Moving away from clicks and links to attention and quality

By | Content | 3 Comments

Tony Haile, CEO of analytics business Chartbeat has a great post up on Time with the provocative title What you think you know about the web is wrong. His point is that we have all been tracking clicks and links as a proxy for attention and intent, but attention and engagement are what really count. As a result publishers and advertisers often misunderstand their businesses and invest in clickbait and articles that people don’t read that don’t perform for advertisers.

Tony says that smart companies like Medium, Upworthy, and the Financial Times have figured this out and are starting to focus on engagement metrics to measure their own success and value their advertising products. The net result is higher quality content which consumers spend more time reading and which supports brand driven banner ad campaigns with quality creative with high recall rates. The insights here are that recall rates are a better measure of ad performance than click through rates, and that recall rates rise when the creative is good AND users dwell on a page long enough to notice it.

The article is packed full of supporting data, much of it culled from a 2 billion pageviews generated by 580,000 articles on 2000 sites. Here are a couple of highlights:

  • We don’t read what we click on so chasing pageviews is a mistake. 55% of the 2bn visits analysed spent less than 15s on the page. The most valuable customers are those that remember a site and come back. Publishers generating linkbait have to start again from scratch every time.
  • Native advertising only works when the content is great – and today most of it isn’t. On normal articles 71% of people scroll, but for native advertising the figure is 21%. The trick for publishers is to ensure that the native advertising offers an experience consistent with the rest of the site.

The web that Tony describes is an exciting one that I would love to see. Less clickbait and shallow articles and more quality content that holds attention combined with a shift towards higher ad quality creative designed to inspire and be remembered. Sounds great to me.

Artists selling direct

By | Business models, Content | No Comments

There is a post on Techcrunch this morning titled: Jim Gaffman Releases His Own, All-New Special, Cutting Out The Middleman, which makes Gaffman the second major US comedian to go direct in recent weeks. I’ve said it before and I will say it again now: I think we will see more and more of this model going forward and eventually get to the point where going direct is the default option for most artists. Now that distribution is as easy as uploading a file to the internet middlemen simply don’t add enough value any more. Jim Gaffman’s new comedy special is available to download for $5 and he says going direct will net him more cash and gives him more creative freedom. Fans also like the idea that all their money is going to the artist.

Nicholas Lovell and I saw something similar when we talked to publishers about our 50 Questions you should ask before raising venture capital blog series and book. Publishers were keen to work with us, but only if we changed the nature of what we wanted to write so it matched with one of their pre-existing categories of readers of business books. They wanted us to either make it more populist or more serious and formal. We decided to stick with our plan to write for the audiences we already had on our respective blogs.

At the moment the direct to consomer model only works for artists like Gaffman who already have an audience and production companies that can afford their own marketing. Over time I expect we will see technology and agency companies that offer marketing and financing services that enable aspiring artists to also go direct.

Buy Harry Potter direct from JK Rowling on any ebook reader

By | Content | 7 Comments

Harry Potter fans scramble to get a copy of the latest Harry Potter bookThe news is out today that the seven Harry Potter titles have become available as ebooks for the first time. The interesting thing is that whilst the books can only be bought from Pottermore (JK Rowling’s publishing company) they will work on Amazon’s Kindle, Barnes & Noble’s Nook, Google Play and most other popular ebook readers.

For a long time I have thought this ‘artist sells direct to end user’ model is the most obvious and efficient way to structure the value chain for all content types in the internet era. Prior to the internet gatekeepers were required to manage the limited distribution platforms and provide working capital to various different players in the ecosystem. Those functions are now redundant and there is no longer a need for gatekeepers of any sort. The gatekeepers we have today exist because they have worked their way into being gatekeepers, rather than because the gatekeeper function is in itself important. Many of today’s gatekeepers have been gatekeepers for years and these businesses have simply managed to protect their existing positions, although they are all getting weaker. Good examples are TV companies like ITV, Sky and Comcast, record labels like Universal and EMI, newspapers like The Guardian and The Daily Mail, and publishers like Penguin and Random House. Some of todays gatekeepers are new, and they have leveraged innovations and control of adjacent markets to become gatekeepers. Good examples are Amazon with the Kindle, Apple with the App Store, Google with Play, and maybe Facebook in the future.

