The Atomization of Content

One of my favorite movies is Shane.  Seems I am not alone: it is often included on lists of the best American movies and is referenced by everyone from grand thinkers like Joseph Campbell in the "Hero with a Thousand Faces" to Kevin Spacey and Samuel L Jackson during a silly riff in "The Negotiator" as they argue whether Shane lives or dies at the end - something that is intentionally left unresolved by the film maker.

Shane, for me, was one of those movies I would watch over and over again if I came across it during a mindless TV channel surfing session.

Over the years I have stumbled on Shane at various points in it's run time on TBS, TNT, AMC and a handful of local broadcast stations and sat through every ad until the end.  Although everything about the movie is great - the acting, the script, the extraordinary cinematography with a Wyoming valley and The Grand Tetons as a backdrop, it is really the ending that I wanted to see, one of the great gun fights in movie history - where Alan Ladd and Jack Palance face off in a climactic showdown of good versus evil.

A couple of years ago someone posted the last 8 minutes of the movie, including the gun fight, on YouTube.  Although it was was pulled recently, probably at the insistence of the copyright holder, the damage was done.  Of the 500,000 or so views it generated, 100 were from me, dampening the desire to ever sit through the entire movie again.   I "played it to death" much like my daughter does to her favorite songs on her iPod.

It's all part of what a blogger I recently stumbled upon, calls the atomization of content.  Here he relates what happened to the music industry to every other media form:

"People were able to select the precise song they wanted to hear, download it, and listen to it. An industry of albums became an industry of (less-profitable) tracks. Molecules became atomized.

There’s a chicken / egg question here. Did people gain a taste for picking out their favorite nuggets – or did MP3s allow people to realize a latent desire? (And why was music the first media economy to atomize? Because of the compact size of songs – and, therefore, downloads in the modem era?)

Whichever came first, the expectation of atomized consumption is spreading.
In Sunday’s Times, Joshua Brustein looked at the advent of stations and online tools that show only real-time sports highlights or provide alerts when games become “worth watching”. Hulu does the same for TV shows; YouTube, for movies – a quick search yields your favorite scenes.

In every case – just as Radiohead would argue about its songs –the consumer loses context: the preceding three minutes in the basketball game, or the set-up to a joke on Community. Subtlety, flow, drama, more important moments or information – all are (or, can be) sacrificed to atomized consumption.

It's not just the content itself that is breaking into pieces but the entire creation and distribution models that the media and entertainment was built upon.  Cable operators are beginning to allow customers to pick smaller packages of cable channels, cable and broadcast programs can be viewed independent of their network distributors, digital media companies like Netflix and YouTube are funding the creation of new television series, and the list goes on.

And while we can argue convincingly that certain forms of content atomization, such as breaking a great album or movie into pieces, is having a negative impact on important art forms, the broader "unbundling" that is giving consumers much greater control of what they watch, and ultimately what actually gets produced or renewed, is positive and inevitable.

But what are the economic models that support the creation of content in these new freestanding formats?  Musicians are now more dependent on touring and merchandising than they are on the sale of music.  Advertising will need to be more effectively integrated into free content, generating enough revenue to incentivize the writers and producers.  Hulu, despite it's hazy future, has been quite innovative in creating more relevant and valuable ad messaging formats. 

I agree with this blogger that everything needs to be thought of in a more modular form - As it relates to television newscast, he writes:

Present finished product news in modular form and let the modules contain their own commercial(s). We currently make newscasts, but those are a form of bundled media. We need to be producing individual newscast elements as standalone entities, complete with marketing, so that they can be used in unbundled settings. This means creating content specifically for an unbundled universe, not simply re purposing elements of newscasts. I like the idea of reporters introducing their own stories on camera, for example, so that the entire package is self-contained. These modules could be then assembled together or presented separately.

Regarding that Shane clip, which had no ad messages attached to it: why not post a less compelling scene from the movie with an ad telling me where I can buy the movie or watch it on a commercial television station or network in the future?

As we move through this massive media transformation there will be endless new business opportunities related to the marketing, distribution and monetization of content.

