Many of you know that I’m a huge Muppet’s fan. I find this video extremely intelligent and hilarious.
I’ve been thinking about bloggers, blogging, memes, and this entire ecosystem from a macro-POV over the past few days. What caused me to think about it… I’m not sure, but nonetheless, I’m down the path and wanted to throw a few ideas out there.
In early 00s, I spent enough time in the music industry to understand the problems that we hear about everyday. Essentially, the music industry for the most part, relies on the ‘hit’ model, which means that a small portion of their artist roster generates enough revenue to cover the entire roster. (You can also draw a parallel to venture capital, publishing, and other industries)
Because the few chosen artists (signed to major labels) are promoted in such a way that exaggerates their excessive lifestyle, many, many artists (bands) want to be signed to a ‘major’ label because they believe that the clout, promotion, advances, and contacts that the label has within the market will help them to become rock’n’roll hall of fame inductees. Generally, this doesn’t happen. Even signed to a major label doesn’t guarantee you success, it even doesn’t guarantee that they will release your upcoming album.
Musicians use instruments in their craft. These instruments are pretty much worthless without someone playing them. A Fender guitar is nothing but a few strings, some solid wood, and a few screws/glue/etc holding it together. It’s the artist behind the instrument who brings value to the instrument.
In the blogosphere, the platform is the instrument. Whether you have chosen to use TypePad, WordPress, Blogger, Tumblr, or any other blogging platform, it’s worthless without someone (or multiple people) behind it producing content. The content producer is the artist (or musician in this instance). There are a handful of blogs that generate 80% of the buzz (TechCrunch, ReadWriteWeb, Ars Technica, Silicon Alley Insider, VentureBeat, Gizmodo, Engadget, paidContent, Between the Lines, GigaOM, A VC, The Social, TechDirt, etc) but there are millions of blogs who exist as well…
Using the blog/music analogy, the 20% of the blogosphere that generates 80% of the revenue are the blogs signed to major labels. What are these major labels in relationship to the blogosphere? Examples are Federated Media, UTA, WMA, and any other high profile blog representation services. Google Adsense and advertising networks are generating revenue for blogs of all shapes and sizes (majority of the long-tail) and I attribute this to the similarities of CDBaby/Amazon and other online merchandise retailers for the music industry however they are doing it in a passive way.
The music industry has the radio, which helped create hits across the globe. Whether you were a one hit wonder like Marcy Playground (I loved those guys) or a multiple-platinum seller like Coldplay, the radio certainly helped bring their music to the masses. In the blogosphere, you’ve got major influencing sites like TechMeme, TechCrunch, and BoingBoing (amongst others) who help drive traffic that potentially create an opportunity for your blog to transition into the pro-blogging space.
We all live the dream, some to play at MSG in front of 15,000 screaming fans, or a direct link to one of my postings from Robert Scoble, but it’s almost impossible to attain.
Thinking about the business model for bands, you’ve got a few ways to monetize yourself: sell music, sell merchandise, sell concert tickets (play shows), take donations, etc. The business model for blogs are pay-for-access, advertising, merchandise (maybe this is a way of the future?), or a loss-leader, like this blog is. I don’t make a dime off of it, but it opens the door to conversations that I’d not normally have.
With so many musicians and bloggers, it’s impossible to follow them all. Look at the amount of music discovery services that have emerged. Blogging discovering on the way? Are VC dollars flowing in that direction? Are micro-blogs like Tumblr essentially “singles”?
Would love to hear your thoughts…
Here’s a starting question:
1. Who will be the RCRD LBL of the blogosphere
I haven’t blogged about Google’s new Ad Planner so thought that I’d start my week talking about it and sharing a sexy and hot observation I made totally randomly.
What is the purpose of Ad Planner? Media Planners spend quite a bit of time trying to figure out where their brands or clients’ audiences are so that the brand can buy media to reach them. For digital media, many agencies use either Comscore or @Plan; both aren’t perfect, but they certainly help us organize thousands of potential sites for media planning.
