Archives for September 2012

Why I’m leaving AR&D

AR&D logoMy contract to continue with AR&D isn’t being renewed, and I’ll be unemployed come January 1st. I’m retiring, and the decision is a mutual one for two reasons. One, my body just can’t do what it used to be able to do, which is what happens to most people when we hit a certain age, regardless of how well we take care of ourselves. Two, and this is by far the bigger reason, our clients simply aren’t buying what I’m selling. There are plenty of better qualified people out there to teach media companies how to get the most out of their brands in the network (Alisa Cromer is the best, but there are many others). Anything suggestive of the idea that the Web is a sustaining innovation are functioning in what I call “Media 1.0,” the sandbox of media brand extension.

For the last 14 years, my heart and mind have been elsewhere: creating concepts that will allow local media companies to move beyond that which their brands can sustain. I think we should be using those brands to move beyond the world of advertising, which is what I call Media 2.0. Here, the innovation of the Web is disruptive, not sustaining.  However, this been a really hard sell for the local broadcast industry. 2012, for example, will finish as a record profit year for broadcasters, who see no compelling reason to invest some of that money in the future. Broadcasters made so much money this year that it would overwhelm even a very rich man’s wallet. Millions upon millions upon millions of pure profit. Everybody knows that next year will be brutal, but they press on, because 2014’s election beckons like a reliable point of light on the horizon. The thinking goes that no matter what happens in 2013, all will be well in 2014, because that’s the way it has always been.

Election money is broadcasting’s classifieds, revenue that feels like you can count on it no matter what else happens. I mean, where else could candidates go to actually move the needle when it comes to controlling the political message? Right? TVB boss Steve Lanzano just published a piece declaring that “As Election Day nears, waving off TV would be a strategic mistake of epic proportions.” After election money comes automotive, the “steady-eddie” of broadcast revenue, the number one reliable revenue source for local broadcasters. Where else would auto dealers go to actually sell cars, no matter how the economy is doing? Right? And so it goes.

My dear friend and employer, Jerry Gumbert, has been a real trooper over the past six years, supporting me and my views completely. He’s even allowed me to verbally beat the crap out of the very industry that pays our salaries, and this has taken a level of courage and leadership that few executives even recognize, much less possess. I’m proud of my contributions to the vision that drives the company, and I’m proud of Jerry. The truth is, though, AR&D will do just fine without me.

Alice and the White RabbitThrough my research and writing many years ago, I came to the conclusion that following three broad trends was a lot more fruitful for predicting the future than chasing every “sure thing” rabbit that came along. If a new innovation advanced one of these trends, it was a lot more meaningful to me, perhaps because it helped keep me focused in a time of unrelenting change. Among the chaotic waves of turbulance that surround me in an advancing storm, I’ve learned to zone in on the horizon instead of the waves.

Here are the three big themes of which I speak:

  • The unbundling of content from infrastructures: In 2004, then FCC Chairman (and currently chief lobbyist for the cable industry) Michael Powell told students that “application separation” was “the most important paradigm shift in the history of communications” and that it would “change things forever.” It has already disrupted major industries like music, print media (esp magazines) and video, and it’s just a baby in terms of its growth and development. This means that any industry that makes its money off an infrastructure that surrounds content that people wish to consume has to face this disruptor sooner or later. It’s why, for example, I favor mobile apps done in HTML5 over those that are closed. Discovery is the key to content distribution downstream, and companies close the door at their own peril. A closed app can be the same thing as a paywall in terms of how it keeps content “inside.”
  • Real time flows and streams of knowledge and information: I interviewed Kevin Kelly a couple of years ago about the seminal “We Are The Web” piece that he wrote for Wired Magazine in 2004. I asked if he’d write anything different these many years later, and his response was that he’d include the shift to real time flows and streams of information. People who walk through their daily lives are apt to miss this subtle but sure shift in the way knowledge and information are being distributed. This seems a managable trend until trend number one is added to the mix, because technology wants and needs that which is detached from infrastructure in order to move this to the next level. For media companies, this speaks to a product unrelated to legacy distribution methods, yet most companies — even those who “get” real time — are reluctant to even flirt with unbundled concepts.
  • The Second Gutenberg moment: This theme is by far the biggest and most disruptive to any hierarchically-based institution, including the media. It’s what Jay Rosen has termed “The Great Horizontal” and J.D. Lasica called “The Personal Media Revolution.” I like the reference to Gutenberg, because history can “see” the scope and breadth of how the printing press changed the culture of Western Europe and led to, among other things, the French Revolution and the Industrial Revolution. We don’t have a clue about this Second Gutenberg moment, but the changes will be just as impactful. The power of knowledge at the fingertips of the masses and the power to disseminate knowledge to the masses have only begun to touch us. Those who stand as “special” in the old world — and I consider those with broadcast towers to be among them — simply aren’t as special anymore (or perhaps it’s better to say they “won’t be special”). It is within this theme that I find it difficult to support practices that serve only to advance this “specialness.”

If you’re unable to find sustainability within those three trends, then your future — regardless of your business proposition, media or otherwise — is suspect, and that’s the truth.

