Saturday, November 25, 2006

Weekend Reading: web 2.0, services, video searches and more...

Amidst the catching up of sleep last weekend, I spent some time catching up on the Web 2.0 juggernaut that shows every sign of running amock the moment you look away.

A good place to start is the venture-blog which, as you would expect, catches trends early.

One of the areas to watch is the superabundance of tools for blogging (Vox), linking and interconnecting (Sphere). Sphere actually uses a widget which you can install in your to track contextual posts on topics you cover.

The second area is the continuous progress of video tagging and searching. While I've spoken about Video tagging earlier, Dabble is a service which tries to add a layer of intelligence around video searches by actually measuring how people view and link to videos on the web.

A final area is that of the software services model - i.e. defining software as a service which masks the technology and exposes only the service construct. Which essentially means that as long as you have defined interface, you don't really care how the software does its job. As more and more software is written this way, it becomes easy to use a specific functionality without having to buy the whole software (or install it). Yo can try it with services like Flickr and Pageflakes.

In the future you could therefore expect to blog to a number of websites, which you could then contextualize and link to other relevant content/ blogs and pull them into your own publishing environment. It's like doing deals on the run - like the proverbial changing of tyres while the car is still moving.

Monday, November 20, 2006

Stumbling and Searching - the best of both worlds

I stumbled upon a website today - curiously called - the premise of this application is that there are people who don't want to google for all their information and surfing but actually want to stumble upon interesting content. Having installed the application (a browser bar - needless to say), the first site it took me to at random was one for measuring broadband speeds (my upstream speed is 340KBPS, but I get 4Meg downstream speed - in case you were wondering). The next site I was directed to after hitting the same button again, was a collection of Einstein quotes. Although not authenticated, by the collector's own admission, its full of little gems such as "Science without religion is lame. Religion without science is blind."

I can think of quite a few reasons why lots of people would like this kind of surfing experience:
  • I often like the radio rather than my own CDs because I like not knowing which song will play next. Its kind of boring when you know the next song and the one after that.
  • For a lot of people the joy of surfing is lost if you have to work for (google) everything. And People do get tired of Youtube, Myspace and even the BBC website.
  • The problem with search is that you're not likely to be surprised or mind-expanded. I mean how likely is it that you'd search for something you've never thought about??
and this led me to understand a key dynamic of the TV-PC unification discussion that so many folks like to have. The TV is historically a "stumble upon" environment. People like to "channel surf" not knowing what little gem they'll discover. Sure, there's always the 57 channels and nothing's on syndrome. But so often we find programs... that we didn't look up in the guide and didn't get told about - but we just discovered.

While enough effort is afoot to change the TV to a search and view mechanism - rendering most of tv like a "Google" experience, it begs the question - will there not be people and occasions to just stumble on good content? I think we all know that most of us at some points of time (and some, most of the time) will prefer this mode of discovering content on TV. And nothing bears this out more eloquently than which has created such an island of discovery in the middle of an ocean of tagging, sorting, socially-networked-recommending and ever better seek and retrieve mechanisms.

Thursday, November 16, 2006


Today I discovered - yes, I know, I'm uncool, and I get things late. But having discovered it, I've ordered my cards. And I'm excited. And since in most such things I'm the barometer of the "early majority" - Moo will soon be a pretty common phenomenon, I'm sure.

Thursday, November 09, 2006

Cash Cows to Stars

The Economist Magazine carried an article recently about the interest of private equity in the media industry. There have of course been no end of bids for media businesses. Today's FT carries a story about a bid for the Tribune Magazine from Eli Broad and Ron Burkle. Well known private equity firms like KKR and Carlyle have evinced interest, and rather well known media businesses from ITV, Vivendi, and Pearson, have been the subject of such bids.

The reason forwarded is a simple, financial one. Markets need growth, private investors just need the cash. As Bhaskar, the Founder & CEO of Recreate Solutions (now sold to Corpus) told me once, you can either have a growth business or a "lifestyle" business, as an Entrepreneur. Of course, the cash coming out of these businesses may not fund lifestyles but other investments for private equity players.