JK Rowling was able to leverage her popularity as an artist and force Amazon, Barnes & Noble, and others to relinquish control over their ebook reader platforms and let her sell direct. This is analogous to decisions by Madonna and other popular music stars to bypass record labels and organise their own concerts and music distribution. My hope is that competition between different distribution platforms will increase across movies, books, TV and music, and that more and less powerful artists will be able to sell direct. The gatekeepers are taking more money out of the ecosystem than they deserve and the more they are bypassed the more money artists will make and the more our creative industries will flourish.

Note that most artists will still need the help with marketing and distribution that the gatekeepers have typically provided. The difference is that they will get it from agency style talent management businesses who get paid according to how much they help instead of demanding exorbitant fees simply to open the gate. LiveNation, Simon Cowell’s Syco, and Simon Fuller’s 19 are all talent management businesses in this mould.

The biggest obstacles to this vision are rights management and financing of production. The former is solvable through technology and there are a multitude of potential solutions to the latter, not least crowdfunding so I’m hopeful we will get there. It will take a while though.

Watershed moment–online film viewing to overtake physical this year, but market still growing

By | Content, TV | One Comment

Bloomberg reported last week on a study by IHS Screen Digest which found that in the US legal online viewings of films will hit 3.4bn this year, up from 1.4bn in 2011, whilst viewings from DVDs and Blue-ray discs will shrink to 2.4bn from 2.6bn.

The shift from physical do digital usually shrinks markets – look at what Wikipedia did to the encyclopedia market – but that doesn’t seem to be the case here, at least for 2012. IHS also found that the average payment for an online movie was 51 cents (typically as part of an all you can eat subscription service) whilst physically purchased videos came in at $4.72. Multiplying these numbers by the predicted online viewings shows that in spite of the big difference in price the growth in online will more than offset the decline in physical, and the overall spend on movies will actually increase slightly ($76m, 0.6%).

Falling prices will inevitably lead to increased consumption of movies, and I suspect that is part of the reason behind the rapid growth in online viewings, and the market is now in transition to a new equilibrium and it will be interesting to see where the market size comes out. If the current prices are maintained then unless we all watch 10x as many movies the market will shrink. I don’t think there are enough hours in the day for that. If we all watch twice as many movies the implication is that the market will contract by a scary ~80%.

Hulu’s sale fails – value in the rights not the audience

By | Content, TV | 2 Comments

Leading US TV streaming site Hulu has been trying to sell itself for much of this year, but is no longer for sale.  The company announced yesterday that the sale process was terminated and now the owners, which crucially include content owners News Corp, Disney and Comcast, will keep the site independent.

According to Techcrunch the company had a number of offers, but none matched the $2bn price tag they were looking for.  Google apparently offered $4bn, but wanted longer deals than the two years on offer with the current shareholders to the rights for NBC (Comcast), Fox (News Corp) and ABC Television (Disney).

The fact that the streaming rights are such a driver of value is of significance to web based media businesses everywhere.  The fact that Google was willing to deal at 2x the asking price with long term rights, but wouldn’t even match it with two year rights shows that they place more value on the rights than on Hulu’s considerable audience and powerful brand.

Hulu’s business model is essentially an arbitrage between what they pay for the rights and the money they can make from advertising as people watch the streams.  The idea behind most sites with this model is that once they get to scale the content owners (be it movie studios or music labels) will have no choice but to deal with them if they want to reach a large audience.  Theory has it that the power in negotiations should then be with site rather than the content owner, and the price of rights will come down and big profits will follow.

The potential acquirers of Hulu clearly didn’t buy into that theory and thought that after two years they would get legged over when they came to renegotiate the rights.  The fact that Hulu’s owners didn’t take the Google deal suggests that they are thinking the same way.

Other companies in this space should take note.

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Facebook increasingly seen as competitor to content companies

By | Content, Facebook, News | 8 Comments

I have seen two comments in the last couple of days making the point that whilst content companies of all flavours are happy for the traffic they get from Facebook they are increasingly conscious that time spent on Facebook is time not spent on their own properties, and hence generating ad revenues for Facebook rather than the owner or publisher of the content.

The first was a comment on this blog from Nicholas Lovell:

TV companies are beginning to view Facebook as a competitor, not a partner. If a TV company builds a major brand (say Downton Abbey) that generates a lot of likes on Facebook, then advertisers can pay Facebook to advertise against that audience. The TV company invested in the IP, took the risk, but Facebook got the reward.

The second was a post this morning on Forbes:

Is Facebook a friend of news companies, or is it a rival? No matter how much success publishers have piggybacking off its traffic, they can’t escape the cruel math: The more of their time consumers spend on Facebook and other social networking hubs, the less they have left over for news sites.

