Archives for July 2007

Tom Synder R.I.P.

Tom Synder and me at the Milwaukee Press Club in 1979What’s with all these old friends and acquaintances passing away?

Today, it’s Tom Synder, host of NBC’s “Tomorrow” show, which came on after Carson in the 70s. The picture at the right was taken at the Milwaukee Press Club’s annual dinner in 1979. I was chairman of the event, and I arranged for Tom to get the “Sacred Cat” award, a high journalism honor in the community. Tom grew up there and was most appreciative of the award, thanking me in a note especially for how happy the event had made his mother.

His career began in news in Milwaukee, and he eventually anchored in Philadelphia and Los Angeles before leaving the news business to do “Tomorrow” in 1972. He was, in many ways, the prototypical news anchor of the 70s, but he was an extremely intelligent and witty man.

No comments about my appearance, please.

Tom died this weekend of complications from leukemia. Tom Synder, gone at the age of 77 but not forgotten.

Bigger, faster, better

I’ve been following the development of WiMAX for a long time, so news this week that Sprint has added Google to its team to make a WiMAX network available next year got my attention. Never underestimate Google, folks. I think this is a major development in the growth of 2-way, wireless video communications, to say nothing of what it will mean for data.

Let’s back up a minute. WiMAX is a high speed wireless technology with 30 times the speed of any 3G wireless network and with a reach of over 30 miles. Think WiFi on steroids. Sprint and Nextel began building a network in 2004. That same year, Intel began producing computer chips with WiMAX built in. A lot of people raised a leery eyebrow at the time, because we don’t even have a valid 3G network in this country, so why build one that’s essentially fourth-generation?

Enter our wise old friend, Google. According to a report in Online Media Daily, Google and Sprint are building a portal specifically for this network.

In the as-yet unnamed portal, Sprint’s high-speed wireless service (which includes location detection) will be combined with Google Apps (including e-mail, chat and calendaring), allowing consumers to browse the Web, buy products on-demand, and stream media on devices ranging from laptops and PDAs to phones and music players.

“This is a play to get Internet access in a very broadband way through a number of different devices,” said Peter Cannistra, director of Sprint’s mobile broadband business. “WiMAX is being built out for laptops and fixed computers, but we’re working to put the chips into wide array of consumer electronics.”

The report adds that Sprint will do a beta rollout of the service (including Google Apps) in Chicago, Baltimore and Washington, DC by the end of this year, with more widespread service available by April of 2008.

I believe this will accelerate the disruption that’s dismantling the media ecosystem in the U.S. and place greater emphasis on mobile, direct marketing. The network contains “location detection,” for crying out loud. Talk about a gold mine for advertisers!

It’s also fascinating at a time when the news is filled with stories about the FCC’s auction of broadcast spectrum. WiMAX is a bird-in-the-hand for Sprint and now Google, so the only question is when will AT&T buy Sprint, so that the iPhone will work better?

(I know. I know. Shut up, Terry!)

The modernist need to assign blame

It is a natural human tendency to discover cause when something occurs outside our plans for life. I went through an agonizing period after Allie’s death, for example, trying to find out if there was something I could’ve done or somebody I could sue to right the “wrong” of her sudden departure. Pain does this. I guess we figure that if we can find out what causes tragedy, we’ll be less likely to deal with such pain again.

Besides, “revenge is a dish best served cold,” as Khan said to Captain Kirk.

There’s a great verse in Ecclesiastes where the preacher says that “time and chance occurs to everyone.” This doesn’t sit well with us, because it says that life is bigger than we are and that, well, shit happens. And it happens to everybody, regardless of their position in life.

But in the modernist world view, this can’t be. The need to determine cause is more than wishful thinking; it’s absolutely essential, because in order to maintain the hierarchy and for things to run smoothly, “proper” paths must be identified. The rigid view of right and wrong is upheld throughout the culture, because it benefits those in the right, usually the haves. This is why a bendable legal system — as witnessed by so-called “case law” (not in the constitution, BTW) — is such a vital fixture of the modernist culture.

I say all this, because four people were killed yesterday when two TV station helicopters collided in Phoenix while covering a police pursuit. My heart goes out to the families, friends and co-workers of these men.

