This phrase from the dMarc FAQ page struck me as pretty Googlesque: “we bypass all human touch points and distribute spots directly to the station’s digital automation systems.”
This paragraph from dMarc’s “Networks” page shows what they can do in terms of targeting ads, but also underscores how far that targeting currently is from what Google does on the web:
Want to hit adults 18-54 in a particular market? Done. Want to run just a handful of different markets, with a different demo in each? Done. Pick your market, station format, demographic, and day parts, click a couple of buttons and your network is ready to run.
Erick Schonfeld at the Business 2.0 blog has some ideas how Google might bridge the gap between radio and its current advertising business:
Can Google use DMarc to serve contextual ads over the radio? Probably not terrestrial radio. But as radio goes digital, and you add in satellite and Internet radio, then things start to get interesting. Just by knowing what stations you listen to, more relevant ads can be served up to you.
Now take that logic one step further. If Google knows your stations and playlists, and can marry that with what it already knows about your search behavior and your clickstream throughout the Web (i.e., if it knows your idenity and can track it), then that information can be fed into an ad engine that serves up radio ads (or TV ads, for that matter), just as easily as it can serve up text ads.
Umair Haque at bubblegeneration also weighs in:
It shouldn’t come as a big shock that Google’s moving into radio ads. Now that Google’s built an edge competence in making ads and content plastic and liquid - essentially, in harnessing the power of markets and networks that underlie them - it is going to leverage this competence across as many media markets as it can, as fast as it can. You shouldn’t see Goog as the world’s information organizer. It’s more accurate to say that it’s the world’s ad allocator.
A commenter takes issue with Umair, saying “google has no success in running a business outside of keyword websearch/adwords…as for radio bolted into adsense, go spend some time with advertisers and see what they think.”
Umair responds that “the key…is that there are possibly millions of advertisers who aren’t using radio, but would, if Google made it easy for them. Sure, coca-cola may have no need to go through google for radio ad buys. But there might be 1,000 advertisers 1/1000 of the size of Coca Cola who will.”
Umair also compares Google to Yahoo in terms of their “edge competencies”:
Contrast Google with Yahoo. Yahoo doesn’t have any edge (or core) competencies; so it can’t leverage anything into new markets. Despite it’s huge, ongoing investment in the edge - Yahoo’s picked up most of the major edge players - it still, amazingly, hasn’t learned how to create value at the edge, and so all it’s edge investments are trapped in silos, because Yahoo’s afraid that touching them will devalue them. That’s a vicious circle: it would indeed mess them up…but only because Y doesn’t understand strategy at the edge.
Danny Sullivan at Search Engine Watch suggests it may be time for Google to add a few words (underline is mine)to its famous mission statement:
“Google’s mission is to organize the world’s information and make it universally accessible and useful” [r]eally ought to say “Google’s mission is to fund and organize the world’s information and make it universally accessible and useful.”Posted by Mitch Shapiro at 10:44 PM | Print | Comments (0)
Yahoo released its Q4 05 earnings today and, against the backdrop of stellar financial performance for the quarter and the full year, the Internet giant disappointed investors with weaker-than-expected guidance for 2006. Revenues for the quarter were $1.5 billion, up 39% year-over-year, while net income was $247 million, or $.16/share compared to $187 million, or $.13/share, a year-ago.
Investors’ antennae were raised with the $.16/share given that it fell a penny short of expectations. But more troubling are Yahoo’s projections for Q1 and full-year 2006 revenues — the company expects first quarter revenues to be lower, around $1.04 to $1.4 billion, while annual revenues are slated to reach $4.6 billion to $4.85 billion, down from $5.26 billion for 2005, due in part to a “realignment” of search partners, such as MSN, which will decrease its use of Yahoo’s search technology.