Some of the other reasons mentioned include (a) better management (b) better access to debt and (c) freedom from the constraints of S-Ox and other strictures of public markets.

Its the last, which needs extension. The reality appears to be that Media businesses don't run very well as publicly held businesses. Decision making needs to be snappy and new opportunities need to be addressed quickly. Moreover, with significant changes sweeping through the business and technological landscape which sometimes questions the very viability of some businesses, it needs the owners to make some big bets on the future of these companies. This is very hard to do for a public company.

However the real value of these businesses may well be more than just the cash cows they are purported to be. These are big brands which over the years have built great consumer value and represent something significan to consumers by way of their propositions. If they could create relevant and new products then they have the brands to deliver these to consumers.


Wednesday, November 08, 2006

In Defence of "Good-Old" Media

All around us there is the rumble and crash of old media edifices falling. The image is either a Stalinesque one or that of a terminally ill patient whose concerned relatives are arguing about the right time to switch off the life-support system. OK, so I'm stretching that a bit, but you only have to look around you to see the carnage in some parts of the sector.

The newspaper & print media in general after ignoring the threats for too long and then continuing to believe in their invincibility, have all but thrown in the white flag. Many have now started working with Google as it starts to look more and more like the "all things to all people" - when it comes to aggregating eyeballs. Recent moves by Google to move into both print and radio advertising suggests that the biggest threat Google presents isn't to media businesses as much as to media planning, buying and the advertising business. Ultimately some of that revenue will always flow back into content, except for classified advertising, which has truly "flown the coop".

Today's FT reports that EMAP have called in the BCG to "review" its Magazine business (requires subscription). The article also hints that this will lead to cost cutting in the group. Seems strange to call in a high profile consulting company to tell you what you've already decided to do. None the less, unless the folks at EMAP truly believe that people buy FHM for the quality of their editorial content, it should be reasonably apparent that young men will prefer to go find what they want on the Internet.

In all of this, though the news about the demise of media in general are "greatly exaggerated" Here are a few reasons why.

1. People still consume news and entertainment - and by and large, don't like to go searching for it every day. This doesn't mean that they'll read or watch any rubbish that you put out, but that people evolve their own, simple patterns for finding what they want, and like to go back to the same places, till they get dissatisfied. Good examples of this are the BBC website, the Guardian website, Youtube (on the verge of dissatisfaction?), and a number of successful TV channels.

2. People also want/ need to consume services - which may or may not be tied in to content. Classifieds (like jobs searches) was a service which was tied in to content because it was the only way of getting to a large number of people. Trade and other focused magazines continue to attract their share of jobs and classifieds. But there's no reason to suggest that the best way to find a plumbing service or a second hand car is in a mainstream newspaper. Newspapers that realized this too late had to suffer at the hands of the ebays, craigslists, and monster.coms of the world. Successful services like Flickr and skype not only take advantage of basic needs, they also should and could have been thought of by existing businesses.

3. The published (note: not printed) word, has a value which is distinct from that of the audiovisual. It stays there in front of you as long as you want. In an audiovisual, if you get distracted for a few seconds, you have to rewind back to where you were, and this is not possible for 80% of the audiovisual (a/v) content we consume. Published content can be consumed at leisure, with interruptions, at your own pace. Whats more it can be searched, underlined, highlighted, passed around and marked up with ease. Although technology will change and morph our ability to manipulate audiovisual content the same way, the published word will not go away in a hurry. But tying it to any format (including a website on the internet) is restrictive and dangerous. Think RSS and see a service called pageflakes

4. A/v content obviously has the advantages of being more compelling, dramatic, worth a thousand words etc. But a/v content is not the same as television. Equally, there are a bunch of services which can and need to be delivered around a/v content. Advertising is one such service, that meets the needs of one set of stakeholders. But surely, the ability to search and tag, to highlight or "underline" - are some of the things we'd like to see in video content as well. Enter blinkx and services like Veotag and

What's changing is the "easy street" of content distribution. This known and trusted model of newspapers, magazines and TV channels - which has become all but formulaic. It just means that content - both published and audiovisual, and services (connected to content or otherwise) will have to think a little harder about what consumers want, how much they're willing to pay, and how to make money of them.