Consuming Versus Creating

A few weeks ago a friend told me I read too much. It was after after I sent him a half dozen or so back-to-back emails and IMs with links to media and technology industry stories that I had come across and thought he would find interesting.  

 

Each morning, buzzed on a couple of cups of coffee, I log onto Google Reader where subscriptions to all my favorite news feeds and blogs are aggregated, sometimes resulting in as many as 1000 stories in a day.   

I try to quickly scan the headlines and dive into only a few stories. But with the media landscape transforming so quickly and profoundly, resulting in entire new industries emerging overnight, my scanning slows to a grind as practically every other headline grabs my attention.  (The rampant practice of "reader-baiting": crafting sensationalistic headlines for superfluous stories to increase page views and ad revenue, adds to the overload.)

 

Before I know it,  a planned 30 minute exercise has extended far beyond that as my caffeine buzz wears off, the morning disappears and my brain is flooded with a lot more info than it can handle.  

 

So when my friend told me I read to much, something resonated. (When I went back and looked at some of the stories I shared with him, just a week after sending, I couldn't even remember some of them.)

 

I decided it was important that I find the right balance of consuming versus creating, or as Seth Godin said in a recent post ... 

In and out

That's one of the most important decisions you'll make today.
How much time and effort should be spent on intake, on inbound messages, on absorbing data...
and how much time and effort should be invested in output, in creating something new.
There used to be a significant limit on available intake. Once you read all the books in the college library on your topic, it was time to start writing.
Now that the availability of opinions, expertise and email is infinite, I think the last part of that sentence is the most important:
Time to start writing.
Or whatever it is you're not doing, merely planning on doing.

For me, it has been too much in and not enough out, this blog post aside.  After returning from a week long ski trip with my family where I intentionally avoided opening my Google Reader, I decided to try another week without logging on.  I wanted to see just how disconnected I would feel.  I wanted to see if the important stuff would find, me so to speak, sent by friends and colleagues in my various social networks.

 

(Interestingly, Twitter, Facebook and email are not distracting time-sucks for me, like they are for most people. I keep the programs closed most of the time,  avoiding the addiction of real time communication - dealing with them at select times during the day, in batches, just as a recent Newsweek feature story on information overload, titled "I Can't Think," recommends.)

 

It felt awesome, like my brain was cooling down from an overheated state, and finally allowed to recover from "information fatigue," a condition validated by its recent  addition to the Oxford English Dictionary.  On a plane trip during the second week of my "purge", I came up with an idea for a new business, a thrilling moment I had been waiting for, one that I thought my morning reading sessions would trigger, but I think ultimately delayed.

 

From that Newsweek story....

Creative decisions are more likely to bubble up from a brain that applies unconscious thought to a problem, rather than going at it in a full-frontal, analytical assault. So while we’re likely to think creative thoughts in the shower, it’s much harder if we’re under a virtual deluge of data. “If you let things come at you all the time, you can’t use additional information to make a creative leap or a wise judgment,” says Cantor. “You need to pull back from the constant influx and take a break.” That allows the brain to subconsciously integrate new information with existing knowledge and thereby make novel connections and see hidden patterns. In contrast, a constant focus on the new makes it harder for information to percolate just below conscious awareness, where it can combine in ways that spark smart decisions.

When I finally did log back on to my Google Reader one morning, I instituted a new set of guidelines:

• Keeping sessions to 45 minutes or less
• Stronger filtering - "Do I really need to know about this?"
• Cancel feeds that are sucking up too much time
• Saving stories that are relevant but too long to a "Read Later" folder on Evernote, a free cloud-based note taking and filing system that can be accessed from any device, any time. (Everyone should check it out.)

I am also investigating new tools to replace or minimize my dependence on Google Reader, such as Flipboard and Linkedin's brand new social news service. 

Although the Internet has give us so many extraordinary tools that enable us to consume and create more than anyone ever imagined, I believe some of the great new businesses too come will enable us to find a better balance between the two.