Google is entering the world of Ad Planning. Why? I suspect it’s because they make it easy for anyone to purchase media on any site as they come into the Google Network. If you’re on the Google Network as a publisher, then ad dollars should follow as buying media for the small tire shop in Boise or a Fortune 100 brand can now reach you for display based online media.
I took a spin around the interface tonight and looked for Males, Ages 35-44, $150k+ in HHI, and have a Graduate Degree. It’s very intuitive, no frills – and gives a nice site list. If you use DoubleClick’s MediaVisor, you can export this and can finish planning in your preferred tool.
A funny thing happened however as I dug deeper. If you look closely at which sites come up first, you’ll see that the #1 site for this search is BDJGirls, an escort service. I’m all for beautiful women (and there are some on their site), but I don’t think I’m going to be spending my brand’s money on an escort service’s website. After reviewing their site, they don’t even accept advertising.
To add a bit of humor to this, BDJGirls is listed in the Weddings category. Does this mean that these males are looking for dates to weddings?
Maybe Ad Planner needs some refinement? What’s evident however is that DoubleClick is very important to Google’s future strategy.
Strange thing happened… I was reading the Wall Street Journal during my commute this morning and there was a music article (and recommendation) so I went to find out a lot more about the artist (Girl Talk) as the technology behind the music sounded interesting to me. Who knew that the business centric WSJ was going to look in-depth at music sampling?
Anyway, I went to check out Girl Talk’s website and it’s pointed to a MySpace page where you can click a link to buy the album. Following the similar format of Radiohead’s latest release, you can pay whatever you’d like for the album. I chose to put in $0.00 and on the next screen, the band asks why I was not inclined to pay but they still allowed me to download the album. Screen shot below… though this was very interesting.
The data they get from this is invaluable. I’d love to see the breakdown of what people say.
Something really fascinating happened today.
We brought together Madison Avenue and Silicon Alley/Valley at our first annual The Media Kitchen Digital Media Venture Capital Conference (say that 4 times fast). Having spent the better part of my life building digital media startups, I noticed that there was a huge divide between what is happening in the garages and what’s happening in the plush offices of Madison Ave (Varick Street). Since Madison Ave relies on these emerging digital media companies and vice versa, I thought it would be extremely beneficial to bring various constituents together with dozens of brands (clients), press, agency folks, and funds/portfolio companies to sit through a bunch of inspiring presentations and collaborate with each other.
It all started at 8AM at the Tribeca Grand in New York, Union Square Ventures, DFJ Gotham, and First Round Capital spoke about their views on the digital media landscape and where they see it going. There were some extremely insightful comments and inspiring moments… Albert Wenger, partner of venture firm Union Square Ventures was talking about generational shifts and broke them down to, “people who dated before they had their first computer and those who had first computer before starting to date.”
After each venture firm spoke, there were two portfolio companies who presented. USV portfolio companies included Tumblr and Outside.in. DFJ Gotham portfolio companies included Izea and ContextWeb. First Round Capital companies included AppNexus and Pinch Media. Conversations and presentations centered around micropublishing platforms to Internet “plumbing” and social media platforms to iPhone analytics. Hearing from the CEOs/Founders of these companies added a touch of validation and inspiration.
Some great audience questions were asked at the end of the conference and there is one I’d like to highlight: one of the group directors at The Media Kitchen asked all of the presenters if there were any digital media companies who were trying to build sustainable businesses (or were doing real revenue) instead of trying to be acquired. I thought this was very interesting. When we hear of Silicon Valley and Alley based startups, we all wonder what the “exit” will be for that particular company. With close to $10BLN in M&A deals in 2007, we’ve come to expect quick acquisitions… but doesn’t building sustainable companies count anymore?
Lots more thoughts to come from this conference… look for articles/postings across the Internet as people start to blog about the event. Here is a recent posting by Allen Stern over at Center Networks about the videos of the event.
Advertising is going through a significant innovation period right now and it’s fascinating to take part in it. Online advertising (strictly online) was established and tested in the 90s and now has billions of dollars being spent. Brands are spending increasing amounts of money to engage with their audiences in the digital world.
