Wednesday, June 11, 2008

IN THIS ISSUE:

THE iPHONE: NOW’S THE TIME TO START CREATING FOR IT
GOOGLE LURKS IN THE MOBILE HANDSET BACKGROUND, FOR NOW
RSS ADVERTISING SHOWS GROWTH, BUT TOUGH GOING IN THE U.S.
WHAT LOCAL MEDIA OUTLETS CAN LEARN FROM OBAMA vs CLINTON
MEDIA 2.0 101: PEOPLE COME BACK TO PLACES THAT SEND THEM AWAY

THE iPHONE: NOW’S THE TIME TO START CREATING FOR IT (Steve)
iPhoneLest you think you’re about to hear from Just Another iPhone Cheerleader, I’d like to point out what I wrote in January, 2007 about the then-newly announced iPhone:

Apple punishes early adopters. There’s just no way around it. I am as slavish a Machead as they come. I run out and buy their new gear.… But Apple has trained me now: if I buy the first version of a new product, I will regret it.… Apple has a deliberate strategy — make no future product announcements so you won’t cannibalize your own sales. That’s fine. But I’ve learned from that strategy, too. There will be a better iPhone soon enough. I can wait.

There’s no polite way to put this: I was right. In fact, I was really, really right. There was that whole “First it was $600, then as soon as the early adopters bought it, we knocked it down to $400” thing. Then they got rid of the 4 GB model nearly as soon as they introduced it, leaving the 8 GB model as the only choice standing. Along the way there was bill confusion and software updates that “bricked” the phones making them useless.

Do not buy the first generation of anything from Apple.

But buy the second generation, because you benefit from the craziness. Apple has introduced its 3G iPhone, and from what I can tell (without benefit of a review model) it is a significant improvement.

For one, the 16 GB version will cost $300. The 8 GB phone — a better version of the one that cost $600 last year — will cost $200 (AT&T is paying a $200 “subsidy” to Apple for each phone sold).

But upfront prices aren’t that important in the cellphone biz. What’s really key here is that the phone is now on the 3G network — and that will make for a much faster Web experience. Apple says the 3G Web speeds will be about three times faster than the current wireless connection.

Then there are all the applications. The 3G is going to be “location aware,” thanks to a combination of GPS and wireless tracking. That means it will be able to interact with programs to “tell” them where you are (should you so desire). This has major implications for news.

While you’re traveling around, the phone will be able to get local news, based upon your location. This isn’t just “in theory.” The AP’s Mobile News Network demonstrated its chops with a program that, according to TechCrunch, “…will retrieve local news based on your location. (The program) links every iPhone with the app to the AP so citizen journalists can send in photos taken on their iPhones of breaking events, as well as text commentary.”

“Location-aware” news and information. It’s a massive leap ahead. When you consider that most stations have little or no mobile strategy, seeing something like the Mobile News Network is humbling. Just when we thought having a small, mobile version of our website was enough, here comes a program that gives you news and information based upon where you’re standing. That’s micro-local. Imagine the advertising possibilities that will follow when you can deliver foot traffic that is, literally, outside the front door.

Local media outlets need to be producing content — original content — for the mobile world. There is no escaping this — the iPhone has now refined itself into a compelling offering. The 3G is much more friendly to enterprise applications, so businesses that used to be Blackberry- or Windows Mobile-only will be able to start buying iPhones. The iPhone is going to dominate. And where it doesn’t, other rich-environment mobile devices will be there right alongside.

Right now there are 1,700 Web applications available for the iPhone. 104 fall under the “news” category (although that includes RSS readers and some tangential offerings). What are you going to add to your offerings so people will be able to get your news wherever they stand?

I didn’t get that first-gen iPhone. But I’m going to jump in now. You should, too.   Link>

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GOOGLE LURKS IN THE MOBILE HANDSET BACKGROUND, FOR NOW (Terry)
While Mac addicts and others are justifiably fawning all over the 3G iPhone, let’s not forget that this space is just beginning to understand its potential and possibilities. If you’re not familiar with the Open Handset Alliance, I strongly recommend you acquaint yourselves with it, for it is open source and has the potential to disrupt every proprietary development that comes down the pike. Some believe it may actually get so far ahead of closed systems that it’ll eventually be the foundation for every portable media device. A quick look at its members will tell you why.