While these estimates aren’t far off from Wall Street consensus, investors want strong growth and surpassed expectations, which Yahoo didn’t deliver. Still CEO Terry Semel praised the company’s performance, saying during Yahoo’s earnings call that “we accomplished all this while continuing to pursue emerging opportunities that we believe in the long term will help sustain our revenues.”
Despite the weak start to the year, Yahoo isn’t backing away from its development efforts. “There is a significant platform shift…now is the time to make investments in new audiences, new ways to engage them and create new opportunities,” Semel said.
However, Semel did seem lukewarm on the idea of Yahoo spending a lot of money to create TV-type entertainment programming, a notion raised by reports that the Internet portal titan might spend $20 million on a web-based TV series that was disbanded by ABC. “We will do a little of that [spend money on video entertainment production]…then ultimately really look for more and more outside companies look to us as a partner of choice,” Semel said.
Posted by Cynthia Brumfield at 6:21 PM | Print | Comments (0)
Om Malik cites a Marketwatch report that “BellSouth Corp. confirmed Monday that it is pursuing discussions with Internet content companies to levy charges to reliably and speedily deliver their content and services.”
According to Marketwatch:
Bill Smith, chief technology officer at BellSouth…suggested that Apple Computer might be asked to pay a nickel or a dime to insure the complete and rapid transmission of a song via the Internet, which is being used for more and more content-intensive purposes. He cited Yahoo Inc.’s plans to stream reality TV shows as an example.
Smith is quoted as saying that broadband access is “the shipping business of the digital age.” But what he seems to ignore is the fact that the barriers to entry in broadband access (especially when you layer in the legal hurdles incumbents are pushing with regard to municipal broadband initiatives) are more akin to those found in the “road” business rather than the shipping business, where there are a range of providers, including the publicly-owned Post Office, which offers some basic services quite cheaply. Also missing from Smith’s analogy is the fact that cable and telco pipe-owners are vertically integrated in ways that are not found in the shipping industry.
I’d argue that the combination of these two elements—barriers to entry and vertical integration—make for a very different market dynamic in broadband access then is found in the shipping industry. While Smith and his colleagues may be sincere in proposing the analogy, it doesn’t seem to apply in a very meaningful way to the development of sound public policy.
A better analogy might be to roads which, like broadband access networks, demand extremely large capital investments that present very high barriers to entry.
Would we, as a society, want a situation in which Fedex owns the road system and could refuse to allow UPS (or, for that matter, the Post Office) to use its roads to make their deliveries or, using a less heavy-handed competitive strategy, charge these other shipping companies arbitrary fees for the ability to use the passing lane when traffic gets bogged down in the slow lane (as telco CFOs and regulators have long known, in industries so heavily weighted toward fixed costs, virtually all fees are pretty arbitrary)?
To extend the analog a bit, would it be good public policy to allow Fedex to not only own the roads, but also to merge with Wal-Mart, which would add the element of vertical integration in the form of substantial market power in retail products and services?
To be accurate, this analogy should actually have two road systems (to some this would seem unnecessarily expensive and redundant, but it’s where we’re starting from today). One would be owned by Fedex/Wal-Mart, the other by UPS, which might merge with Target…a vertically integrated, capital intensive, high-barrier-to-entry duopoly market structure.
In some ways this world would be appealing. We’d probably have two entities with stable and relatively controllable (through their market power) costs, revenues and margins. They’d no doubt compete to some degree, but neither would be likely to aggressively innovate. Why take the risk, when Wall Street will reward solid predictable cash flow growth and may move its investments elsewhere if that stability begins to appear threatened?
It also seems likely that both entities would do what they can (and, with their market power, they could probably do quite a lot) to nip in the bud innovative technologies, products, services and entities that pose a threat to the financial health and stability of their relatively predictable duopoly market structure. Their investors would and should expect no less of them.
That could make these two entities powerful gatekeepers in terms of technical and economic innovation, perhaps increasingly so over time.