The Internet is really the first medium that is enabled by technology, potential for mass reach, and the ability for anyone to aggregate audiences (niche or mass). Television, print, radio, and OOH (out of home) all have significant barriers to entry in terms of both human and capital resource. Because of the lower barriers to entry and the adoption of billions of people worldwide, the Internet has become one of the most fertile feeding grounds for technology geeks and media mavens to innovate within and to make a difference in a short amount of time.
With all of the properties that exist online (web only or hybrid), a common theme for many of them has been monetization by advertising revenue. Over the past decade, companies like Poindexter, Atlas, Overture, DoubleClick, Google, Burst, Sonar, Tribal Fusion, and a whole slew of others have helped brands reach their audiences either through technology or advertising sales (enabled by technology).
Up until very recent years (and in many cases, even today), when you advertise online, you are reaching the audience of a particular website. For instance, if you are advertising on FerrariChat.com, you are going to reach the affluent crowd that visits that particular site. To put this in context, you would advertise (place your media) on sites/properties that have a high composition of your target audience. If a sites composition is 92% (of your audience), it means that for every $10,000 of media dollars spent, you are wasting $800.
Of course, we all like to create efficiencies and limit our wastage. Advertising technologies are in a high-growth phase where audience data is becoming highly sought after and important. Most brands and companies have tons of audience data but generally, it’s always existed in many different silos (divisions of companies) or the technical (or operational) infrastructure was never in place to crunch the data. Now that entrepreneurial visions and technical infrastructure are on the same wavelength, advertising is becoming increasingly technical.
Lets throw away our old models of buying mass audiences.
Lets look at new models of buying single people and I’m sure you see the benefits of this. This isn’t revolutionary but it’s becoming mainstream. Some smart people have been thinking about this for quite some time but there are finally enough media dollars behind this to move everything forward and validation is occuring.
Separate audiences from the page and on top of that, fragment the audiences into singular conversations (impressions).
In order to buy single targeted impressions, you must have data on the impression. Data is key. Dare I say, data is the new king (content)? If you have data and aren’t afraid to roll up your sleeves and analyze it, you can do some really interesting things today. Just having data however does not mean a thing…. quantitative analysis and modeling abilities will allow everyone from agencies to technology companies create unique audience segments and add color to single impressions.
Whether your a venture capitalist looking for your next investment, a media planner/strategist looking to figure out where to spend your ad dollars, or a brand manager looking to grow your P&L, there are no shortage of companies emerging (or have emerged recently) that could provide this data. Just look at the behavioral targeting networks that emerged such as Tacoda, Revenue Science, and Specific Media. Not only do these networks allow you to target based on behavior, but they provide added value in the sense that they show you who your audience really is by analyzing the data they have on the audiences who react to your brand messaging. This data is turned into reports that are given during and after the campaign has run for your brand. Of course, this is very interesting.
Look at Lotame, 33Across, Datran, Media6 and others that have quite a bit of data about users that can be leveraged for reaching audience segments. Matching an impression with a chunk of relevant data can be extremely interesting.
Who will win the near/mid-term advertising game?
This is a very interesting question. I think that there are quite a few players in the market who have quite a bit of data and also have an ad-sales team. Many times, these companies keep the garden walls “up” with this data and you can only receive minor parts of it through your ad buys. I think there are ways to monetize that data individually aside (but maybe not mutually exclusive) from having to buy media. I’d like to see companies leverage all of their data together to make impressions more valuable, whether they are bought from the respective company or a 3rd party.
Where does this play out? In the exchanges, networks, and sometimes, site buys.
Food for thought: While most of this conversation was centered around the Online Advertising world… it’s safe to assume that this will take place for all media channels in the next few years. As we’re one power outlet away from being a fully digital society, we’re going to be able to buy single impressions across television, radio, print, OOH, etc. Data will make this infinintly more valuable. Get excited… I know I am.
One of my colleagues in the office told me about a website statistics service named Woopra (he knows I love quantitative data). I had not heard about it prior, so I went a did a little research around the Internet about it. Apparently, it launched on/around May 30 2008, as it’s relatively new, but had a nice little writeup on TechCrunch. I did some Tweet tracking and saw that a healthy early adapter audience was using it.