Cutting The Cord For A Week

My wife is in the middle of a 15-day "cleanse" - no caffeine, alcohol, meats or starches - all things I couldn't give up for more than half a day.  But in the spirit of cutting things out of our life that we are addicted to, I spent the last week seeing if I could live without cable television, "cutting the cord", so to speak.  Of course I still watched TV, just via the web through a $250 Google TV Logitech box and keyboard.

Cord cutting is the media topic du jour.  Although the term cord cutting couldn't be more inaccurate, as the cord into the home, powering so many web-based TV viewing alternatives, is more important than ever.

As you can see on my latest cable bill, I pay nearly $80 for programming and $30 for broadband service. (Including phone service, the odd VOD movie rental and an utterly bogus sounding list of taxes and fees, my bill adds up to $165 per month.)

It's the $80-per month cable programming subscription that I cut out for the week, relying on the $30 broadband subscription to bring the web, including custom applications from Netflix, Amazon and YouTube, to my TV. (The multi-billion $ question: will/can the cable companies move to a usage model like every other utility, enabling them to raise the price of broadband significantly for heavy users.)

Connecting the Logitech box to the TV and accessing our Wi-Fi network was as easy as setting up our Wii game console. It is designed to be a central home video entertainment hub, enabling users to manage their TV, Web and personal digital media library from one device.  However, I kept it disconnected from my cable box for the week.

My purpose here is not to provide a review of Google TV (many reviews have been written by people more qualified than me) or make a prediction on the future of Google TV and other products like it, but to question why the $160 billion television subscription and advertising business continues to chug along, growing every year,  yet maintaining outdated practices (the Upfront Ad Market) and pricing strategies (Bundling) while the Internet disrupts, upends and in some instances completely dismantles other sectors of the media  industry.

A popular tech blogger I follow recently described the Internet in terms that on one hand seem so obvious, yet also revelatory:

The Internet has gone through fits and starts – in particular the dot com crash of 2000 disillusioned many – but every year we see it transform industries that previously sauntered along blissfully denying its existence.  Already transformed: music, news, advertising, telecom. Being transformed: finance, commerce, TV & movies, real estate, politics & government. Soon to be transformed (among many others): health care, education, energy.

The modern economy runs primarily on information, and the Internet is by orders of magnitude the greatest information mechanism ever invented.  In a few years, we’ll look back in amazement that in 2011 we still used brokers to help us find houses, that doctors kept records scribbled on notepads, that government information was carefully spoon-fed to a compliant press corps, and that scarcity of information and tools was a primary inhibitor to education.

I think within a few years we will also look back in amazement that we paid each month for a bundled package of TV programming, most of which we didn't watch, and that we were not given the flexibility to pay for what we want, when we want it and on the device we want to watch it on.

And that is what my week with Google TV brought to light.

As indicated in an earlier post, I am a relatively light television viewer, so total viewing for the week only added up to 10 hours or so.

Here is a sampling of what I watched:

The Onion News Network
TimesCast (daily video news reports from The New York Times)
Netflix (30 Rock Season 4, various episodes)
Amazon Video On Demand (Mad Men Season 4, first episode)
You Tube (sampling of the greatest soccer goals of all time with my 10 year old son)
Barnes and Noble "Meet The Writers" video podcast

I watched in a similar pattern as I do on cable - sometimes just surfing around, other times having a clear idea of what I wanted.

My experience was completely different from the 5 families featured in a well-publicized cord cutting experiment who, according to this article, all reacted negatively, "feeling immediately the absence of the constant flow of automated TV choice."

I found the less-passive viewing experience, expanded choices and on-demand availability of everything I wanted extremely appealing.  I was also surprised by the abundance of great content that exists outside the cable hegemony.  The Onion News Network is funnier than almost everything on Comedy Central (The Daily Show and Colbert Report aside).  Timescast gave me enlightening, timely, restrained news coverage - something that is quite difficult to find these days on the cable news networks.  And Amazon, Netflix and YouTube's programming offerings are becoming more compelling by the minute. 

BUT...

Cord cutters like me represent a sliver of television viewers, despite all the press attention.

