Techie and the Media

Soul & Salsa

I was having breakfast with a dear friend and colleague this week when the topic turned to television (go figure!). Now understand the characters in this play — myself (you all know) and this gentleman, who is in the 55-65 demo, white, extremely educated, and comes from a television background. His words to me were as follows: “The only scripted show I watch is ‘Lost … there is nothing on television for me.” An interesting statement that was then followed by some smart remark about him entering the Andy Rooney phase of life.

Anyway, the conversation then turned to his child, who is a grown-up, and also works in television. Let’s call her Annie. Annie is a news producer. She works for an affiliate. She has now been tasked with a show called “Soul & Salsa” in the morning slot, because the affiliate is in what is generally referred to as an emerging Hispanic market and sees the opportunity in “speaking” to that group. The rub: the audience of this particular affiliate is predominantly white, female and older.

What is wrong with this picture? Why do we insist on leaving valuable audiences behind and hunting for new ones that, in some realities, do not exist? What is the mania that the industry has created for itself about rebranding, retargeting and reprogramming itself for the ever-elusive “new” audience?

Here are two things I know to be true: 1), the old adage “if it ain’t broke, don’t fix it” is usually sound advice; and 2), something a professor in some business class utters to a bunch of over-caffeinated students: instead of trying to be Coke, why not be the best Pepsi that you can be? Get it? And don’t even get me started about the Sundance Channel.

Well Respected, Forever Remembered

Sydney Pollack July 1, 1934 - May 26, 2008

I want to take a moment to honor a man who, perhaps unbeknownst to him, created opportunities for people to come together through film. These moments will be remembered, as will he, with adoration and admiration.

Glory Days Were Not So Glorious

It is human nature to look at the past through rose-colored glasses. Nostalgia is the basis of all good memories and makes one feel good. I say this in reference to two pieces that I came across this week: Jack Meyers’ “Network TV Upfront Week 2008: Not So Bad After All” and John Dvorak’s “Losing Perspective.”

In response to the first, I simply have one question: why? Why is part of the success of the upfronts based on how good the party was as compared to last year’s? Why are we even having this discussion? If people really knew the business and cared, they would know that the recovery hasn’t happened for many a writer in Hollywood, and that the entertainment economy hasn’t bounced back. With a recession looming, groups at the bargaining table and an industry in flux, why are on earth do I care that CBS didn’t have a party? At least those media executives have jobs! I am mean, I remember the greatness of the party being a determining factor in one’s popularity in high school — but it still amazes me at how a multibillion-dollar industry and its constituencies are rated based on their ability to booze and schmooze media buyers. I am not naive, I get it, people. But it still baffles me.

As for John Dvorak — well, John, your reader who pointed out that you are about 15 years late to the party was right. Bemoaning the current state of the media world and longing for a time when newspapers were better subscribed, when schools were better funded and could teach things like languages, the arts and music, and even afford a physical education teacher — and a time before the Internet devastated your perfect world, is a fruitless endeavor.

What you really should be asking yourself is this: Now that the world has changed and arguably is flat (for a more extensive discussion on this please read Thomas L. Friedman’s “The World is Flat: A Brief History of the Twenty-First Century”) how do you narrow down the choices with which you form your world view? Which sources do people trust? (And by people, note that each demo will have its own version of The New York Times).

Yes, “60 Minutes” is not what it used to be. Then again, 20 years ago, Mike Wallace would smoke during an interview and before the advent of the Internet and bloggers, Dan Rather and his team of producers would have had no accountability in reporting the news. And yes, the self-esteem movement has permeated both the educational system and parenting styles over the same time period, but I would rather tell a child they are worth something than have it “drummed into them” that they are worth nothing. And if you are that concerned about what “is going to happen when it dawns on this crowd that they are useless boneheads,” why don’t you help them out by focusing your efforts and writing the definitive how-to for the Net and media, rather than pointing out the inadequacies of others? If it is the past you seek, may I suggest the following channels of entertainment for your enjoyment –TV Land, TCM and anything on public access television.

And Then I Am Done

So, to cap the series of articles stemming from the event that I attended a couple of weeks back about the favorite topic d’jour: user-generated content, I would like to draw your attention to the definition of irony.

American Heritage Dictionary
i ro ny
n. pl. iro*nies a. The use of words to express something different from and often opposite to their literal meaning.
b. An expression or utterance marked by a deliberate contrast between apparent and intended meaning.
c. A literary style employing such contrasts for humorous or rhetorical effect.
d. Incongruity between what might be expected and what actually occurs.
e. An occurrence, result, or circumstance notable for such incongruity

After the panel, I was quoted several times in the pro-sumer and pro-fessional press. I would like to thank those who quoted me correctly and didn’t use my quotes out of context. And then I would like to point out to those who did quote me completely out of context that yes, the panel was in fact taped and the entire session has been posted online (http://www.herrick.com/events/kingsofmedia.html) for all to view — a textbook example of, you guessed it, user-generated content.