As a society, we need to ask ourselves if having a pair of cable-telco “innovation gatekeepers” is a good idea. Maybe it is and maybe it isn’t. Today, the context in which we make that decision is an increasingly competitive global economy, where a mix of different economic and broadband policy models are being pursued, and where we face serious and chronic economic, social and political problems. If we end up choosing a competitively weak model, we do so at considerable risk.
I’m reminded of the old saying “what’s good for General Motors is good for the country.” Maybe what’s best for Verizon, Comcast, AT&T and Time Warner really is best for the country. But I don’t think we should accept this on faith, just as we shouldn’t dismiss it on faith.
If the next-generation broadband Internet is as important as many of us believe, there’s too much at stake to leave the choice of policy models to politics-as-usual…especially since, as recent scandals suggest, politics-as-usual appears to have sunk to new lows in its ability to serve (or even consider) the public interest.
Rather than pass any new legislation, I’d like to see federal and state governments sponsor more broadband policy-related research and encourage real-world experimentation aimed at understanding and comparing different models. Together, this experimentation and research can provide fuel for fact-based debates that clear away the confusion generated by simplistic arguments and politically motivated claims (on all sides), and unhelpful analogies (such as Smith’s). As I’ve said before, that’s the kind of collective decision-making process I like to call IP Democracy.
Update: I just read Cynthia’s post on News Corp/DirecTV’s WiMAX plans, and since its relevant to this post, thought I’d include a quick comment. If it unfolds as some are predicting, the News Corp. move would change my duopoly reference to a “tri-opoly” (which may not be a word), which would arguably exhibit a wider range of competitive and innovative behavior than a duopoly (especially with Rupert Murdoch running the show). On the other hand, it appears to underscore my point about the significance of vertical integration as a source of exclusionary market power, especially when combined with high barriers to entry. Though News Corp. might be relatively late to the broadband network business in comparison to cable and telco competitors, it would have most of these competitors trumped by a wide margin when it comes to vertical integration with content and (with its recent acquisitions) web services.
Posted by Mitch Shapiro at 3:45 PM | Print | Comments (2)
Business Week has this piece today on DirecTV’s bid to buy into a terrestrial broadband distribution network via a $1 billion WiMax investment. When news of the impending broadband effort by the News Corp.-owned satellite player was leaked by none other than Mr. Murdoch himself, the spin was that New Corp. is itching to break the cable-telco high-speed duopoly.
But BW’s Steven Rosenbush adds another layer of strategy on top of News Corp.’s motivation to jumpstart broadband competition: the entertainment giant, which has been aggressively pursuing web-based businesses, could use the high-speed platform as its own IP video distribution arm.
Over the longer run, the broadband network could provide a ready-made in-house platform for distributing the entertainment and news that News Corp. produces. Media companies are quickly warming up to the idea that the Web is a legitimate way to distribute TV and other content. News Corp. spent more than $1 billion last year to buy Internet properties, such as social-networking powerhouse MySpace and gaming site IGN
Of course both incentives for News Corp.’s push into terrestrial distribution are probably driving the company to mount wireless broadband competition. But with its own pipeline in hand, News Corp. would have nothing to fear from a two-tiered Internet and could even leverage its own broadband platform to cost-effectively launch a range of new IP-based offerings.
Posted by Cynthia Brumfield at 1:50 PM | Print | Comments (0)
After reviewing Scott Karp’s post on integrating elements of “old” and “new” media, I took a look at Umair Haque’s response, along with Umair’s earlier “case study” posts on newspapers and Memeorandum, and a link- and insight-filled post by Fred Wilson entitled “Living on the Edge (the rise of the edge feeder).
Scott’s post suggests how a major publisher might leverage the value of web-based “conversation” as part of the “synthesis” that takes place within its editorial process and, further, can combine these two functions with the credibility its brand has established within the marketplace of ideas. This struck me as a very sensible idea.