The television industry has been to date the least flat-footed player in the traditional media landscape, focusing every possible resource on avoiding the fate of the music and newspaper industries. NBC led the development of what is now the second largest online video destination and cable operators have been quite effective at adding broadband, phone and even mobile services to their offering.  (Notice that cable programming represents only half my monthly bill.)

And cable networks are investing heavily in original programming and the highest profile sports franchises, the key stuff that is either not available at all to chord cutters, or available months after the premiere.  (I was able to watch Season 4 of 30 Rock via Netflix, but not the current season. )

Many cable nets are also proving to be particularly nimble at extending their brands to digital platforms - MSNBC had 158 million video views in January, making it one of the most viewed video destinations on the web; and ESPN is consistently one of the strongest brands on mobile devices.

Two recent developments reinforce this sense of adaptability:  Time Warner Cable started offering  lower cost, more customized bundles in certain markets and a new set top box from Cisco that includes web access, among other features, will be soon be available to cable customers from their cable companies.

From an article in the Wall Street Journal announcing Cisco's plans:

IDC analyst Jonathan Gaw said Cisco has an advantage... because consumers would rather lease one device from their cable operator for Web video and cable programming than buy or lease devices from multiple vendors.

"People would rather not buy a Google TV or a Roku or an Apple TV," Mr. Gaw said. "They would rather not have to pick up another remote control."

And just yesterday, Time Warner (the entertainment company, not the cable company) and Comcast announced an agreement that provides Comcast subscribers with expanded online access to TV content from TBS, TNT, Cartoon and a host of other Time Warner networks.

The title of the blog post I referenced earlier is: "Predicting The Future Of The Internet is Easy: Anything It Hasn't Dramatically Transformed, It Will."

It's just taking a bit longer to transform some of the biggest industries.

Television, the biggest and most influential media form, is at the center of an epic battle for control by many of the most powerful and innovative companies in the world.

Over the next couple of years there will be a steady stream of startling developments that transform every aspect of television viewing - from how we discover and decide what to watch, to how programs are produced, distributed and monetized.

My Take on the Groupon Frenzy

Just over a year ago I blogged about the breathtaking amount of deal activity in the local media sector and mentioned a new company called Groupon that had just raised $30 million. (A significant amount of money by most fund raising standards, although somewhat inconsequential compared to their latest raise and Facebook's eye popping $500 million Goldman Sachs investment at a $50 billion valuation.)
 
What was driving all the interest then and even more now, is the sheer size of the local ad market (over $100 billion per year) and how little local businesses spend on digital media (less than 10% of their ad budgets.)
 
But it is, and always has been, the toughest of markets to crack and achieve any degree of national scale.  Soliciting and servicing millions of highly demanding, not particularly tech-savvy businesses who have limited resources and a laser-like focus on results is a monumental task.  AOL, at the height of it's popularity, couldn't crack it and Google, at the height of it's power, has only had limited success.
 
From that post ...

    "... local advertising is a tough business. As a well-known local media consultant said, "local is sold not bought." Three things are needed for a company to succeed in local: a great product, significant capital to drive awareness and, most importantly, a big local sales force. The Yellow Pages became a $20 billion category, dominating local advertising for years, based in large part on a famously aggressive local sales force numbering in the thousands. "

Groupon not only has the three ingredients (their sales force is already among the largest in media history), but appears to be turning the "sold not bought" assumption on it's head (businesses are calling them and can't sign up quick enough).

And that is why Groupon may be worth every penny of it's latest estimated $7 billion valuation.  Creating enormous new marketplaces that bring businesses and customers together, exciting both parties along the way, is what made eBay and Google such extraordinary businesses.  And, as Google has also proven, new forms of advertising that cut through the clutter and provide businesses with clearer metrics of accountability will be readily embraced. Finally, with a rumoured $2 billion revenue run rate, Groupon may be outpacing Facebook, which is now seriously encumbered with a ridiculous market valuation and quite frankly, does not have as clear a scalable revenue model as Groupon.

A blog called Measuring Measures summed it up well:

    "Advertising has become quite spammy and irrelevant. We've gotten away from the core issue, which is not inherently spammy at all - merchants interacting with people to retain their existing customers and win new customers. There is nothing evil about that, and the direction that advertising has taken for decades has been largely disrespectful, manipulative, misleading, and lacking in creativity. As a result, it has become quite boring.