Thursday, November 02, 2006

What Price Music?

As expected our Intellect Convergence Conversation session on "What Price Music" - started with a few strong positions and some edgy interactions, but surprisingly, got quite constructive towards the end with more than one participant suggesting a longer time-frame would have suited the discussion.

At the heart of the problem was the challenge of "competing with free" - how do you compete against the free giveaway? What can actually help increase the value perception and hence the price of the product? This is the big question the industry must answer.

A part of the problem lies in marketing - how to raise awareness of the value of music? Or, perhaps, how to raise the relative value of music, since, as somebody pointed out with this classic quote from a 12 year old - "we have to spend money on shoes, phones, music... if I could download the trainers for free on the net, I'd pay for the music!" Of course, the irony shouldn't escape anybody - the same consumers are probably downloading ringtones for 2-3 Pounds each.

On the other hand, perhaps this IS the future of the industry - the average price of the product has come down and this is here to stay. Certainly a large number of people are of the view that piracy is not really curable. It needs to be factored in to the economics of the business. This means that a part of the answer is structural - the industry has to re-organize itself against these lower prices. After all there are plenty of industries, which face the challenge of having to innovate in order to bring prices down year on year for their clients - ask any of GE's suppliers.

Isn't it funny though that there's such a consistency in music pricing? I mean its almost an arbitrary figure. Even though we quibbled about whether its actually consistent, the fact remains that there are only mild variations in the pricing of new albums (irrespective of number of songs, effort, quality of recording, past track record of the performers, etc. Even less so for tracks - which are uniformly priced at 79p, on iTunes and other platforms. Of course, the reason for this is that this is the only way the industry can work, without confusing the consumer and the retail environment by evaluative pricing for each piece of music.

The issue becomes a little clearer if you consider that digital music really has an "infinite supply" and so it needs an almost arbitrary price to make (and clear) a market. Although people have suggested alternative "stock exchange" type models with prices going up with the number of items sold, this is far too expensive to implement and also will not help tackle piracy.

There are other pricing models out there in existence - including those of Yahoo, eMusic and others - largely focusing on subscription revenues against which you can download or play tracks as you go. These have had mixed success and with Spiralfrog set to launch, these attempts are still playing themselves out.

One of the interesting thought-experiments you can conduct goes as follows: if you had access to ALL the music in the world, ever created, how would you decide what to listen to? Clearly, one lifetime would be far too little to even sample every piece of music! Therefore you would need somebody (or some tool) to evaluate and make recommendations to you. These could be based on your past preferences, defined parameters or by market opinion. Which ever it is, you might be willing to pay for this service, even if the music itself is free. This may well be one of the value sources for the music industry.

Another obvious point around which opinions largely coalesced is that one of the main ways to price music is to bundle it with services. These could be ancillary services which have a loose affiliation to music - such as broadband, or "coffee shop ambience", or they could in fact be the outcome of studying listening/ usage patterns for music. For example, it might be possible to charge a few pounds for creating playlists - based again on defined or assumed parameters. E.g. "weekend party at home" or "high energy music for exercise".

There are of course services out there which are doing some pretty complicated analyses already to match the kinds of songs you like to the kinds of songs you might like. Pandora is one such service.

The bottom line is that simply selling the songs will have a limited and potentially shrinking market in the long term. Prices will need to drop, and even then, piracy will not go away completely. All businesses in the industry will need to work harder at marketing the value of music to the consumer and ensuring that this is reflected in the price they're willing to pay for it. But more importantly, over the next few years, the industry will have to be structurally clever and innovative in product design so as to create a bundle of services around the music using which businesses can make the consumer an offer he can't refuse.

Until then, the debate on music pricing will go on.