Umair seemed to agree, but only in part:
Of course, the call for synthesis in [Scott’s] post also misses half the equation - reconstructors like Memeorandum are valuable because they synthesize, or reconstruct microchunks into coherent streams of attention. The shift away from manager at the core to DJesque choreographer at the edge is something many of us have felt for a long time; the problem, of course, has been the “cannibalization” of traditional media business models - they can’t capture any value from conversation. That’s why media needs edge competencies. Management innovation has to be backed up with business model innovation, and, often, product/service innovation. Edge competencies are the unification of all these.
This got me thinking about the role Memeorandum plays in my own media consumption and generation, and how things might evolve from where we are today. It also prompted me to go back and read Umair’s earlier post on Memeorandum and Fred’s post (and a piece Fred cites by Jeff Jarvis), which contrasts Google Base (a centralized “freebase”), with “edge feeder” models like Flickr, MySpace, del.icio.us and a new crop of “video feeders.”
Thinking about Memeorandum’s functionality reminded me of a point Scott made contrasting the elegance of the iPod and Google search with the unwieldiness of today’s RSS functionality. It also got me thinking about where—and why—Memeorandum fits on the “elegance” and “user-friendly” continuum and how using it (as both consumer and creator of content) relates to the “integration” model Scott discusses, and the broader evolution from Media 1.0 to Media 2.0.
Though sparse esthetically, Memeorandum has its own form of simple elegance, which accompanies a functional utility that is hard to match from any other source—at least in the tech and political arenas (I only use the former, but assume this is also true for politics). As someone who reads a lot of articles and blogs, and also writes a blog, articles and research reports, Memeorandum provides a very simple and easy way to track fast-changing developments in the tech world and to quickly digest what’s being said about them by people I respect, including both “bloggers” and “journalists.” It also provides a convenient way to jump into the dialog, if I think I have something to add to the conversation, or if I simply want to add another “human” layer of editorial function for readers of IP Democracy, some of which presumably don’t have time to do as much reading as I do.
This last point speaks to the interaction between the algorithmic elegance of Memeorandum—which leverages the power of links, but is therefore also dependent on them—and the value provided by the “experienced human” editorial function Scott suggests is key to the “synthesis” function (and, still today, often to the “credibility” function).
Compared to the process of consuming traditional media, the process of using Memeorandum remains relatively “lumpy” and time-consuming, in that the “synthesis” occurs as I read the main “source” piece, some or all of the “discussion” items listed next to it, and, in some cases, one or more items to which these “discussion” posts provide links. If I’m lucky, someone else has already done much of the work for me—provided a synthesis of the “conversation” and some perspective on it that makes sense to me, hopefully with plenty of links if I want to take the time to dig more deeply myself. These writers (whether they be journalists or bloggers) become my “go to” media sources for key topics of interest, especially when I don’t have much time and want to get a grasp on things as quickly as possible.
This suggests that Memeorandum has established a beachhead that provides some degree of “editorial synthesis” using algorithms to leverage the distributed assets of expertise, writing skills and hyperlinks. But it also suggests that this beachhead can expand beyond tech and politics only to the extent that other subject matters are adequately covered in some forms of “conversational/community” media that are rich in hyperlinks and/or metadata (tags, recommendations, etc.).
What I’d like to see as a next step is some integration of what Memeorandum does with the syndication functions of RSS, and some customization tools. For example, I might like to receive a feed derived from the sources cited on Memeorandum (maybe a few times each day?) but customized based on the topics I’m most interested in and the “publishers” I most respect. These could be ordered based on Memeorandum’s algorithms, or I might prefer the order to be based on my own topic and author preferences.
While this particular step in the evolution of functionality probably wouldn’t reach the “ease of use” levels provided by Media 1.0 publishers, it seems that each step along the evolutionary path will help the transition to Media 2.0 models penetrate a little more deeply into the media consumption mainstream.