Groupon shines a light on a new direction with a different vibe. It is more fun, more down to earth, and a far more compelling proposition for the customer."

There are still many questions about how big Groupon can become.  They just haven't been around long enough to accurately gauge repeat buyer and seller trends. Two key questions that will indicate their future significance: What is the real, long term impact a Groupon deal has on a business's bottom line and, are folks actually redeeming all those deals they purchased in the spur of the moment?

I have been a subscriber via email for 3 months now and still haven't purchased a deal (a fair amount have been relevant and I was close a couple of times), but a week doesn't go by when I am not forwarded one from a friend via email or on Facebook.  (Another "social shopping" company, Living Social, which I just signed on to, seems to be even more popular among my friends but isn't getting the same level of media attention, yet.)

And my friends who own local businesses can't stop talking about both companies.  One friend in particular, who owns one of the largest and most successful dance schools in the country said, "It's advertising that sends you a check." But she is an early adopter and tech-savvy entrepreneur who started building a fan base on Facebook years ago.

Seems the real value in Groupon will be unlocked when they move beyond the curated deal a day model and introduce a self service platform that enables local businesses to communicate more consistently with a more finely targeted audience.

Stay tuned.  Will be fascinating to see how it unfolds.

Tony Soprano And The Future Of YouTube

I am what media research organizations would classify as a light television viewer - someone who watches just a few hours per week at most.  Based on our demographic profile, light television viewers like me are extremely sought after by advertisers.

Up until recently, about half my limited television viewing time was spent lazily channel surfing with no specific idea of what I wanted to watch - just bouncing up and down the channel line up with a glazed look on my face until something grabbed my interest.

The other half of the time was, and still is, spent watching stuff I specifically intended to watch.

And other than our weekly family "Glee"viewing party (including, quite inappropriately, my 8,10 and 12 year-olds), the Sunday Jet's game, the odd big live event (Academy Awards, Grammys, Superbowl, etc) and the occasional breaking news story, most of this "appointment television" occurs on my timetable via DVR or VOD technology, or a Netflix DVD or stream.

It takes a pretty fine-tuned TV advertising plan to reach me.  And it is getting harder.

Over the past 6 months or so, I have almost completely replaced the channel-surfing portion of my TV diet with YouTube clips, watched on our family's 22" iMac down the hall in another room.

With a beer or glass of wine in hand, I now surf YouTube, which has, under the wary and litigious eyes of the biggest media companies in the world, aggregated an unrivaled library of video entertainment.

YouTube reported last week that 35 hours of new content is uploaded to the service every minute, twice the amount from just a couple of years ago.  And while much of it is family videos or silly user generated attempts at viral fame, a significant amount is copy-right protected content from the likes of MTV, HBO and AMC, uploaded in reasonably good quality by individuals wanting to share and discuss their favorite pop culture moments.

Here is one of the clips I watched the other night...

 

... one of the greatest scenes in television history, uploaded in decent quality by a random YouTube subscriber with no apparent connection to HBO.  The big question - where are the ads?  My guess is that a pre-roll ad unit in front of a seminal TV moment like this is worth... $25 per thousand? $50? $100?  A $50 CPM against the current 2 million view count represents $100,000 in potential revenue for this one clip.

Or why doesn't HBO insist (I am assuming they know this clip exists) on promotional messages for current HBO programming?

Next I watched this...



... from the 2003 MTV Video Music Awards - one of the funniest openings ever of any awards show. (Was there any doubt Jimmy Fallon would become a superstar?)

But also uploaded by a random YouTube subscriber with no authorization.

And this content is owned by MTV, the company that threw down their gloves and sued YouTube in a very public dispute just a few years back.

According to an article in The New York Times last month, some of the big entertainment and media companies are beginning to work with YouTube in finding mutually beneficial ways to capitalize on the site's enormous social media power.