From every corner, blame is being assigned. It’s a sensational story with sensational video that can be used to make sensational stories about police chases and their value to the news community. Lawyers are knocking on doors, and analysts are on the sets of various cable news shows. Let’s string up the bastard who did this, and we’ll all feel better!

In the early days of my news career, I was taught that “reaction” was the second day lead. Today, it’s blame, the assigning of fault. It’s as automatic in journalism as “if it bleeds, it leads.” This is then followed by a punishment phase, during which we lambaste the culprit six ways to Sunday. At times when we feel powerless, this helps us feel powerful. And so it goes.

It was an accident, but you’ll not hear anybody say that, because of our view that all accidents can — and should — be prevented. There’s always an insurance company to be sued, and so forth.

Meanwhile, the deconstructionist, postmodern culture looks at this and asks, “Where does the blame stop?” Is God to blame for allowing it to happen (or making it happen, depending on your religious view)? Do we blame life? Human nature? The air? The sky? Nobody ever blames the weather, because we can always fall back on my favorite, “He should’ve known better.” You see, you can’t sue the weather, but you can sue somebody for not knowing about it or somebody else for not providing an accurate reading of it.

Postmodernism says that when you deconstruct any stated narrative, grand or otherwise, you’ll ultimately find that you’re chasing your own tail (that’s a terrible over-simplification, but it works for me). Postmodernism is the Age of Participation, and if we’re truly to be participative, then we must necessarily be a part of cause and blame as well.

Who killed those four skilled and professional news people over Phoenix yesterday? We did.

We need to think like smart investors

Once upon a time, a small church in rural Pennsylvania got a new pastor, and everybody was excited. The nice-looking young man brought smiles to the faces of the blue-haired ladies, and his first sermon was on love. “Wonderful,” the congregation agreed as they exited the church afterwards. “Thank you so much. Pastor.”

The next week, everybody was a little surprised when the new pastor spoke again about love. Week after week, the sermons began to all sound the same, and one woman couldn’t contain herself as she took the pastor’s hand after the service. “Pastor,” she said, “why do you keep preaching about love? What about sin? What about right living?”

The pastor answered with a smile, “When I believe the congregation fully understands this topic, I’ll move on to something else.”

I feel that way sometimes, as new versions of old themes keep popping up across the media landscape.

Umair HaqueUmair Haque, the brilliant London Business School economist that I’ve written about so many times, writes today of new investment in Twitter, the cool text-messaging application without a business model. Why would anybody sink real dollars in a business that has no business?

This is where the old theme comes in. I’ll state it, and let Umair expand. The disruption of Media 2.0 is, at core, a disruption of mass marketing. Hence, “new media” applications built on a mass marketing foundation are not part of the disruption.

This approach – an almost disturbing lack of interest in the business plan/model/etc – is something all of today’s great media investors have.

…When an industry requires total economic reinvention – new assets, capabilities, revenue streams, market space, the whole nine yards – it’s futile to stick to the sterile nostrums of a printed “business plan”.

This should be intuitive. Total economic reinvention implies almost perfect uncertainty. Under conditions of perfect uncertainty, it’s a suckers bet to put faith in rigid plans.

Now, this isn’t to say that you should descend into irrational exuberance, and forget about value creation and value capture altogether.

Rather, what counts is the ability to tap (better yet, create) many different kinds of revenue streams, offsetting the systematic risk of investing in the space in the first place.

…There’s little strategic point in focusing no how, for example, to grow a next-gen media business to $50m in revenues or how much $$$ ad nets make if it’s the larger economics of the industry which are in an almost total state of flux, because the new value chain hasn’t yet emerged.

Put another way, too often, these kinds of elaborate analyses built on fixed assumption have a very steep opportunity cost in industries where resources, competencies, revenues streams, business models, etc are exactly what are undergoing seismic shifts – they blind us with illusions that fixed cells in spreadsheets are strategy.

Spreadsheets aren’t strategy.

Rather, next-gen investors are better off understanding why and how value creation and value capture will shift over the next 2-5 years – and then invest in plays which can dominate those shifts.

Numbers are important – sure. But it’s understanding the deeper economic logic which really counts.

