As the world of media moves beyond its traditional boundaries, media operators need to broaden their thinking about potential revenue sources. In a connected world, the possibilities transcend the classic advertising, sales and subscription models.
In my recent article Creating the Future of Media: 4 Driving Forces, 4 Strategic Issues, 4 Essential Capabilities in Media Titles magazine I wanted to point to some of the possibilities. I brought together some of what we had been working on with clients to create a Media Revenue Models framework to show some of what is possible.
Of course a key aspect of potential revenue streams is the value creation that merits payment. While the general categories of value added by media have not changed, their relative importance definitely has. To understand potential revenue models, you must also be clear on the distinctive value add of your media offering.
A few things to note. First, this is a draft, and while I haven't had time to update it yet I've already been given some additional ideas to complement this. I'd love to hear any other perspectives or ideas that would add to this. Second, this only looks at revenue, not at business models, which look at how resources are brought together to create value. We're in the process of developing a media business models framework. And third, the primary purpose of this is to help executives to think in new ways about their own business. I have already found it very valuable in strategy sessions with clients in generating new strategic options and ideas.
Here is the content in text form:
I am at the Media 2010 conference in Sydney, where there is an extraordinary line-up of speakers through the day. I am here to get my head back into gear on future of media strategy, which will be a major theme for me through this year.
Below are my notes taken on-the-fly from the first few speakers. Hopefully I will get hold of some laptop power to be able to continue after this.
JACK MATTHEWS, CEO, FAIRFAX DIGITAL
We are at the point of singularity – beyond which we cannot see.
Highly recommend Yochai Benkler’s Wealth of Networks.
I very rarely find the time to write magazine articles, but I was delighted to write the opening feature article for MediaTitles 2010, an annual publication which covers the media and magazine industry.
To see the article in the full splendor of the print version, go to the MediaTitles website, which has the full publication viewable using Realview Technologies (with the article reformatted to take out the lists of four, which I think is a pity). My article is on pages 7-10.
The (original) text of the article is below.
CREATING THE FUTURE OF MEDIA
These are the best of times, these are the worst of times. The global economic crisis, coming on top of a dramatic transformation wrought by the rise of the Internet, is creating the swiftest change in media industry structure ever experienced. Newspapers and magazines are being shut down at an extraordinary pace all over the world, journalists are losing their jobs, and broadcast media are under threat as sliding advertising revenue hit an unmoving cost base. Yet as the world shifts towards what will be truly an all-encompassing media economy, there are extraordinary opportunities ahead for media organisations.
This is a critical juncture to examine the future of media. Magazines have and will continue to be central to how we learn, socialise, entertain ourselves, and make buying decisions. Yet the magazine industry will undoubtedly look very different scant years ahead. It is our role and responsibility to create the future of media, rather than to let it happen to us. To do that, we need to examine the most central driving forces, strategic issues and capabilities in the evolving media landscape.
Four Driving Forces
Some more interesting insights from the UK OFCOM report (in addition to the shift in social networking activity from youths to adults I wrote about earlier today).
There has been a 25% slide in newspaper revenue over the four years to 2008 (with the biggest drop in 2008, and likely a larger one coming in 2009). Most interestingly, half of this loss has come from local classifieds.
UK has a distinctive structure to its newspaper market, with a number of national dailies mainly out of London, and a large variety of local newspapers. Classifieds by its nature tends to be a local market, so the national newspapers have in fact not taken the bulk of this revenue - this has been the province of the many local papers, which have been slammed by the fall in classifieds revenue.
I’ve done two radio interviews this morning, asking me for forecasts for the year ahead.
The broader issue I am emphasizing in my current interviews and speaking is that 2009 will bring more change than any other year this decade.
Perversely, a slowing economy will accelerate the pace of change. Many companies will take advantage of the downturn to use technology in innovative ways. Technology ranging from mobile applications to online gaming will become an everyday part of our work lives.
Social change tends to be faster in a downturn. Our attitudes to what is acceptable behavior by the government and companies will rapidly evolve. Technology is shaping society, but society is also shaping technology, particularly in how it allows us to express forcible opinions.