This is in some ways a repeat of the argument Google had with the news industry which initially welcomed traffic from Google search, but later began to see Google as a threat, largely because people could read the headlines in Google’s search results and then had no need to go to the news site at all.

My feeling is that Google has effectively won that battle, mostly because news publishers can’t live without its traffic (would welcome thoughts here though).  I think the Facebook vs content industry showdown will play out differently because it is less of a zero sum game.  News and TV producers can improve their products by making them more thoroughly social whilst Facebook will improve its data assets (increasingly their key asset) if they do so.  The consumer experience can then take place either inside or outside of Facebook.  The big question will be the extent to which they share revenues.  Google refused to share, but Facebook is both asking more of its partners and getting more in return, so I think they will cut deals.

According to the Forbes article mentioned above on Tuesday the WSJ is launching a news product that lives entirely within Facebook which sounds very cool:

it’s … about reimagining newspaper reading as an inherently social experience. Users choose whose streams they want to follow — the official ones produced by the paper’s, and each other’s — and that determines what stories they see. The most-followed users can compare their rankings on a leaderboard and earn prizes — possibly including their own WSJ-style stipple portraits. “It’s really about the users being elevated to editors,” says Maya Baratz, the Journal’s head of new products.

And apparently it will look like this:


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TV Streaming on the rise

By | Advertising, Content, TV | 2 Comments

Over the weekend I read a post by Ed Bott about the the decline of TiVo and Windows Media Center which had the following Google Trends chart:

I think this shows conclusively that since around 2008 consumer interest in media services based around local storage – Media Center and Tivo have waned whilst interest in web streaming service Netflix has sky-rocketed.  Interestingly a chart of their stock prices over the same period looks pretty similar – see here.

These are pretty dramatic shifts, and whilst at this stage they reflect sentiment and interest rather than buying behaviour I think this is a pretty clear indication of where things are headed.  Streaming is simply a better proposition for consumers:

  • being able to subscribe to only the programmes or channels we want rather than huge bundles would save money for many of us
  • our content truly travels with us – available anytime we are on the web
  • search and discovery should be much better – browsing EPGs is an awful experience – good search and adding social would be a major step forward

So, as I’ve written many times before, we can expect more streaming and with that less cable subscriptions – i.e. what is often called over-the-top-TV.  But with that will come changes in what we watch.  YouTube has already brought huge changes, but more will come.  I once heard Google’s Merissa Mayer say that when you change the medium of distribution for content the unit of consumption also shifts – e.g. in music from the album to the single.  When you think about it, the lack of innovation in the basic format of TV has been limited for decades so we are probably overdue a change.  This is a quote from Asymco’s Horace Dediu (courtesy of Techcrunch):

What I mean is that there is no innovation in what a program is–the job it’s hired to do. The way it and its distribution fits into a person’s life. TV programs have not changed for half a century. They feature the same genres, the same duration, the same business model, the same series, format and scheduling and the same value chains as when “I Love Lucy” premiered in 1951. They assume people watch TV during the same time each day (while doing nothing else.) They also assume people are equally influenced by brand advertising and that audiences are largely homogeneous.

The brave new world won’t arrive quickly though.  Hollywood and the cable companies are pushing back hard and they will be successful at stemming the tide for longer than their music and book industry equivalents.  Movies and TV series’ are generally much more expensive to produce than books or music and the role of traditional TV companies in financing production won’t be replaced anytime soon.  Moreover the cable companies will leverage their existing market share to slow the rise of internet based media companies – witness Starz recent decision to walk away from Netflix.

Over time the change will come though, driven by:

  • greater audiences on the web undermining the bargaining power of traditional TV companies
  • content producers looking to make more money or get cheaper offerings to consumers by cutting out expensive distribution channels
  • (I suspect) a revolution in content production with more varied duration and niche targeted offerings designed for web delivery

Content delivered via the web should offer the prospect for greater advertising revenues as well, driven by much, much, better targeting and the ability to interact directly with ads.

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Ebooks driving growth and enabling innovation in the book industry

By | Content | 2 Comments

It is often the case that new media formats are greeted with suspicion amid fears that the changes they herald will undermine important creative aspects of society.  Often these fears are misplaced and it is the distribution channels of the old format that are under threat rather than the media itself, and after a period of decline the industry returns to growth and often hits a new peak.  Earlier this week I saw a chart which showed how the music industry evolved according to this pattern as the physical format shifted from vinyl through cassettes to CDs, and today I’ve seen data showing that ebooks are now driving growth at the overall market level in the book industry.