Do I need to point out the obvious irony here? I think not. Who needs TV when all you need is a video camera and a server? But I will offer this a piece of sage advice: beware the power of user-generated content in its ability to keep everyone honest and, more importantly, accountable. Now, if I could just figure out how to monetize this…. Ideas?

When Someone Gives Me A Platform I Take It, Part Deux

Part two to last week's article (http://blogs.mediapost.com/tv_board/?p=306). As always, proper credit is required, so here it goes: This article appears in "User-Generated Content: New Business Models and Legal Issues," edited by Jeff Liebenson and published by the IAEL (International Association of Entertainment Lawyers).

PART ONE: DEFINITIONS

The application of a common nomenclature in this discussion of the impact that user generated content (UGC) has had on the entertainment industry is essential. As such, the term user generated UGC will, in this paper, be defined as: any content that is the direct result of a consumer’s manipulation of existing or creation of new content that is audio/visual in its nature. In this case, this paper will examine the UGC in three forms: 1) professionally -produced content that has been captured and/or manipulated by a consumer and re-distributed online; 2) professional content originally produced for distribution online; and 3) semi-professional content originally produced for distribution online.

The Network Effect

In the early -1980’s, Robert Metcalf coined the term "network effect", to describe a the momentum that causes a good or service to gain in value to an individual based on the number of other individuals that have purchased the good or service. More succinctly, the number of prior consumers or adopters is a determining factor in the value of the product or service to the next consumer. As more and more of the products or services are adopted, it becomes that all members of the community receive an increasing benefit by each transaction.

One of the key benefits of the network effect is critical mass. Simply stated, critical mass refers to the point at which the adoption or usage of a particular product or service becomes economically viable as a market. This phenomenon usually occurs when said product or service is in use or has been adopted by 15 to -20 percent %of the target market. For example, when the VCR reached approximately 18 percent% penetration of US TV households, three things occurred: the economies of scale for production and distribution of the technology itself resulted in price decreases; the price cuts helped spur faster consumer adoption; and this in turn prompted studios and producers to make more content available more quickly for rental and for eventually for sale. What was a simple playback and recording technology turned into a multi-billion dollar market in less than 5five years after reaching the point of critical mass.

3 Types of Distribution Networks

In 1964, Paul Baran published a seminal piece of research entitled On Distributed Communications I. Introduction to Distributed Communications Networks1. In it, he outlined a third, more effective network model,; one that differed from the 2 common models – centralized and decentralized. The distributed communication model was one of the base elements of the development of ARPANET in that, for the first time, the introduction of redundancy as elemental to the sustainability of the network was proven. (See Figure 1).

Figure 1. Centralized, Decentralized and Distributed Networks

 

PART TWO: DISCUSSION OF THE APPLICATION OF THE NETWORK EFFECT, CRITICAL MASS AND DISTRIBUTED NETWORKS THEORY TO THE DEVELOPMENT OF PROFITABLE USER GENERATED CONTENT BUSINESS MODELS

At the core of the explosion of UGC are the social networking platforms that are used as the main points of distribution. Called "sharing", UGC is often viewed as a form of self-expression by users who, for the first time in history, have been liberated by technology to self -publish anything from photographs, text and video on any topic or interest that may take their fancy.

The basis of a social network is key to the development of profitable business models. Wikipedia defines a social network as thus:

"A social network is a social structure made of nodes (which are generally individuals or organizations) that are tied by one or more specific types of interdependency, such as values, visions, idea, financial exchange, friends, kinship, dislike, conflict, trade, web links, sexual relations, disease transmission (epidemiology), or airline routes.

Social network analysis views social relationships in terms of nodes and ties. Nodes are the individual(s) […] within the networks, and ties are the relationships between the [individuals]. There can be many kinds of ties between the nodes. Research in a number of academic fields has shown that social networks operate on many levels, from families up to the level of nations, and play a critical role in determining the way problems are solved, organizations are run, and the degree to which individuals succeed in achieving their goals.

In its simplest form, a social network is a map of all of the relevant ties between the nodes being studied. The network can also be used to determine the social capital of individual [persons, products or services]. These concepts are often displayed in a social network diagram, where nodes are the points and ties are the lines."3 (See Figure 2)

Figure 2 Example of a social network diagram

 

The last 24 months has seen growth in the number of Web sites that are enabling the storage and distribution of user generated content (UGC). The UGC movement started with the explosion of Web-based blogging applications housed in such sites as Blogger.com and Moveable Type. Others soon followed and within a single generation, the launch of YouTube, arguably most famous for its purchase price of $1.65B by Google for $1.65B in 2006, and MySpace, are the behemoths in the UGC space that is now comprised of hundreds, if not thousands, of sites. The challenge faced by most social networks is the monetization of professional and semi-professional content, especially as traditional media companies step up their efforts to thwart what they term the piracy of their content.

