Emerging media business model frameworks

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Today we ran a press briefing on the Future of Media Summit, featuring a sneak preview of some of the research and content that will be included in the Future of Media Report 2007. Last year the Future of Media Report 2006 attracted excellent interest, with now over 70,000 downloads. This year’s report should be even more interesting than last year’s.

The centerpiece will be a number of frameworks that together are useful for thinking about how effective business models for emerging media. Today I’ll share one of those frameworks, with a couple of others coming over the next days before the release of the final report. We’ll also shortly release some of the findings from Nielsen//NetRatings, who as a research partner of the Future of Media Summit has come up with some fabulous global comparative data.

Our framework below shows the differences in business model required for the three major parts of the overall spectrum of media, from the head to the “long tail”.

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A few initial comments on the framework.

Audience focus. Mass media only accesses broad audiences, whereas further down the tail highly selective niche audiences, by geography or interest, can be garnered.

Advertising models. At different levels of scale, dedicated, aggregated, or combined advertising sales models are appropriate.

Cost of content creation. Cost of content creation can be taken as a given, requiring a certain audience size or revenue, or considered as a variable to match revenue.

The most important take-away of this framework is that there is no right or wrong place to be on the curve, simply that advertising or other revenue models and content creation mechanisms need to be aligned with the audience. As related frameworks to be included in the Report will show, going for niche audiences can attract stronger revenue relative to costs. A “multi-niche” model which is effectively monetized can be more effective than traditional mass media approaches, by allowing sharing overheads and sales efforts, and gaining more value from highly targeted audiences. Scaling costs and overheads and extracting premium revenue is as viable a strategy as increasing audience size.

Update on Future of Media Summit 2007

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The Future of Media Summit 2007 is rapidly approaching. Lots of exciting developments lately on this – it promises to outdo the great success of the inaugural event last year.

In particular, some recently confirmed speakers at both the Sydney and San Francisco sides of the event include:

Anne-Marie Roussel, Director – Strategic and Emerging Business Group, Microsoft. Anne-Marie is responsible for Microsoft’s entertainment portfolio, including Xbox, Zune and video. Anne-Marie has a great blog.

Mitch Ratcliffe, a doyen of the online world, who among other claims to fame co-founded Buzzlogic, and has now moved on to establish Tetriad LLC, which is shortly coming out of stealth mode.

Martin Hoffman, CEO of Loop Mobile, which has a very interesting mobile social network Kink Kommunity with an international presence. Martin used to be CEO of Australian online giant NineMSN.

Hugh Martin, who has recently been appointed General Manager of APN Online Australia, will be the chairman of the Sydney side of the event. Hugh was formerly Editor of News.com.au, and has won a Walkley award for journalistic excellence.

The full list of speakers is here.

Time is running out, so register now for the Sydney of San Francisco events, whichever is more convenient for you!

Lots of associated content coming soon, including the Future of Media Report 2007.

The rapid progress of personalized advertising and the changing role of creative

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Yahoo! has just announced a new product, SmartAds, that enables advertisers to create customized advertisements on-the-fly to be relevant to the individual viewer. As revealed in an article in the New York Times, the advertiser gives the visual and text components of the advertisement to Yahoo, as well as access to its inventory, so the advertisement can promote specific products relevant to the individual that are available from a local outlet, such as a car dealer or branch of a chain store. The targeting is based on Yahoo’s at-times deep information about its audience, which is a critical advantage in these kinds of initiatives. The ads are being launched with three major airlines and several travel aggregators.

While this is being branded “behavioral targeting”, that depends on the richness of the data that Yahoo! has available, and is largely limited to people’s online behaviors. However this initiative illustrates just one element of a powerful and long-term trend towards greater personalization of advertisements. The other day, in discussions with a large national advertising assocation, I talked about how online is changing the role of creatives in agencies. Moving beyond user-created advertising, the next phase will be creatives having to create campaigns that can be customized on-the-fly depending on who is viewing it, when, and it what circumstances. SmartAds is only integrating data into a given advertisement. Certainly what is new here is the breadth of data which is being used, and how this is being pulled together. However personalized advertising has a lot further to go, where the actual advertisement and creative is tweaked for the individual.

Our Future of Media Report 2007 will be released next week, shortly before the Future of Media Summit 2007, held simultaneously in Sydney and San Francisco. In the report we will include some frameworks on models of personalized advertising, drivers of the value of advertising, and how these can be applied in creating new media business models. Keep posted!

The IPTV landscape

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SmartInternet CRC, which was one of our partners for our Web 2.0 in Australia event, has recently released a very interesting report titled IPTV: Order, Chaos and Anarchy, examining the state of IPTV. The author is Mark Pesce, noted for being the co-inventor of VRML (Virtual Reality Markup Language) (which I was a big fan of when it came out – I wrote about it in my first book which came out in 2000) and his immoderate thoughts on the future of media – in other words an extremely credible commentator on an often muddied field.

Mark defines IPTV as “delivery of audio-visual programming via packet-switched networks,” which as he points out, doesn’t in itself help us understand what forms this will take as it matures. Mark picks out three key forces:

* Centralization, driven by commercial issues and incumbents

* “Hyperdistribution” allowing anyone to create and distribute content

* Social activists and entrepreneurs reinventing broadcasting as a peer-to-peer medium

In the report Mark covers issues including Internet bandwidth requirements for the evolution of IPTV, government policies, the role of BitTorrent, IPTV on the Microsoft Xbox 360, Joost, and the role of democracy. Well worth a read.

Technology innovation and making the leap from smaller markets

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The front page of the IT section in today’s Australian Financial Review sports as its largest story a review of our Web 2.0 in Australia event, titled “Start-ups weave future around social web”. It starts off:

“It’s a dreary Sydney afternoon in early June, but social media consultant Ross Dawson couldn’t be happier. He’s surrounded by the cream of the Australian internet start-up community, who are buzzing as they discuss how the next-generation worldwide web will be built.