In these interviews for non-professional audiences I briefly covered six important forces that will shape business and society in 2009:
1. Constant partial attention. 2009 will see more people consuming 20 hours or more of media a day. And no, it’s not just the insomniacs. It is due to a phenomenon called Constant Partial Attention, or CPA, in which our attention is constantly divided between a massive array of channels now including mobile Internet, video screens on buses, and more. Over two-thirds of people watch TV while reading. To be successful, we need to thrive on constant interruption.
Adding to my last post on the fabulous list of new confirmed speakers at Future of Media Summit 2008 …
See the full line-up of media leaders speaking at the event.
Others recently confirmed for the event include:
Belinda Rowe, CEO Australia of Zenith Optimedia, one of the top few media buying groups globally, with very detailed insights into media industry structure.
Stephen Hollings, CEO, News Digital Careers, who has probably the broadest understanding of the classifieds market in Australia.
Jane Schulze, Media Editor, The Australian. The Media & Marketing section of The Australian is the most widely read media publication in the country.
Bruce Meagher, Director Strategy at SBS, Australia’s multicultural public broadcaster, which has adopted a variety of new initiatives.
Willie Pang, Head of Yahoo! Search Marketing, previously worked on Yahoo!’s Panama project and has very international perspectives.
Jim Waltz, President, Traffic Marketplace, one of the leading advertising networks.
Brian Lott, SAP Global Client Leader, Burson-Marsteller, one of the leading PR firms globally.
Check out our Future of the Media Lifecycle framework, just released. More research and analysis posted here soon.
Hope to see you at the Summit!
Last Thursday’s Media Report on ABC Radio National features an extended interview with me on the state of Australian Web 2.0 and major online media (there is both a podcast and transcript available from the link). Some of the points we covered:
Major online media players
* The well-publicized challenges of NineMSN (the Australian 50/50 jiont venture between Microsoft and PBL Media) are partly company-specific, and partly a reflection of the difficulties of the incumbent position.
* Australia’s major media companies have done far better than their international peers in dominating online news (and other aspects of the online space including classifieds). Blogs and micro-publishing are now finally taking off, taking market share from the majors, leading to the major online publishers losing readers in a growing market. The long tail is the natural distribution of readers, and it has always been inevitable that the majors would lose their dominant market share.
* In media conglomerates that are experiencing revenue challenges in traditional channels such as TV, newspapers, and magazines, expectations for growth in the online business are often unrealistic, leading to disappointments when budgets are not met.
* PBL Media, which owns 50% of NineMSN, is 75% owned by private equity company CVC Capital Partners. Private equity companies, for reasons including their debt structure, are often biased to short-term over long-term revenue, relative to their listed company peers. This leads to pressures on management and staff, which can make attracting and retaining staff more difficult when other companies are enjoying participating in a rapidly growing market. The 50/50 ownership structure doesn’t make things easier.
We are currently hiring a new finance/ admin person. One of the impacts of online job classifieds is that it is far easier to apply, and so you get far more applications than when people had to write and post a letter. For another position we're advertising, for an Extremely talented office/ events/ digital media assistant, we've received over 150 applications in the last five days - a few very good, and many just not worth looking at.
However there are occasional compensations for the work of going through many resumes. One application for the finance/ admin position included the following in her career history:
XXXXXXX Finance Service in China (a professional financial consulting company, handling tax dodging sensibly and regular accounting operating for clients)As an accounting clerk/ admin officer
Ahem.
In the Future of Media Report 2007 we published some original research on the ownership of online classifieds in the US, UK, and Australia. One of the biggest industry fractures in the shift to digital media has been the emergence of online classifieds. Classifieds used to be the sole domain of print media. As classifieds have shifted to a medium that is superior in accessibility, searchability, and cost, new entrants have taken part of the pie. It has been possible for incumbent media to leverage their power and position to be successful in online classifieds, but in many cases other players have taken the opportunity and seized prominent positions.