To date, now mature online advertising methods and metrics have been implemented as a means to monetize UGC. The question remains as to whether or not there is a more effective and evolved approach to monetizing UGC. The author would argue that the answer lies in the very basis of social networks and the application of the network effect to the way UGC moves across and within these constructs.

The reader will recognize the similarities between the formation of a distributed network and that of a social network. The ties between nodes are remarkably similar in both models. Armed with that similarity, if the individual now represents a single piece of UGC or asset to be monetized, the basis for the hypothesis becomes clearer.

More specifically, if each UGC asset is valued by the number of times it is it replicated or tied to similar content (the same way that a product or service gains in value the more times it is adopted, purchased or utilized), then the assumption that the higher the replication or redundancy of access that asset, the higher the value, meaning that the benefits of network effect are realized faster on distributed networks versus centralized or decentralize networks simply by the very nature of the ties that bind the nodes or, in this case, the UGC assets. And, as such, the benefits of critical mass in the increase in demand of value as it relates to a UGC asset will be achieved at a faster rate based on the size of the network itself.

PART THREE: CONCLUSION

It is the belief of the author that the development of profitable UGC content business models lies in the application of the principles that underlie the formation for social networks, the way that individuals share and communicate with each other vis -a -vis the use of UGC as a form of self -expression and the resultant network effect that takes place when the content, in aggregate, can grow members, ties and UGC assets at a doubling rate. This, as has been proven in other content and technology markets, is the point of critical mass.

It should be the intent of every social network platform provider to develop and deploy tools that will enable the professional and semi-professional UGC creator to leverage a syndication model on a per UGC asset basis in order to reach critical mass in reach and consumption. Why? Only at the point when distributors understand and internalize that a centralized, and even decentralized architecture for the purposes of supporting and monetizing UGC will cap once the audience has matured. Tools such as RSS, widgets, and other syndication technologies are the basis for which the next generation of social networks will be able to leverage the ties that bind UGC assets and, more importantly, value and subsequent monetization not only of UGC assets but of the entire community as a whole.

Footnotes / Sources:
http://en.wikipedia.org/wiki/Social_networks
http://labspace.open.ac.uk/mod/resource/view.php?id=170889
http://www.rand.org/pubs/research_memoranda/RM3420/

When Someone Give Me A Platform I Take It

I was asked to speak at on a panel today entitled “The New Kings of Media” hosted by Herrick, Feinstein LLP. This all stems from a paper that I wrote for them back in December about everyone’s favorite topic d’jour: user-generated content. Below you will find the first part of the paper. As always, proper credit is required, so here it goes: This article appears in “User-Generated Content: New Business Models and Legal Issues,” edited by Jeff Liebenson and published by the IAEL (International Association of Entertainment Lawyers).

User-Generated Content and Social Networks: Building For Long -Term Value On A Near -Term Phenomenon THESIS

The World Wide Web has been the foundation upon which a series of fundamental changes to various markets have taken place. As the IP-based data network moved from governmental to academic to business to consumer markets, the effect and changes that have been waged against markets that were, prior to the application of the Internet, driven by a one-to-one relationship or that were structured with a “middleman” have been drastically impacted. In some cases, they have ceased to exist. Consider the following areas of commerce: travel, retail, auctions, and classifieds - to name a few. These markets, once inter-personally driven, today rely on data networks rather than human- driven networks.

This disintermediation of markets by the application of the World Wide Web by the technology industry as well as the consumer in many cases (think about Pierre Omidyar / eBay, Shawn Fanning / Napster and Joshua Schachter / del.icio.us) has forced many traditional business models to adapt to faster rates of commoditization, increased access to competitive products and services, and faster devaluation of products and services simply because the World Wide Web affords any individual the opportunity to consume products and services for free — something that was hard, if not impossible, prior to the mass adoption of the Internet.

The latest seismic impact has been in the entertainment industry. Beyond the impact of P2P networks and file-sharing technologies on the music industry, the likes of YouTube and MySpace have fundamentally changed the relationship between passive and active consumers of content and traditional content distributors - from cable and broadcast networks, to cable and telecommunications providers, and studios.

The impact? The use of professionally produced and distributed content without the rightsholders’ express permission. The race is on to evolve sustainable and profitable business models for the monetization of user -generated content (UGC) as it relates not only to the aforementioned content but also the professional, semi-professional, and nonprofessionally created content.

I will explore the intersection of the network effect, critical mass and distributed networks as a basis for monetizing UGC. The entertainment industry’s failure to quantify the impact of building such a network, driving and eliminating the top-down model of content distribution, fails to acknowledge the fundamental changes that have taken place at the very core of the relationship between consumer and content.