Mr Dawson’s Web 2.0 in Australia conference on June 6 was a landmark event for Australia’s internet community, bringing together a host of entrepreneurs who had previously only been connected online.

A couple of years ago, this event would not have been possible because there wouldn’t have been enough people to take part.

The numbers of Australian internet start-ups are booming at the moment as local entrepreneurs join the global rush to build web applications and hope to make a fortune along the way.

“I’m amazed at how rapidly they’re coming out at the moment,” Mr Dawson said. “In the last six months, it’s been a really rich scene.””

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The role of shared corporate language in staff and client communication

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The June issue of BOSS magazine has a very interesting piece titled “Lost in Translation”, which examines the role of building a shared corporate language for employees and clients. (The article is currently available online though AFR often takes these offline after a period.) The article quotes me as follows:

“Management consultant Ross Dawson, from Advanced Human Technologies, says there’s good reason for specialists to talk this way. “You have to think about the broader context. When people become specialised they need a specialised vocabulary. It’s useful to get a verbal shorthand. But it can create barriers

to understanding, both within and outside organisations.”

One of the perennial debates in linguistics is whether language is the origin of thought or the other way around. This seems like an odd question to a layperson. Surely it’s a no-brainer to conclude that without thought there can be no language? But there is evidence that changing the way language is used can alter the way people think and then behave. It’s the theory behind neurolinguistic programming, a still-controversial amalgam of linguistic and psychoanalytic techniques designed to improve the subject’s ability to function, usually in the workplace.

Some psychotherapists contend that NLP practitioners try to duplicate their function without their qualifications. But at its simplest, NLP is a technique that asks people what they really mean, to encourage them to think and communicate clearly. It represents what Dawson sees as a kind of harmonising of language across different communities.

However there is another approach to reining in linguistic anarchy that Dawson describes as codification. Codification occurs when a company provides a strict definition of commonly used words and phrases. Take the word “incident”. Does it just mean something that happened? Or does it go further than that?”

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The increasingly tight limits of propriety for bloggers

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There’s currently a massive discussion going on in the blogosphere about a series of Microsoft ads in which they asked prominent bloggers such as Michael Arrington, Om Malik, Fred Wilson, and Richard MacManus (the links are to their comments on the brouhaha) to say what they thought the term “people-ready” meant. These were compiled in a site sponsored by Microsoft, which does not mention any products or services, but simply promotes the concept of people-ready.

The controversy was sparked by a brief article on rabble-rousing blog site Valleywag, which starts its piece saying:

“The stodgy old media industry has a rule that newspaper reporters, and TV news hosts, shouldn’t trade on their public trust to endorse products.”

…and goes on to attack the people-ready campaign. I don’t get this. These bloggers are not endorsing products in any conceivable form. They are giving thoughts on a concept. How this could be seen to affect their credibliity is beyond me.

Among other business activities, I am a professional speaker and writer. I’ve written white papers, done webcasts, and given keynote speeches for payment, for among many others Microsoft, SAP, and IBM. At no point in these activities do I ever endorse a product or company. I share my views and expertise, and my clients pay to be associated with these ideas, and to attract an audience who want to get an unbiased perspective on business trends and strategies. The fact that I’m being paid to share my opinions on business and technology issues does not impact my credibility.

The bloggers in this campaign have not done anything that would affect how any reasonable person would perceive their integrity. They have not endorsed anyone. They’ve shared their thoughts on a topic. The fact that some of these bloggers have now shied away or even apologized shows that their sensitivity to potential perceptions is extreme. The degree of propriety expected of bloggers now goes far beyond that expected for mainstream media. That there is transparency and debate on the limits of propriety is good. However it is crazy to say that sharing opinions and ideas is wrong, when these could apply to any company, any product, and any service, and are not linked to any of these.

Prometeus: In the media revolution, experience is the new reality

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David Casaleggio, a media and network consultant based in Milan, let me know about an extremely interesting short video he’s created on the future of media. He has created versions in English, as below, and also subtitled in Japanese and Spanish (recognizing the global nature of media markets).

A few highlights in the second half of the clip:

In 2020 Lawrence Lessig becomes the US Secretary of Justice and declares copyright illegal.

Devices that replicate the senses are available, and reality is replicated in Second Life. Everyone has an Agav (Agent Avatar) that finds information, people and places in virtual worlds.

In 2022 Google launches Prometeus, the Agav standard interface.

In 2027 SecondLife becomes Spirit, where people share their experiences and feelings. Memory selling becomes normal trading.

In 2050 virtual life is the biggest market on the planet and Prometeus finances space missions to find new markets.

In conclusion: “Experience is the new reality”.

A nice thought-starter on where we might be heading…

The Singularity and being a geek

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Hmmm…. Not sure whether to take this as a compliment.

Cameron Reilly of The Podcast Network and I caught up last week after we both spoke at the Evolve conference. Cameron wrote on his blog :

“Caught a taxi to the airport with Ross Dawson and we had a great chat about the Singularity. Ross looks like an accountant but he’s really a major geek.”

For those who are not geeks, the Singularity is the point at which the acceleration of technology goes beyond human comprehension. Whether and how soon it comes is a fascinating conversation for transhumanists…

Video interview of Adrian McDermott, BEA Systems

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This one minute interview of Adrian McDermott, Vice President of Engineering at BEA, was made in conjunction with the Web 2.0 in Australia event. The video was produced by One Minute World, which specializes in one minute video content for streaming and mobile devices.

Adrian discusses BEA’s initiatives in applying Web 2.0 in the enterprise. These are also covered at BEA’s new en.terpri.se site.

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