As such we looked at the jobs and real estate online classifieds markets across the three countries, dividing the owners of properties into five groups: Traditional Media, Large New Media (e.g. Yahoo, eBay, Google), Small New Media, Industry (e.g. recruitment or real estate firms), and Other. We used traffic to the sites as a proxy for their prominence. We would also have liked to have compared online classifieds with print classifieds, but it is difficult without financial data. Perhaps a project for our 2008 Report... The analysis is below – click on the charts for full details in the Report.
The annual Future of Media Summit held simultaneously in Sydney and San Francisco (the Future of Media Summit 2007 is on next week) is as much about providing new content, research, and insights as it is about an event. Last year the Future of Media Report 2006 certainly succeeded in its objective of sparking debate and discussion on the future of media, with over 70,000 downloads, commentary generated in seven languages from over 20 countries, and use of our content in magazines across three continents and in at least one government submission on the future of media.
This year we are following the example of last year, creating an entirely new report that looks at different angles and perspectives on where the media landscape is today and where it is going. The Future of Media Report 2007 is now officially launched - download it here.
Some things you’ll find in the report:
Eight Developments in Media July 06 of June 07. Examples of key developments, including industry transactions and acquisitions, layoffs, new channels, intellectual property, and consorship.
Shifting Global Advertising Channels. Data and commentary on shifts in advertising spending, and a comparison of ownership of the online classifieds segment in the US, UK, and Australia.
Comparison of Fastest Growing Properties and Internet Access. Exclusive original research from Nielsen//NetRatings, comparing uptake of new media properties in the US, UK, and Australia, and different online browsing behaviors across nations.
Key Elements of Media Business Models. Following the extremely popular Future of Media Strategic Framework from last year, we have created four complementary frameworks looking at Scalability, Value of Distribution, Value of Advertising, and Media Personalization. These can be applied to understanding emerging media business models. Each of the frameworks is explained in detail.
Media Industry Network Analysis. An analysis by Laurie Lock Lee of the recent acquisition of Southern Broadcasting Corporation by Macquarie Media Group, and insights on the impact on the Australian media industry landscape.
Media Transactions. A list of media mergers and acquisitions of at least US$1 billion over the last 15 years, putting the massive surge in recent media industry activity into context.
Download the complete Future of Media Report here.
Please feel free to pass on word or comment. As with all our work, the Future of Media Report 2007 is released on a Creative Commons license, which allows anyone to post it, use it and build on it as they please, as long as there is attribution with a link to the Report on this site or to this blog. The framework is intended to be a stimulus to conversation and further thinking, so if you disagree on any aspect, or think you can improve on it, please take what is useful, leave the rest, and create something better!
We’ll be releasing parts of the Future of Media Report separately over the next days and weeks.
Attendees at the Future of Media Summit 2007 in Sydney or San Francisco get a very nicely printed copy of the Report, so get along! Hope to see you there.
IT Wire has just written an article about the press briefing we did earlier this week on the research being released for the Future of Media Summit, titled Social Networking Shows Explosive Growth in Australia. They've largely used our press release in the article, so thought I might as well provide that below, even though it was mainly a teaser for what we covered in the briefing. More details of all of this will be available over the next week or two leading into the Summit.
A brief summary of today’s release of research findings (4 July, 2007):
From Nielsen//NetRatings:
How bandwidth affects media usage: Low Internet bandwidth in Australia is playing a major role in the lower time spent online by Australians, and in how their media consumptions habits differ from other countries. Average home user connection speeds in Australia are 21%-43% of the speeds in comparable developed countries.
The rise of social networking online. In the year to May 2007, growth in use of YouTube by Australians was a massive 239%, resulting in 20.6% of online Australians accessing the site each month. That still leaves us far behind our peers, with 30.2% of Americans and US and 25.5% of British accessing YouTube. Australians are behind in the use of blogging platforms, but close to the lead in usage of Wikipedia.
The other day I was having a conversation with a senior executive of Reed Elsevier about the future of media, and in discussing their inititiatives he used the word “geocloning”. I immediately took up on this neat and intriguing neologism, which obviously means taking a business and duplicating it in its entirety in another country. I later Googled the term, and found that geocloning seems at this stage to be a word used exclusively by Reed Elsevier, however it uses it freely in its investor communication.