I don’t make portability its own theme, because mobile isn’t so much something new and separate as it is where the whole network is going. Computing, in other words, is going portable, and it can be dangerous to think that “mobile” is its own category. For a similar reason, I don’t view “second screen” or “social TV” as their own themes, because these are simply natural extensions of computing and fall more into what I would see as Media 1.0, or brand extension tactical applications.

I’ve worked very hard to stay on top of things on behalf of clients and beyond, but it has become a full-time job without a demand, so my departure from AR&D is both inevitable and understandable. I’m a little unclear as to exactly what I’m going to do downstream, but writers write, so I’m assuming I’ll continue writing. The Pomo Blog will live on.

The Web — and these three broad trends — are going to accelerate their disruptive nature, and sooner or later, television stations are going to have to respond.

But I’m reminded of the old admonition to not “confuse a clear view with a short distance.” Market timing is everything…

…and so it goes.

Gallup: Lack of trust in press hits record high

The folks at Gallup today released their annual survey about trust in the press, and it’s bad news. Six of ten Americans now say they have little or no trust in the news media. Here’s the chart published along with the release:

Gallup Trust in media displayed in annual increments since 2001

While this may be depressing, it pales in comparison to the chart I’ve been creating ever since Gallup switched to annual data in 2001. Prior to that date, they only asked the question every three years. I think the story is more precisely told by looking at the data in 3-year increments going back to 1973:

Gallup media trust data in 3-year increments

Either way, this is an incredibly dangerous sign for the press, the elements of which are fighting for their own survival. Here’s the way Gallup summarizes the problem:

On a broad level, Americans’ high level of distrust in the media poses a challenge to democracy and to creating a fully engaged citizenry. Media sources must clearly do more to earn the trust of Americans, the majority of whom see the media as biased one way or the other. At the same time, there is an opportunity for others outside the “mass media” to serve as information sources that Americans do trust.

The bottom line is this (and it’s been this way for many years): When your newsroom employees hit the door to do their jobs, they do so without the public trust. The only way we’re going to get any of that back is to be trustworthy.

Amanda Palmer: We Are The Media

Pop star Amanda F–king Palmer’s Kickstarter campaign has been well-chronicled elsewhere. She abandoned recording labels four years ago and released a new album via a highly successful kickstarter campaign ($1,192,793). The record hit Billboard today at #10. There is much to be learned from this, and I want to leave you with just one sign that Amanda presented in her “This is the future of music” video. Enjoy (and don’t forget it).

Amanda Palmer rightly notes that everybody is a media company today

Newspapers: Defending the indefensible

Newspapers and the postal service are in a tug-of-war over couponsWhat happens when one industry in disruption runs into a business conflict with another industry in disruption? Think of two huge carnivores fighting over a third helpless beast at the tar pits of LeBrea.

An editorial in the Madison Eagle newspaper of Bernardsville, NJ last week caught my attention, because it provides a new enemy for newspapers — the United States Postal Service (USPS) — and proposes the same tired refrain of a threat to freedom, if something isn’t done about it. Last month, the Postal RegulatoryCommission approved a three-year discount deal to boost use of the mail system by Valassis Communications, which sends mass coupon mailings to homes under its RedPlum brand. Newspapers opposed the deal, because it cuts into “their” value proposition on delivering coupons via the Sunday paper.

I get that this is yet another rug being pulled out from under the newspaper business, but I object to the industry’s defense, as spelled out beautifully in the Eagleeditorial:

To newspapers that count on advertising to pay its reporters and cover the news, this USPS plan is beyond alarming – it’s a threat to journalism and an informed public. Many think it will push some newspapers in America already struggling with a fragile economy and Internet competition over the edge.

If that or anything like it happens, communities across our country will suffer the most long-term harm.

…We don’t fear the Internet; we are using it, and it is vastly expanding our ability to inform the public up-to-the-minute.

But, two things to keep in mind: The most reliable and comprehensive news on the Internet is posted by journalists who work for print newspapers. Anything that weakens those newspapers will have a negative ripple effect on access to solid, accurate news on the Web.

And two: This is a media age not only in revolution, but in transition, to a future no one can fully describe. There are still many readers who aren’t satisfied that the news has really been reported and disseminated “until it’s in print.”

I’m especially struck anytime I read such hubris as: “The most reliable and comprehensive news on the Internet is posted by journalists who work for print newspapers.” Let’s ask the Pulitzer Prize winning Huffington Post about that.

Do newspapers truly believe stuff like this, that they are so important to freedom in the U.S. that their loss would be a threat to an informed public? In a capitalist economy, the powers that be simply say, “Cry me a river,” for only fit businesses are allowed to thrive. Fifteen years ago, newspapers had a virtual monopoly on classifieds, display advertising, and coupons. As each one has been stripped away, the industry has chosen not to compete with the disruptors, but instead do nothing except cry “foul” and offer a threat to freedom as the consequences of their doom.

As Lisa Williams famously wrote in 2008: “Journalism will survive the death of its institutions.” Do I really need to go into the ways it’s already happening?