One of them is eBay, whose iPhone application is touted as one of the reasons to buy an iPhone. However, eBay plans to be ubiquitous, so anything built via the Open Handset Alliance will have the same thing. Another Android logomember is Google, whose “Android” operating system is the fundamental core of the alliance. That means we’ll have three big providers of an operating system for portable media: Microsoft (Windows Mobile), Apple (iPhone) and Google. Since Google’s is the only open source candidate, the best independent programmers are likely to favor it, and that would result in more consistent new applications than those that any closed system could create. So my vote is for Android. It’s one thing to take on Microsoft with great ads that depict Windows as a moronic clod, but it’s another thing altogether to take on Google.

The Android Guys, a blog of all things Android, write that the Open Handset Alliance is already ahead in many areas:

The hardware behind the iPhone didn’t change so much as the network they’re running on. Yesterday was more about AT&T’s network than Apple’s specs getting a bump. The design of the device is nearly identical to its earlier incarnation. There are still things which are missing that Android phones will likely be built with.

Off the top of my head I can think of:

  • Higher Resolution Cameras
  • Video Recording
  • Video Conferencing
  • Haptic feedback
  • Landscape Keyboard Layout
  • Cut & Paste
  • MMS (Picture Messaging)
  • Voice Dialing
  • Flash Support

Yes, some of these things are more “want” than “need” but once people see these features implemented elsewhere, they are going to be looking at their iPhones differently. “Aww, I want my phone to do that too.”

There’s no doubt that Apple is leading the way in portable media devices, and the company’s gifts for design and quality will always keep it in the forefront. But watch out for open source and the company that continues to dominate the Web, Google.

In the end, the iPhone may just turn out to be a bridge from here to tomorrow.   Link>

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RSS ADVERTISING SHOWS GROWTH, BUT TOUGH GOING IN THE U.S. (Terry)
RSS symbolAccording to a report in ClickZ, Gawker Media sequentially grew its revenue from feed-driven traffic by 300 percent in Q1 2008. Gawker Sales Chief Chris Batty told ClickZ that the company is now pulling an average CPM of $4 or $5 for its RSS inventory, “a little less than we get on the sites.”

RSS, which stands for “Really Simple Syndication” is a method whereby users can draw content from publishers without being on the publisher’s website. To view content via RSS, you need an RSS reader, such as Google Reader or any of hundreds of other applications. It’s the heart and soul of widgets and other place-based distribution models, but it’s just not a big deal in the U.S.

Thirty-four percent of global respondents to a March social media survey from Universal McCann said they had “ever” subscribed to an RSS feed. That represents a large jump from the previous year’s findings, when the agency found just 15 percent said they had subscribed to a feed. The data were gathered from 17,000 Internet users in 29 countries, aged 16 to 54.

However the U.S. ranks far down on the adoption list, with penetration of only 18.6 percent. That’s tiny compared to RSS-addicted nations like Russia (57 percent adoption), Brazil (55 percent) and China (54 percent). Additionally, of those who access feeds, only 25 percent of U.S. respondents said they do so daily. Another 35 percent said they access them weekly, while 16 percent said feed reading is a monthly endeavor.

The U.S. is down the list — and therefore is missing revenue opportunities — because media companies here don’t care for RSS and don’t promote it. Why? Because we want people to come to OUR sites, not consume our products elsewhere. Moreover, most RSS feeds from U.S. media companies are simply “teases” designed to bring people back to the site of origin, so that we can expose them to our display advertising. While this is entirely understandable from a mass marketing perspective, it is self-destructive in the long run, because people will consume media where they want to consume it. The smart media company will acknowledge this, and create ways to make money in that paradigm.

Top dog in the RSS advertising world used to be FeedBurner, until it was purchased by Google. Adsense is now the format, which leaves the experimentation up to companies like Pheedo. We like Pheedo and think they’re a good partner for media companies.

But there are two other ways to make money with RSS that most don’t see. One, you can insert ads as items in a feed. As long as they are marked as advertisements, I see no ethical problem in doing this. Ads delivered this way, show a much higher click-through rate than other forms of web advertising, so it’s a no-brainer for advertisers. We don’t do this, because we’re afraid of RSS and sending people away from our (artificial) grasp.