The word interests me because it immediately evokes many of the issues in the globalization of media. One of the key themes of the Future of Media Summit 2007 (as last year) is Global Strategies for Media:
New distribution channels allow content creators anywhere to access global markets. A useful way to identify some of the variables across media markets is to compare key features of the US and Australian media markets, including industry structure, ownership concentration, scale, demographic, and technology platforms. This helps to identify appropriate global strategies for media industry participants.
The core issue is that while the Internet allows global distribution for digital content, localization is often required. At the highest level, language and format may need to be changed. Entertainment in some cases benefits from localization, such as country versions of Big Brother or American Idol, or Russian imitations of American soap operas or Latin American telenovelas. Global syndicated news is often localized with currency translations and addition of local relevance or commentary. Local niche media is a growing space, however it requires a judicious mix of local and broader customized content.
Today BRW launched its flagship Australia Online issue (which is only available online at a hefty subscription price!), covering an interesting range of topics including the rise of online advertising (over $A1 billion annually now), e-commerce, online classifieds, travel, internet TV and music downloads. There is a truly atrocious full page picture of me facing their article “Business blogs on” (Don’t look – please!). This was intended to be a follow-up to their Blogging Power article of December 2005. In my interview for today’s piece, I tried to stress that the issue for corporates was no longer just blogging per se, but how activities across the enterprise are aggregated to enable more efficient working. The writer seemed to base the entire article on what we covered in our discussion, though only used a few anodyne comments from me. Certainly there is a real issue in getting corporates to use blogs for their external communication. Inside the organization, the game is now not about getting people to blog. It’s about creating an infrastructure whereby comments and activities by individuals have value across the enterprise. I’m hoping that Australian corporates will be able to leapfrog the phase of experimenting with blogs to start implementing enterprise-wide systems to tap collective behaviors, including document creation and viewing, bookmarking, annotating and more. A lot more on this later – I am currently developing a Web 2.0 framework (including enterprise and consumer), which I’ll launch sometime in the next few months.
Another article in the same issue was on internet TV and movie downloading, looking at competition among the online video platforms in Australia. I was quoted in the article (somewhat accurately) as saying:
Future Exploration Network chairman Ross Dawson says: “It surprises me how slow free-to-air TV channels have been to stream programs on the internet, especially as they can get a better idea of their audience on the net, and tailor advertising to suit them.”Dawson says device convergence – such as Microsoft’s Xbox initiative – is also critical in how the market evolves.
“Manufacturers know convergence [will happen] and are desperately seeking to be at the centre of it,” he says. “ It happened with Apple. The sold people a physical device, an iPod, which led them to an internet site to make music purchases. Now this encompasses podcasts and video. They have moved from selling a single device to having a strong relationship with consumers selling content.”
Have a look at what I’ve written on how European telcos are positioning themselves to get some more insights into the foundations of this strategic positioning game.
This week I was interviewed by Nicholas Scibetta, Global Director of Ketchum’s Communications & Media Strategy Network, on The New Media Transformation, looking at the implications for the PR industry.
The full interview is below. Click here to read the interview on the Ketchum site.
NS: What companies do you feel are doing a good job of playing in the ‘new media’ space and why?
RD: News Corp. is the media conglomerate that has done the best job among its peers in getting into new-media forms. This has been not only through its highly discussed acquisition of MySpace, but also its less-visible purchase of IGN [a gaming network], which recognized that video games are now part of the media space.
In the start-up space, I like Edgeio, which competes with eBay and other classified services. It enables people to publish listings on their own blog or Web site, which are then aggregated into one space so people can search for and find what they are looking for across all advertisers. One of the most important questions in the media space is whether classifieds will remain associated with traditional media. Edgeio is a very interesting experiment based on the assumption that they will be separate.
NS: What do you feel are the biggest misconceptions about working with new-media outlets and what are the three things you think all PR professionals should know before reaching out to them?
RD: Many people associate new media with blogs and podcasts. These are part of the emerging media space, but any Internet presence that has significant reach can be considered new media. Three things for public relations professionals to keep in mind when reaching out to new-media outlets are, one, PR professionals should always be completely transparent and open in their communication with new media; if they don't, it will swiftly boomerang on them. Two, every message should be targeted based on an understanding of their interests -- you will get no respect if you contact people with irrelevant information, but you will be respected if you know what they will be interested in and why. Three, the way to engage new media is to build relationships -- people in new media believe in relationships and conversations, not in press releases.