“Spreadsheets aren’t strategy.” Brilliant!

This is precisely why I tell people that you can’t left-brain your way into right-brain thinking and why I have so little faith in the conclusions of the NewspaperNext project. “Innovative” solutions, it concludes, begin with the spreadsheet about which Umair speaks, and that’s as problematic for media companies trying to reinvent themselves as it is for investors.

This is why Simulpath™ is so crucial to understand and why we must throw off the burden of tying everything we do today to a revenue stream. It’s not blind faith; it’s a deep understanding that the revenue runway for a lot of this has to be a long one, which is why Media 2.0 is best viewed as an investment.

And for me, this is a vital aspect of my work, because my passion lies with positioning local media companies for tomorrow. If we can bring ourselves to get in sync with the disruption, we’ll be far ahead of our local competitors, but that means thinking like motivated and informed new media investors.

Facebook Ads

A lot of people ask me about how you do ads in feeds, and I think Facebook does it well. The bullhorn icon (nice metaphor) announces it’s an ad, and I’m free to skip it if I want. The creative challenge is to get my attention up front, which TBS does rather nicely here.

Facebook Ad

Borrell: Cable positioned to win big in online video advertising

New eMarketer data reported by Online Media Daily reveals strong growth for online video advertising, including a whopping 89% increase this year. The report projects growth rates near or above 40% through 2011 and notes that next year should provide the watershed moment for online video, when over half of all web users in this country will be watching it.

This shouldn’t surprise anybody watching this space, but the report’s author, David Hallermam, has two concerns that make future estimates problematic:

One concern, he said, is uncertainty about what the audience will accept in terms of video ad content, placement and length. The other concern is the difficulty in gathering enough video ad inventory, with questions about ad placement and how to monetize the billions of user-generated video streams.

“Video ad inventory” is one of those mass marketing statements that presupposes static systems. That may be a concern to traditional marketers, but it misses one of the key points about online video: it doesn’t have to be “attached” to somebody else’s content (e.g. “The Smart Show” by Holiday Inn Express). Video classifieds are going to explode, and all of this bodes well for local media companies.

Gordon BorrellAnd nobody knows local media online revenue like Gordon Borrell of Borrell Associates. Borrell agrees with the eMarketer numbers, but he tells me that they will be boosting their own projections later this year.

The eMarketer consensus estimates are pretty much on target with what we’re seeing at the ground level for online video advertising — which is only to say that everybody tracking the actual numbers are coming up with similar estimates. However, our numbers — part of the eMarketer estimates — are going to be adjusted upward significantly this fall. We’re seeing a great deal of growth at the local level as smaller advertisers buy online video commercials, but we’re seeing some incredible growth at the national level that no one seems to be tracking accurately at the moment. Automotive, packaged goods, telecommunications and job-recruitment are the key categories. Real estate has begun to explode as the agents try to market themselves and find snazzier ways to move higher-priced homes.

There was a time when many media company executives scoffed at the Borrell projections, but Gordon’s wisdom is being validated every day. One thing he’s always pointed me to has been the online ad significance of local cable franchises, and he says they are the ones to watch as online video advertising grows.

The sleeper in all of this is local cable operators. Their lower-priced TV commercials have sold nicely, but the “on demand” aspect of online video seems to be capturing advertisers’ attention more. Cable operators already have the systems in place to reach the type of advertiser eager to buy video. They know how to produce the video at low cost. The Internet has given them an extra weapon in their arsenal: Not only will they air the commercial spots, but they’ll also put it online where people can view it 24 hours a day. And they own three very powerful marketing vehicles: their own cable avails, a gateway page for their broadband subscribers, and the envelope that contains the monthly bill. In short, local cable operators are likely to seize the online video advertising opportunity faster and more successfully than their broadcast competitors in the market.

As I’ve said before, it’s hard to convince broadcast sales people to accept commission on lower-priced sales when they view their time as better spent chasing big ticket advertisers. I’m not sure that will continue to be a valid argument for long, but it does underscore the need for local media companies to dedicate sales people to work the web exclusively.

I agree with Gordon that the local cable operators are ideally positioned to score big hits in an online, on-demand world. The only question is are they smart enough to see that?