News, media & communications

Web 2.0 and the Evolution of Online Media

Is the Internet, and web 2.0 in particular, the biggest thing to happen in the history of media or is it just a fad wrapped up in an enigma and covered in a conundrum? According to Professor Patrick Barwise, who teaches management and marketing at the London Business School, (i.e. an old guy that might know what he’s talking about), the threat created by new media innovations such as social networks and IPTV is massively overrated. For example, while advertising revenue for traditional TV networks is bad it’s not “falling off a cliff”. Equally, while newspapers are having a hard time adjusting to the new media environment most are still making money and some are increasing circulations and revenues.The core of Prof Barwise’s argument is that while the digital revolution is changing distribution and consumption habits (e.g. more people are spending more time online and some consumers want to control, share or co-create the content) audiences have the same core needs that they had 50 years ago. Furthermore, research strongly suggests that there is very little demand for media on demand and that mobile video does not compete with the needs most people have of TV. Most people use TV relax at the end of a long day and they want to do it in their own home in the company of others. This could shift over time due to the generational crossover and it could also be that much of the technology is still in its infancy (e.g. download times are still slow in many countries so IPTV is not currently a viable option). Nevertheless, the argument is interesting.

The Business of Blogging and the Future of Social Networks

Will blogs exist in the future? Nobody knows. One argument for extinction is that there is no revenue model in blogging but that could miss the point. Because audiences are generally small there’s no money to be made and this creates a resilience that commercial enterprises can only dream of. If anything is going to vanish perhaps it is social media but again the very lack of commercial models could be the main reason why they survive. Nevertheless there are some problems. Back in 2005 blogs were still the next big thing and businesses were blissfully unaware of their impact. Those business types that did know about blogs largely regarded them as a cathartic publishing tool for trivial information that was only read by the writer.This was, and still is, partly true but a few blogs have become huge with audiences that can sadden many a metropolitan newspaper.

The upside is that blogs and social media in general have democratised the media and a few other things besides. Blogs have broken down some very high walls although it could be argued that their influence is still slight outside of media and technology. One thing that hasn’t really taken off is the idea that businesses can blog about themselves to a general audience because nobody, quite frankly, is very interested. What blogs are clearly useful for is the creation of rich content around very specific subjects or people. However, the medium is still the message and most digital content is either lost in a sea of infinite content or else the digital nature of the message has the effect of reducing its power. As for social networks they have proved to be valuable in terms of transmitting content and ideas. Blueshirtnation, for instance, is an in-house social network ‘owned’ by Best Buy. It has 20,000 active participants and the group churns at a rate of 8.5%. Compare this last figure to an average churn rate for sales associates of 85% and you can start to see where some of the social value lies.

Of course social networks do suffer from two major drawbacks. First, if you post something on a site there is no guarantee that you will ever be able to get it back. The other problem is the opposite. Social networks may end up inadvertently destroying information because it tends to get scattered across a number of different places and it is difficult to locally back-up event streams or other data.

Behavioural Marketing and Digital Privacy

Someone, I forget whom, once said that you become like those you are with.This might be true but these days you are increasingly judged by where you go, at least online. The issue here is ISPs tracking which sites users visit and then selling this information to advertisers. Sites like Google have been doing this for years but the difference is that Google only serves up ads on the basis of search terms used on its site. ISPs, in contrast, monitor everything you do and everywhere you go. Phone companies are much the same. Thanks to GPS they have information on where you are, where you’ve gone and, if you have a phone that houses digital cash, what you’ve bought. Add a bit of voice recognition software and text analysis and, hey presto, the phone companies will even be able to tell what you’re saying or what you’re writing.

To some extent this is a storm in a teacup. In almost all cases this data is sold on in anonymous bundles so there is no way to identify a specific individual. ISPs don’t sell information about visits to particular sites either. It’s purely patterns that people are interested in, for instance, whether you are interested in luxury cars or cheap watches. This is similar to the way in which retailers such as Tesco collect and analyse data every time a customer uses a loyalty card. It is patterns that can predict future behaviour that people are interested in. On the other hand data does get lost and can sometimes be used to identity individuals. The 2006 case involving AOL immediately springs to mind.So should we be worried? When it comes to digital privacy it’s probably better to be safe than sorry so perhaps a simple opt out is all that’s required. That and laws preventing governments from eavesdropping on data trails without a warrant.

The Future of Reading

According to a recent survey 411,000 new books were published in the US last year and total sales hit 3 billion books. However, reading in the US, like in many other developed markets, is declining, especially amongst the young who have an ever-expanding range of other entertainment options at their fingertips. So what’s next in reading?One development that is slowly making its presence felt is digital books. Sony launched its e-reader in 2004 and the latest entrant is Amazon with something called the Kindle, a ‘book reader’ that can download digital titles from the Internet in a matter of seconds (think of iTunes for books and you’ll get the picture).

At the moment it’s far too early to tell where this trend will go although it does look as though digital publishing will be significant over the longer term. Right now most people are generally still wedded to ink on dead trees (82% expressed a strong preference for paper over any digital equivalents in one survey) but once people understand some of the benefits of e-books they might change their behaviour. Digital books obviously dispense with printing costs, warehousing costs and shipment costs so they are cheaper. For books that traditionally cost a lot of money – text books for example – this could make a very big difference.

Equally, if the economy tanks cost will move to the fore again so e-books could become more appealing. The reality is that digitalisation isn’t something that you can un-invent so digital books (and print on demand) are here to stay. Digital books won’t kill physical books but their existence will affect what we read and how we read it. We will see more serialisation for instance and book clubs will move online, except for specialist clubs that are able to capitalise on the human touch. As for the publishing industry itself, it's yet another example of polarisation and the death of the middle. At its most basic the publishing industry only requires two things: People that write books and people that read them. Anyone standing in the middle of this relationship is asking for trouble unless they are bringing the two sides even closer together or are adding value in terms of price, convenience or editorial ability.

Web Economics

Never in human history has it been so easy for an idea to connect with so many people for so little. The reason is the Internet and specifically something that some people are calling viral expansion loops. Viral loops aren’t just viral marketing although viral expansion loops are probably the best way in the world to communicate with vast numbers of people very quickly at little or no cost. Ning is a business with viral loops firmly embedded in its business model. Twitter, Myspace, Facebook, Linkedin, Wikipedia and Flickr are others.Viral loops are a way of designing a product, service or company so that they build themselves with astonishing speed. How do they do it? Simple, create something that’s good and then allow each new user to pass the idea onto others but ideally design things so that users link to other users or use other users to co-create content thereby improving either the scale or the quality of the whole.

Tupperware parties are a good example of viral loops but the frictionless nature of the Internet has taken the idea to the ultimate level. What’s fascinating about viral loops is that most of the time they don’t actually create content at all, they simply organise it. So what’s the dilemma? Mass audiences obviously attract the eyeballs of big advertisers and even small networks are theoretically valuable if a niche is niche enough. Hence a network of opera buffs in the US or, even better, around the world, is hugely useful to anyone wanting to sell opera buffs something relating to opera. But here’s the rub. For all the success that many of the businesses already mentioned have had, next to nobody has really worked out how to successfully monetise these sites beyond selling the entire network to someone else. Neither Twitter, Facebook, Flickr, Myspace or Facebook has a credible revenue model and retrofitting a revenue generating idea into these sites doesn’t really seem to work either. Of course, maybe these networks, like the Internet itself, simply isn’t something that has a purely cash value.