NS: What is the future of media and what is the role of both new and traditional media in PR programs, given the current media landscape?
RD: Mass media will not die -- what we are seeing emerge is a continuous spectrum from traditional mass media through to small community-based conversations. For any particular client or campaign, PR professionals will have to consider where across this spectrum of media they should be investing energy to achieve results. In some cases, accessing only traditional media will be appropriate, while in others, new-media channels will be the primary target. Usually these will be complementary, especially given that traditional media increasingly takes its cues from key bloggers, and their stories can have little impact if they do not generate a discussion among bloggers.
From the start, a key part of the idea for the Future of Media Summit was to create some interesting content that would provide a basis for discussion at the event. Something that would help people think in a structured and productive about what’s really happening in the world of media. The Future of Media Report 2006 is NOW! officially launched.
Download Future of Media Report 2006
The Summit is on next July 18/19, simultaneously in Sydney and San Framcisco. Get thee along! It will be a mighty fine occasion, with well over a 100 people in Sydney, nigh on 50 in San Francisco, and a whole bunch globally on the live videostream. Check the website in the next couple of days about the live videostream. There'll also be some kind of "audience blogging" at the event, including people in all locations. If not, just read the report, and the event will leave a trail of participatory content behind it.
Some of the things you’ll find in the report:
Global media market highlights. In 32 years media will have doubled its share of the global economy. Newspaper revenue is stagnant, but television, driven by cable subscriptions, is growing healthily. The US is heavily overrepresented in the global media markets, boasting 42% of all revenue. However China’s media appetite is exploding.
Global media comparisons. Other countries are catching up to the US in online advertising, though classifieds is a particularly strong source of revenue growth in the US. Teens spend more total time with media than adults, but less time watching TV.
Emerging media relationships. The Washington Post far outstrips other major US newspapers in blog references per print copy, but still lags The Guardian. Almost half of all “mashups” are based on location. PhotoBucket outstrips the growth pace of MySpace.
Content creation and usage. Eighteen percent of Americans over 65 years old have created content on the Internet, showing it’s not just for teenagers. 37% of all blog posts are in Japanese, more than in English.
Media industry networks. Microsoft remains the company most central to global media alliances and joint ventures. Yahoo!, Apple, CBS, Viacom, and Sony Ericsson are among those that have become more central over the last five years.
The Future of Media Strategic Framework. A framework to pull together some of the many threads that make up the future of media, including the symbiosis of mainstream and social media, the consumer/ creator archetype, content, formats, revenue, distribution, globalization and localization, and intellectual property.
Five ideas transforming media. Key ideas include “time compression,” describing how people’s media consumption habits change when they get busier, and “infinite content,” about a world in which limitless media is available.
Media snippets. In 1892 there were 14 evening newspapers in London. Today there is just one. 36% of US high-school students believe that newspapers should get “government approval” before stories are published.
The main intent of the report is to build a conversation. So very interested in any thoughts, comments, additions, disagreements, other stimulating stuff in this space. Actually I need to check my comments function is working properly. Email me if it isn’t. Speak later!
[UPDATE:] A slightly updated version of the Future of Media Strategic Framework, together with lots of related content, is available in the Future of Media Report 2006.
Future Exploration Network is organizing the Future of Media Summit, which will be held simultaneously in San Francisco on July 18 and Sydney on July 19 to explore the evolving world of media. In preparation for this, we’ve prepared a Future of Media Strategic Framework. The intention is to provide a framework and starting point for useful discussion before, during, and after the event. It is by no means comprehensive, but rather a project to pull together in a coherent way some of the key themes on the table as media evolves, how they relate, and the strategic questions that media organizations of all stripes need to consider.
The Strategic Framework and explanation below are work in progress. These are early versions, and a small part of what will go into the Future of Media Report, which will be produced just before the Summit, and be available to all Summit attendees in both Sydney and San Francisco. This will also include research comparing the US, UK, and Australian media markets across traditional and social media, major trends in media, and more.
