be a terrific new stand-alone product. As a result, great now too often becomes good at Google. And, if this new-product dilution and diminution continues, it will be increasingly difficult for the company to successfully innovate and take advantage of the burgeoning social Web.

One classic example: instead of solving a real need for all the Web’s users, Google Buzz was, as MG Siegler noted at TechCrunch, “shoved in everyone’s face by way of its somewhat unnatural home in Gmail.” My mother has taught me to put people with advanced degrees on pedestals, so I can’t help but be stunned that legions of Googly Ph.D.’s missed this by integrating Buzz into Gmail. It’s pathetic, but true: Google forgot that most connected people aren’t even on Gmail. And, obviously, the value of the network is far lower when most people aren’t on it. So, instead of being a great social product with a clear use case, Google Buzz became a controversial feature with ambiguous purpose that was added on as an appendage to Gmail.

With the launch of the Google+ Project, these questions of product integration, synergy, and installed-base leverage are more crucial than ever.

Google+ will not succeed on the back of Google’s search product alone. No matter how many users it may garner, it will turn out like the other stillborn features in Google’s search, e.g. Buzz and SearchWikis. Already, it would be easy to consider Google’s first new social product launch a success, based on the 20 million or more reported users who have signed up for it. But nearly all of those users have joined on the basis of their existing relationship with Google, rather than for the sake of any life-altering content from their friend networks.

And, while leveraging its existing business and user base in search may sound like a smart corporate strategy, the results of such migration will be limited. The battle for the social Web is being waged for a prize of exploding consumer attention online. Adding line extensions to users’ search experience will neither defend Google from Facebook’s coming attack, nor offensively capture new and emerging opportunities for Google. So, the “leverage-and-enhance-the-core-product” strategy is an easy reach to execute, and offers appealing initial momentum, but it is short-sighted.

We’ve all seen this pattern before; and I’ve lived it as part of the Microsoft (MSFT) world here in my home of Seattle for the last decade. No matter what part of the company they work in, my friends at Microsoft know their paycheck comes every week, thanks to product sales of Windows and Office. And no matter what product they work in, whether it’s set-top boxes or mobile phones, their objectives are overwhelmed by the need to sell more copies of Windows and Office. Meetings at Microsoft have become famous for having a dozen-plus attendees – all in order to maximize integration with, you guessed it, Windows and Office. Rather than being marketed independently, great products like Office Web Apps and Windows Live SkyDrive seem destined to become mere shadows of their moneymaking core brands, victims of what Matt Rosoff recently referred to as the “strategy tax.”

As Google matures, is it becoming more and more like its original nemesis? Ironically, it’s Microsoft’s focus on synergy that has left such huge room for entrants like Google and Apple to come in and dominate sectors including apps, music and devices. Microsoft’s failure syndrome was especially perplexing because it clearly had the talent and experience to build these categories better and faster – if it had been willing to obsolete itself.

If Google doesn’t give itself back the freedom to compete with the reality of the outside world, it will quickly find itself a self-imposed victim of the Microsoft Syndrome. It may ride its own large, but strategically dead-ending, business for a long time; but it could also find itself missing out on the huge next wave of the Internet — social.

The required response from Google is not just a set of adjunct products that build on search. Instead, this is exactly the time that Google needs broad, far-reaching, and decentralized creativity to solve real people’s still-latent needs via the emerging social Web. Google needs to make sure its Google+ Project is a complete stand-alone product that – like Google Apps, Google Search, Gmail, and Google Maps before it – can compete on the open Web and break new ground. Facebook has outsize traction in the social sphere, but it’s not too late for Google, as long as the company quickly takes action to avoid falling into the trap that has caught its first major rival.

More Trouble For Google: War On The Regulatory Front?

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.