Last Tuesday the Association of American Publishers released a study which found that total US industry sales grew 3.1% to $27.9bn from 2009-2010 and that ebooks were 5.7% of the total at $1.6bn.  The press release gave ebook sales for the trade portion of the market and assuming a similar growth rate in consumer ebook sales then it is accurate to say that the overall industry growth is down entirely to ebooks, and that physical book sales declined.

Unsurprisingly there was also a significant shift from physical retail to online retail, with online retailers’ market share rising from 9.9% in 2009 to 14.3% in 2010.

The way I see it now that we have decent readers ebooks are simply a better proposition for consumers.  Books have become cheaper, more portable, and quicker and more convenient to get hold of.  It is unsurprising that they are growing the market.

When the format for media changes the unit of media consumption often changes as well.  In music the move to online distribution brought with it a shift from buying albums to buying singles.  We may be seeing the start of something similar in the book industry now with the emergence of Kindle Singles, a new idea from Amazon which they define as:

"Kindle books that are twice the length of a New Yorker feature or as much as a few chapters of a typical book."

It is early days, but this innovative new concept is looking like it might be popular.  Here are some soundbites:

I’ve been saying for some time that ‘dead tree books’ will soon go the way of stone tablets and papyrus, and that middle class families the world over will reclaim the wall and floor space that are currently occupied by bookshelves.  Now I can also say that we will have a stronger and more vibrant book industry as a result.

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The New York Times adopts gaming monetisation strategy–exploit the whales

By | Content, News | One Comment

My friend and co-author Nicholas Lovell regularly sets out his belief that the future of digital media is a tiered business model where the majority of users get the content for free and heavy users pay, with very heavy users paying heavily.  The games industry has made this model work with free to play games supported by virtual goods and/or subscriptions for true fans – companies like Mind Candy (Moshi Monsters) and Bigpoint stand out as having made this work really well.

Whilst the games industry has figured out a way to make this model work, the same cannot be said for the news, book, TV, movie or music industries, not yet at least.  Part of the challenge is the absence of an equivalent to virtual goods.

That said, it seems the New York Times is now thinking along the lines that Nicholas suggests.

Peter Kafka of MediaMemo recently interviewed Ken Doctor, the Digital Czar of the New York Times (I think the New York Times website has the largest revenues of any digital news organisation) and Ken said the following:

But I’d just remind you that we’re still very much in the advertising business. It’s our core business. We don’t expect the vast majority of our users to see the paywall, and we expect to remain a very very large player on the web.

That sounds like the beginning of a ‘whale strategy’ to me.  The next step would be to offer these core users opportunities to spend even more money – maybe for conferences, access to celebs, or even early access to news.  Bigpoints biggest customers spend tens of thousands of dollars a year on virtual goods, and the New York Times can get something similar going it would reduce their dependence on advertising and drive up the amount they can spend on generating quality content.

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Tablets will change the way we read books

By | Apple, Content | 4 Comments


On Monday there was an article on Techcrunch about a startup called Inkling that has developed an innovative digital textbook platform for the iPad (picture above).  Their technology adds collaboration, multimedia, 3D, quizzes and social interaction to the basic reading experience and they have just released their first book/app – an iPad version of Lights, Camera, Capture: Creative Lighting Techniques for Digital Photographers.  It is priced at $9.99.

The app contains the full text of the original, over 100 videos, and interactive photography simulators which allow you to change one parameter and see how it affects an image.

This is a huge step forward from reading a paper book and will make learning easier and more fun.

I’m writing about this because it shows how computer based books open up the possibility for novel interfaces which change the way we access content.  We have seen some of this already as RSS readers have changed the way we read news sites and apps like Flipboard change the way we browse sits like Facebook, but Inkling takes interface innovation to the next level – moving beyond reading to other modes of interaction.

I think there is scope for other platforms like Inkling and more innovation in this area generally.  Some of that will take the form of app platforms that work with content providers and some will take the form of new devices and operating system enhancements that hardware manufacturers build into their tablets to make them better than the competition.  The touch screen was the first of these innovations, and it was a big one (and it may be the biggest), but it won’t be the last.

As an aside – for those that are following the Kindle vs iPad or dedicated e-reader vs generalised tablet debate this sort of development favours tablets and iPads as generalised computing platforms are better platforms for innovation than dedicated devices.

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