Click on the image for the Future of Media Strategic Framework pdf (293KB)
Future of Media Strategic Framework: Diagram Explanation
The symbiosis of mainstream and social media
A symbiotic relationship is emerging between mainstream media (such as newspapers and broadcast), and social media (such as blogs, podcasts, and online social networks). Mainstream media and social media feed off each other. Blogs provide a vast public forum for discussion of content provided by major media. Leading blog search engine, Technorati, has enabled every online piece on The Washington Post, Newsweek and Associated Press newspapers to display the complete blog discussion about that article, turning an article into a conversation visible to all. At the same time, it has become common for mainstream media to quote blogs and bloggers, sometimes exclusively, and the conversations between bloggers often provide the ideas for media stories. Together, mainstream and social media create a single media landscape in which we can all participate.
Strategic questions: How can you best draw on social media for content and ideas, and facilitate social media commenting on and annotating your content?
Key features of social media
Conversation is almost by definition the heart of social media.
Relationships between people and ideas emerge in a very different fashion from the one-to-many configuration of mass media.
Annotation is commentary on and reference to existing information and ideas. This will soon spread into geospatial annotation, where conversations are generated around physical locations.
Self-exposure is a more powerful driver of social media than self-expression. The exhibitionism and associated voyeurism of blogs and social networks are a key factor driving participation, as Richard Watson points out.
The Future of Media Podcast Series is launched today, kicked off with a fabulous interview with Art Kleiner, who is among other things Editor-in-Chief of Strategy + Business, the quarterly strategy magazine of Booz Allen Hamilton, author of Who Really Matters, editorial director of The Fifth Discipline Fieldbook Series, and generally one of the top business thinkers around. His extensive background in media includes running significant consulting projects examining the future of media.
In the interview, Art touches on three key themes:
• The evolution of media formats and conventions
• Giving voice to many participants in a coherent way
• Globalization and localization of media
Art points out that the conventions of newspaper layout and television programs took decades to develop. He notes that in 1888, when newspapers were first produced for wide circulation, the concepts of newspaper headlines, lead stories, classifieds and use of advertising were yet to be developed. Art adds, “Procter & Gamble didn’t make a dime from the format of soap opera. But their initial development of the format of soap opera put them in a position of leadership.”
Art goes on to discuss how the formats of blogs, Wikipedia, HTML, online readership tracking are now evolving. “What we have are the very, very beginnings of formats that ultimately will be influential and widespread…. These are not technological innovations. They are the format innovations that emerge 5 to 10 to 50 to 100 years after the original technology.”
Another theme that Art emphasizes in the podcast is the challenge of globalization for media. “ New media that have previously been tied to a particular nation or locale, have the challenge of recreating themselves around communities of interest,” says Kleiner. He suggests, for example, that a local newspaper such as Silicon Valley’s San Jose Mercury could become a global brand for technology news. Referring to his own magazine, Strategy + Business, he says its challenge is “how exactly we evolve so we keep our distinctive presence and make it a global presence. The same is true for every other publication.”
Art says that “we are still 10-20 years away from establishing conventions for new media, even moving at internet speed,” and that a huge amount of experimentation with formats is needed.
Highly recommended podcast! Have a listen, and subscribe to the RSS feed for the podcast series, available from the link.
More great interviews in the Future of Media Podcast Series out soon, including Jerry Michalski, Nicholas Scibetta of Ketchum PR, Bruce Wolpe of Fairfax, and far more. The podcast series is associated with the Future of Media Summit 2006, which will be held simultaneously in Sydney and San Francisco – more details on this soon.
A very reliable source tells me that Microsoft is summoning journalists from around the globe to Redmond for an announcement on Windows Live on May 10. This is clearly a significant launch, quite possibly the shift from Beta to full release products of some of the Windows Live suite of products. I strongly suspect that the launch, whatever it entails, will position Microsoft yet further as an advertising company. There have been a range of signs recently that Microsoft is reconceiving itself, and much of that shift is around advertising. Consider the following:
1. In a press release dated March 15 titled Microsoft Developing Web’s Largest Advertising Network, Microsoft describes how it is now placing advertising across not just MSN Live Search and MSN Spaces, but also Office Live (the online version of Microsoft Office). It also says it will exploit advertising opportunities in Xbox Live, IP TV, and its mobile properties.