What is Woopra you ask? Very simply: MyBlogLog meets Google Analytics and has a baby, and then morphs into a Bloomberg Terminal of the next century. Very, very interesting, at least to me it is. I’ve taken some screenshots of my Woopra Terminal and put them below for you to see:
What I like about Woopra is that it gives me information in near real-time and tells me where my audience is going and where they have been on my website. Generally, all of the data exists on server logs, but I like the advanced graphical representation of my data. In the screenshots above, you can see the ticker on the bottom of the page that scrolls with data from the server.
Woopra is going to run into some issues when large publishers start signing up. They are in beta right now which is very smart and limiting their service to publishers who are less than 10,000 page views. I’m speculating that the reason for this is because the amount of resources it takes to crunch all of the data is fairly intensive and that they want to work out all of the kinks before they start charing. I’m interested to learn how their infrastructure is built – are they using Amazon’s EC2?
What I’d like to see is Woopra share network data information. Meaning, if I track a view on my site and rename them, I’d like to see that “renamed” person across the entire Woopra network. There is a lot of information in the larger “network” – lets see if Woopra pools that data.
I also give them credit for the slick interface.
PaidContent has released their second installment of their Social Media Deals Report. The team has analyzed a 15 month period starting January 2007 and reports on estimated value, categories, and trends. You can order the report here.
Below is a chart and some statistics from the report:
— Total number of investments: 400
— Total number of disclosed investments: 341 valued at $2,763,715,000
— Average investment size: $8,104,736
— Best estimated value of overall investment in the space (disclosed and undisclosed): $3,074,215,000 total invested
— Total number of acquisitions: 131
— Total number of disclosed acquisitions: 41 disclosed valued at $13,422,310,000
— Average acquisition size: $327,313,415
Let me start prefacing this posting by stating that I’m a huge fan of U2. The band has tons of charisma, energy, and an amazing “show” that is similar to the aesthetics of the Dave Matthews Band. U2 is one of the top selling acts of all time including tour attendance and record sales. They generate income. A lot of it. Bono’s sunglasses aren’t cheap.
I was reading my daily newspaper (Techmeme) this morning and an article caught my attention, entitled, “U2 Manager slams Internet providers.” Naturally, I’m fascinated by this because I love the music industry and digital media is my passion.
I read the article and it’s essentially stating that their manager, Paul McGuinness, while talking at a music conference in Hong Kong, accused the ISPs of strangling the music industry. “ISPs” were compared to shoplifters. You get where it’s going from here and can read the rest of the article, but now, I’d like to voice my opinion.
Let me preface my opinion by stating the following:
- I ran a music marketing and technology company in 2001-2003
- I downloaded music from P2P networks in the mid to late 90s
- I stopped downloading illegal (important word) music in 2000
- Without confirming, I’ve probably purchased 500 songs off iTunes since it’s launch
Now that I’ve given you a bit of background, my opinion is as follows: adapt.
The world is becoming increasingly digital and new ways of distribution are going to disrupt MANY industries. It just so happens, that the music industry is being hit hard, but as bandwidth proliferates more homes and people have faster access, Hollywood is next. In some respects, Hollywood is being heavily disrupted as well as people download movies instead of going to the theaters.
I know in theory, adaptation seems easy. Practicality – it’s not. However, if we don’t start adapting and finding new business models… we’re doomed. The folks holding the purse strings for the music world and the ancillary businesses touching it need to step outside their comfort zone and try new models. Business will change. I can guarantee that.
U2 makes a lot of money and they are trying to protect their livelihood. For a band that is SO progressive, why are they being so conservative? This is an opportunity for U2 to create revenue streams outside of the traditional record store.
McGuinness, you’re a manager. You’re responsible for the future of the band and their business. Instead of complaining and trying to shutdown ISPs, why not embrace the fact that people WANT U2 music and find ways to get compensated for them. Just walk around the SXSW Music Festival hangouts and you’re bound to run into really innovative people trying to change the business. U2 is a business/band that can make a difference. Put yourself out there.