The article described an unauthorized clip from Mad Men that Lions Gate (the rights holder) allowed to remain on YouTube in exchange for a 50% ad revenue split.
  
If YouTube can structure deals like they did with AMC with HBO, MTV and all the other premiere content owners, the revenue opportunities are substantial.

Of the approximately 2 billion daily video views on YouTube, 14% include ads, helping the company finally reach profitability this year with over $400 million in revenue.  Just doubling the ad load could bring YouTube within range of $1 billion, putting it in the same ad revenue league as some of the larger cable networks.

YouTube has ambitious plans to convince users like to me to start browsing the service on my television.

NY Times tech columnist David Pogue recently wrote that browsing the web on TV is an idea whose day will never come.  Not sure I agree.  At a party recently, a group of us stood around a web-connected TV laughing at some random YouTube clips.   For the most part though, surfing YouTube in it's current form is a solitary, small-screen, head-phone insulated experience.

However, might YouTube, with so many resources at their disposal, be able to reformat the experience for lean back viewing, integrating longer form programming as they develop better relationships with their network partners? 

They are working on it.  Here is a link to a job posting for a new position at Google:  "Product Manger, YouTube on TV".

And might YouTube's growing clout provide some leverage to Google in their grander Google TV initiative?

Whether they succeed in bringing the service to TV or not, YouTube is clearly a major force for the entertainment and ad industry's to reckon with.

My Experience With Cable's "TV Everywhere" Platform

ESPN, arguably the most valuable TV programming franchise in the world, is making all their programming available online, live, to authenticated Time Warner Cable subscribers.  Seems like a huge story, but much like the entire "TV Everywhere" initiative introduced by the cable industry nearly 2 years ago, the actual service is shrouded in quiet - like the stealth launch of a new product that all stakeholders are unsure about, as it represents enormous disruption for their industry.

I could find no mention of the new offering in any Time Warner Cable marketing materials or on the customer web site.  There was some coverage in the trade media, but quite frankly, I expected to see much more.   I initially found out about it on a blog, which took me to this ESPN/Time Warner Cable co-branded web site:

After entering my account number and customer code, within seconds I was watching Sports Center and a bit later, a college football game - basically, a live feed of the cable channel, without commercials, although I am sure that will change quickly.

The problem with TV Everywhere has been the lack of compelling content.  Up until now, the most prominent programmers to participate - Time Warner's TNT, TBS and HBO - have only made limited content available; and very little promotion has resulted in minimal consumer adoption. 

Some toes in the water, but no real commitment.  And as a result, everyone had heard about TV Everywhere, but very few have actually experienced it.

(Comcast's TV Everywhere initiative features a somewhat broader line up of content but has struggled with the additional issue of a poorly designed authentication process, frustrating the customers that tried to sign on.)

Not surprising, it is ESPN that is the first to make such a dramatic move.  They are consistently among the most innovative and technologically nimble of all the media brands.  Yet both ESPN and Time Warner Cable have significant risks to consider.   ESPN's subscriber fees are the highest in the business, bringing the company billions in revenue from their cable, satellite and telco distribution partners.  And for the distributors, live sports is among the most valuable and highest rated programming, justifying in large part why consumers are willing to fork over so much money every month for a bundled package of programming options that includes channels they never watch.
 
Yet as more and more consumers are connecting their TV's to the web through one means or another, and they start to see some of their favorite programs outside the realm of the set top box, the whole business model of the bundle weakens.   A column in Tech Crunch earlier in the year addressed the looming bundle versus a lá carte challenge facing the cable companies:

 "... on the Internet the more empowered consumer has become comfortable with picking and choosing the content for which they pay. Thus the success of iTunes over the Rhapsody model. So the really interesting business question which TV Everywhere raises is whether the old media model of bundling all-you-can-eat content in a single monthly price can work in the digital age of this empowered consumer.  Perhaps, in parallel with TV Everywhere, cable companies would be wise to also offer the option of paying for online video content on an a lá carte basis..."

With so many big guns (Google, Apple, Amazon) and smaller ones (Netflix, Hulu) aiming at them with lá carte options for consumers, the cable industry will need to respond quickly.