2. After launching AdCenter, Microsoft is expected to launch ContentAds this year, which will allow its advertisers to place their ads not just on Microsoft properties, but on an array of independent sites (i.e. "contextual advertising"). The best way of understanding Google in its current form is as an advertising aggregator, placing the ads they sell on a wide variety of online and offline properties, increasingly ones they don’t own. Microsoft now seeks to be an ad aggregator too.
3. Last week the Wall Street Journal reported that Microsoft is acquiring Massive, a company that inserts advertising into games, for up to $400 million. The intent is clear – Microsoft sees embedding advertising into its users’ activities as central to its strategy.
4. Within the Windows Live suite, Windows Live Expo is a classifieds site that seeks to overlay all of MSN’s functionality to create communities. The direct comparison here is with eBay, whose acquisition of Skype, nominally to provide connectivity between buyers and sellers, is mimicked by how Microsoft provides instant messaging, voice, and video connectivity to enable communities to connect and transact business.
Clearly part of all this is copying Google’s – and to a certain extent Yahoo’s – positioning. Google’s acquisition of Writely has firmly established its intentions of providing web-based office utilities, undoubtedly advertising-supported. Microsoft’s moves suggest it is considering meeting them front-on, with the possibility of some configurations of Office Live being available in free advertising-supported models. This could cannibalize its existing market, but if it doesn’t do it, others will do it. This time it is seeking to be ahead of the game. Following Google’s footsteps in much of the development of the Windows Live suite doesn’t mean Microsoft doesn’t have a bigger vision here. Microsoft could be an extremely different animal in just a year or two from now.
[Update May 5] This has now been announced as the official launch of Microsoft AdCenter, moving out of pilot mode. AdCenter is said to
"provide advertisers with a one-stop-shop experience, whether buying search, contextual or display ads across a number of Microsoft properties.... Contextual advertising testing begins on MSN in the U.S. market this summer. In addition, the following Microsoft properties are preparing to launch ads in the near future: Windows Live Mail, Windows Live Spaces, Windows Live Safety Center, Windows Live for Mobile, Office Live and Office Online, and the Xbox® Web site Xbox.com."
In web parlance, a “mashup” is a computer application that brings together elements of other applications. One of the key concepts behind it is that of APIs (application program interfaces), a term that is increasingly hard to avoid seeing. An API basically defines how other programmers can access a particular application. When Google first published its APIs, it was big news, as it allowed people to take specific data from Google and use it in their own applications. This helped set a trend, and now the whole much vaunted “Web 2.0” phenomenon is based on most new web applications having APIs that others can use to create new applications. For example MashupFeed compiles all the new mashups, that are appearing at a rate of around 2.5 per day. The just completed Mashup Camp conference was centered on mashups, including the economic models as well as the technology and emerging applications. Arguably the majority of the innovation and creative intent on the Internet now centers in this space.
One of the hottest applications in this space is the soon-to-be launched Edgeio (which comes from “edge” – where all the interesting activity happens on the web, and “input/ output”). In a nutshell, it allows people to post classifieds listings on their own blog, and for these to be taken and presented in one place, with links back to that person’s blog. It can also be used for any other content. In principle, this could challenge eBay and other classifieds giants - instead of posting a listing to sell something on eBay, you put the relevant information on your own blog or website, and anyone else can find it and compare it to all other offerings on the Internet. A good overview is given by the very first report on Edgeio on BusinessWeek’s tech blog. Some worry that Edgeio is too cognitively complex for people to understand. However I think the basic concept isn’t too hard. If you have a blog, you have power. You can do what you want there, and automatically participate in the collective space of all interactions. Why work by the rules others create?