Aereo’s gauntlet has been cast

Should broadcasters disrupt their own business model for the sake of building something that fits better with tomorrow and tomorrow’s technology?

An insightful article in yesterday’s New York Times makes the chilling point that the disruptive nature of Aereo, Barry Diller’s broadcast antenna farm for digital users, “might lead to a larger breakdown in the bundling of content over time.” In other words, it’s a threat for broadcasters to take seriously.

And they have. A judge’s refusal to grant an injunction against Aereo this summer is being appealed, and broadcasters are confident they can win on grounds that it’s a copyright violation. Aereo argues that by providing antennas and DVRs to subscribers, they’re doing nothing more than a consumer could do for him or herself.

There are other players in the space, including those blessed by the National Association of Broadcasters, but Aereo gets the publicity, because of the clever way it skirts the status quo.

The real conundrum for broadcasters is this: should we pursue this disruption for ourselves instead of playing defense, defense, defense? The answer is tougher than you think. The Web is not a sustaining innovation for broadcasters anymore than it was for newspapers, as noted by Gordon Borrell two years ago:

Is the Internet a sustaining technology to their radio, yellow pages, TV companies and newspapers, or is it a disruptive technology? The key to how companies think about that is the key to success or failure, and the key to why some companies in the local Internet space are succeeding so well, 10 years later.

As Borrell noted, you can tell what companies believe by how they’re behaving, and a Johnny-one-note of defense says much. There are many who would like to see the Web function as a giant cable TV system, but that position looks a lot like wishful thinking, regardless of how much money is poured into it. The Web is a 3-way communications medium, not one-way, and pulling broadcast signals into the mix doesn’t change that.

We’ve all heard the stories about how Blockbuster “should” have been Netflix, Kodak “should” have owned digital photography, and railroads “should” have been airlines. Here we have a case where the broadcast TV industry has an opportunity to cannibalize itself and create an advantage in the world of digital, unbundled TV, instead of sitting back and watching somebody else do it instead and at our expense.

The problem is that that would take thinking like the tech industry and not the media industry, and I’m afraid that’s just too much for us to handle right now. We have little energy for it, because managing threatened bottom lines is a full-time job all by itself.

Is this is a case of fighting to win the battle while losing the overall war? Only the cold reality of future history can answer that.

More fun with headlines

It’s time to play “Fun with Headlines.”

The Television Bureau of Advertising (TVB) held its “Forward” conference this week, so there have been a few headlines this week about the future and especially the future of TV. These form a fascinating, albeit confusing, narrative.

MediaDailyNews offers TVB President Defends TV ‘Value Proposition’.

To hear TVB President Steve Lanzano tell it, Henry Blodget isn’t any better at writing about the media than he was researching stocks for Wall Street. In his opening remarks kicking off the TVB’s Forward Conference Wednesday morning, Lanzano challenged a recent story by Blodget, the disgraced research analyst-turned blogger who declared that the TV industry was headed toward collapse.

Lanzano asserted that Blodget “didn’t let the facts get in the way of” his reporting.

“Our value proposition has never been better,” declared Lanzano, citing various third-party sources to make his case.

If you’re interested, here’s a link to the Blodget piece that Lanzano referenced. Here’s a link to my response.

Diana Marszalek at TVNewsCheck delivered Ryviker: Local broadcast TV is here to stay

Despite an unstable economy and increased competition, traditional television is apparently holding its own in getting its share of advertising dollars.

“The investment community thinks broadcast TV is going away, but we are not seeing that,” says Marci Ryvicker, who covers media for Wells Fargo Securities.

“You still have growth in the industry and that’s a really important concept.”

From Mobile Marketer, we were given Tablet users’ TV consumption is heavy across mobile, traditional outlets: report

Tablet users who stream television programming on their devices watch more regular TV, not less, according to a new report from The Diffusion Group.

Marketers are concerned that as consumers spend more time consuming TV content via tablets, this will cannibalize high-value prime-time TV viewership, thereby diluting the impact of their ads. However, the research suggests this should not be a concern, with 39 percent of 18-49 year olds reporting that their tablet viewing has lead to an increase in regular TV viewing.

TVNewsCheck also published its annual consensus spot TV forecast, and saw positive signs in the auto industry. 2013 Spot TV: Total Down 7.8%, Core Up 4%

According to broadcasters, reps and analysts surveyed by TVNewsCheck, the revenue driver at TV stations next year will be automotive, which our survey participants say will be up around 8%.

Finally, another headline from TVNewsCheck’s Diana Marszalek, Don’t Take The Auto Recovery For Granted

Despite pretty rosy predictions for car-related TV ad sales in 2013, an auto industry analyst says the business is not rebounding like it should.

“The truth is that auto sales … are actually worse than they would have been in a typical bad recession,” says Itay Michaeli, Citi Investment Research’s VP of U.S. autos.

So you see, it’s easy to grab a couple of headlines to make the case that everything’s fine (*waves fingers* “These are not the droids you’re looking for.”). I recommend caution, however. For one thing, Henry Blodget isn’t nearly as incompetent as the TVB would have you believe, and the auto industry is already adjusting marketing due to decreased sales.

Until next time…