And while this evolution of the editorial function doesn’t directly address the important question of revenue models, Umair suggests some general possibilities when he says:
Consider a newspaper industry player who had invested along the new media value chain - in a microplatform, and a reconstructor; and who had also developed strong edge competences in making ads, publishing, and finding, writing, and checking stories plastic.
Such a player would be actively reshaping industry economics. By controlling microcontent, they would be exerting strong market power over buyers and suppliers. By being able to leverage new kinds of distribution - individualized ‘casts of microchunked content - they would be able to massively raise switching costs, as well as entry barriers. The net effect of such a player would be to capture much of the value that is shifting away from the core of the value chain, and towards the edge.Posted by Mitch Shapiro at 1:00 PM | Print | Comments (0)
When Steve Jobs’ announced last week at MacWorld that iTunes has sold “over eight million videos,” the real news behind that announcement is just how fast iTunes video sales are accelerating. First of all, based on that eight million figure, what Jobs was essentially saying is that iTunes had sold an average of nearly 90,000 videos per day, racking up a total in incremental revenue of around $16 million since the iTunes video store was launched on October 12.
More importantly, however, based on video sales announcements made by Apple since the store’s launch, that eight million figure also reveals just how rapidly video sales are increasing at iTunes.
|
Apple iTunes Video Sales |
|||||
|
Date |
# of videos sold |
Incremental Sales |
Total Revenue |
Incremental Number of Days |
Average # of videos sold/day |
|
10/31/2005 |
"more than one million" |
1,000,000 |
$ 1,990,000 |
19 |
52,632 |
|
12/6/2005 |
"more than three million" |
2,000,000 |
$ 3,980,000 |
37 |
54,054 |
|
1/9/2006 |
"more than eight million" |
5,000,000 |
$ 9,950,000 |
33 |
151,515 |
|
Total |
8,000,000 |
$15,920,000 |
89 |
89,888 |
|
| Source: Emerging Media Dynamics analysis of company data. © 2006. | |||||
The nearly 90,000 per day video sales average, however, masks what seems to be rapidly accelerating growth in video sales. On October 31, Apple announced that it had already sold “more than one million” videos in less than 20 days, for a rate of sales run-rate of approximately 52,632 videos per day (taking the one million figure as the most conservative estimate of sales). On December 6th, Apple announced that it had sold “more than three million videos – the additional two million videos (again using two million as a conservative figure), sold over 37 days, yields a rate of 54,054 videos sold per day.
But, by the time of Jobs’ keynote presentation at MacWorld, the number of videos sold soared to “more than eight million,” meaning that in the 33 days between December 6 and January 9 (the day before Jobs’ keynote), Apple sold at least an additional 5,000,000 videos. That incremental gain translates into 151,515 videos sold per day in this time period, a run-rate that is almost triple that of the preceding two time periods.
That’s a lot of videos, and for most of this time period, iTunes’ video offerings were pretty slim — mostly music videos and a handful of high-profile Disney-owned TV shows. As iTunes beefs up its video offerings, it’s clear that video revenues and sales will accelerate even further. (For a more in-depth analysis of iTunes video sales, check out this week’s IP Media Monitor. Free registration required.)
Posted by Cynthia Brumfield at 11:50 AM | Print | Comments (0)Google announced this morning that it has bought dMarc, a Newport Beach, Calif.-based digital solutions provider for the radio broadcast industry. dMarc connects radio stations to advertisers through its automated ad system, and Google plans to integrate the system through its Google AdWords platform, creating a new radio ad distribution channel for Google advertisers.
According to the Wall Street Journal, Google is paying $102 million in cash and additional payments that could be worth up to $1.14 billion if performance targets are met over the next three years. In its press release announcing the acquisition, Tim Armstrong, vice president of Advertising Sales, Google, said that Google is keen on expanding its ad efforts into other media and hopes to bring more accountability to radio by combining Google’s expansive network of advertisers with dMarc’s system.
Posted by Cynthia Brumfield at 10:39 AM | Print | Comments (0)
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