Market research company Polk has found that first-time car buyers barely use traditional media in assessing potential options, leading to a description of traditional media as “nearly obsolete” for this sector. Internet is the primary information source for 35% of these buyers, four times that for television, and eight times that for magazines. Sixty-five percent of vehicle buyers did so without any influence from family or friends, making their media information sources all the more important. As first-time car buyers are in the 18-30 age bracket, the bias to online media is not surprising. However the superior information search and multiple perspectives available online mean older buyers are increasingly dependent on online information for their high-value purchases. One implication is that specialist buyer magazines will find it very hard going as advertisers shift to where the buyers spend their time. Another is that classifieds, for cars and other high-value items, will continue their shift to online. Print classifieds will soon be considered archaic. The issue will become who owns the classifieds – traditional media players, or new players? This will be the subject of some of the research on the future of media my organization will be doing over the next months – more details soon.
One of the most important concepts of the digital world is aggregation. The Internet gives us access to far more information and services than we can handle. We have to choose what we access, unless there is a way of bringing together relevant sources into one place. In this vein, Lycos has recently released a dating seach aggregator, which allows users to search for potential partners across iMatchup, loveaccess, Matchmaker, and True. One point provides access to all of the people across these sites. A company currently getting a lot of attention, Oodle, searches and aggregates classifieds listings across eBay, Craigslist and many more sites. Why go to the individual sites when an aggregator can give you access to them all? The increasingly open nature of the Internet, based on web services, published APIs (application programming interfaces), and other tools to integrate digital flows, means that aggregation is far easier to implement than in the dot-com days. Expect many more innovative plays in this space.
The media landscape is rapidly shifting. Newspapers and magazines have seen the writing on the wall, with over the last six months US newspaper circulation dropping 1.9% and newsweeklies also slipping fast. Classifieds – which represent almost half of newspapers’ advertising revenue – are being assailed by online alternatives. McKinsey & Co executives recently forecast newspapers will lose 20% of their classifieds revenue by 2007. This is undoubtedly too optimistic. Competition is not just coming from the online recruitment sites such as Monster.com and local city classifieds such as Craigslist. An entrepreneurial unit in eBay has established Kijiji as an independent classifieds site, with local operations around the world, including across many Chinese cities. Newspapers have been responding by buying online properties, notably Washington Post buying Microsoft's online magazine Slate in January, and New York Times acquiring About.com in March for $410 million.
In the next phase media is focusing on the power of social networking technologies. News Corporation spent $580 million last month to buy Intermix, with the youth networking site MySpace the jewel that merited the price. This gives News Corp access to a whole strata of society who are not prime consumers of traditional media. Its Australian rival Fairfax recently spent $A39 million to acquire online dating site RSVP. Google, which is increasingly moving into media space itself, acquired mobile social networking company Dodgeball earlier this year. The future of news media – and especially its revenue models – is increasingly focused on running the networks within which people interact, rather than simply broadcasting information one-to-many. Watch this space.
I recently gave a brief, casual presentation on The Rise of Social Networking Technologies to a very interesting group of technology innovation professionals in Sydney called Innovation Bay. A video of my presentation is at http://www.viocorp.com/clients/innovationbay.
I prepared a crib sheet for those attending the talk, as below, giving a few references and thoughts on this space….
What defines this space is that it taps existing connections between people – our “six degrees of separation” – to form new, useful direct connections.
Selected Social Networking Technologies
Social/ dating/ politics
Friendster
Tribe.net
Orkut
I Stand For
Professional
LinkedIn
Ecademy
Ryze
ZeroDegrees.com
Corporate
Spoke
Visible Path
Matcheroo
Related applications
Jobs: Monster.com
CRM: Interaction
Search: Eurekster
Content: LinkSV
Event technologies
nTag
SpotMe
PowerMingle
CRG
Intro
Business models
Subscription
Subscription for higher-level functionality
Pay per request
Link to classifieds
Targeted advertising
Enterprise implementation
Suggested references
Stanford Business School Alumni Social Networking Panel video
Stowe Boyd's weblog (see especially under Recent Publications)
Friend of a Friend (FOAF)
Later I’ll post some thoughts on where this whole space is going, including industry consolidation, user growth, business models, reputation systems, collaborative filtering, learning on demand, and more. Plenty has already been said on the current primary issues of privacy and extending trust through networks, not that these are close to being resolved…