Two, you can create and sell ad feeds. One day, this will become the new sales insert that the newspaper industry has known for so long. Everybody needs to shop, so access to information about deals and the like is important, even for people who hate commercial interruptions in their lives. Ad feeds are user-friendly, and allow people to peruse them at their own convenience. Again, we don’t do this, because that would mean wholesale adaption of RSS as a delivery mechanism.

Pheedo CEO Bill Fritter told ClickZ that he’s definitely noticed an uptick in consumer use of RSS, and that has created a glut of RSS ad inventory.

Pheedo sells about 50 percent of the inventory it represents directly, and for the rest it pulls a feed from ad partners including MIVA, Ask.com, and Business.com.

“Some of our publishers are seeing their page views from RSS are nearing page views of Web sites,” he said. “The market’s finally there. The growth is finally there.”

I’m not so convinced that it’s “finally there,” but I think that when it is “there,” and local media companies are selling it and serving the ads along with a remnant partner such a Pheedo, we’ll be amazed at what kind of money we can make by letting people have what they want — the ability to view our content wherever they choose.   Link>

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WHAT LOCAL MEDIA OUTLETS CAN LEARN FROM OBAMA vs CLINTON (Steve)
Barack ObamaThere’s an excellent article in TIME this week that serves as a roundup for “Why Obama won and Hillary Clinton lost.” Inadvertently, it offers us many lessons for our own industry.

To oversimplify (and why not?), Obama was able to run a modern, decentralized, Web-centric, grassroots campaign, while Clinton depended on an old-fashioned, top-down hierarchy that overspent on the wrong things and that couldn’t respond quickly enough to changing dynamics.

In other words, Obama is the upstart who behaves like a startup.

In “How Obama Did It,” TIME reporter Karen Tumulty dissects the old school vs. new school differences that gave Obama the edge:

“Obama’s Chicago headquarters made technology its running mate from the start. That wasn’t just for fund raising: in state after state, the campaign turned over its voter lists — normally a closely guarded crown jewel — to volunteers, who used their own laptops and the unlimited night and weekend minutes of their cell-phone plans to contact every name and populate a political organization from the ground up.”

“A similar innovation came in fund raising. Normally, it is only the big donors who get quality time with a candidate. But Obama devoted far more of his schedule to small-dollar events. In Kentucky, the month after he announced his run for President, the first such effort quickly sold out all 3,200 tickets at $25 a head — and produced the beginning of a local organization.”

Get it? Obama used technology and the power of the masses to build his machine and feed it. Rather than rely on a few huge donors, he built his coffers $25 at a time. The Clinton campaign was busy “fighting the last war”:

“By contrast, the Clinton campaign, which started out with superior resources and the mantle of inevitability, was a top-down operation in which decision-making rested with a small coterie of longtime aides. Her state organizers often got mixed signals from the headquarters near Washington. Decisions from Hillaryland often came too late for her field organization to execute. Obama’s bottom-up philosophy also helps explain why he was able to sweep the organization-heavy caucus states which were so crucial to building up his insurmountable lead in pledged delegates.”

This is enormous. Clinton wrote off the caucuses. She went after the Large Numbers in the Big States. She didn’t see the power of Web fundraising the way the Obama campaign did. Decisions had to be made in a centralized office, and those decisions were then handed down to the field. That doesn’t work anymore. Things change too quickly.

You need to empower your people and let them make their own decisions. If you hire the right folks, they’ll make the right decisions. The Clinton team was not allowed to act. The Obama people were. Going after the Large Numbers — the big audience, the big ad buy — and ignoring the Long Tail (Obama’s $25 at a time approach) will end in defeat.

I don’t want to over explain the lesson here. You get it. The marketplace has changed. We have moved to, as Terry says, a postmodern world. Here, top-down is too slow. The competition is bottom-up, and it’s a hell of a lot faster. Slow and steady doesn’t win the race; quick and nimble does.   Link>

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MEDIA 2.0 101: PEOPLE COME BACK TO PLACES THAT SEND THEM AWAY (Terry)
the bird returns, because he gets fedThe title phrase was originated by web visionary Dave Winer several years ago. It’s a fundamental truth of the way the Web works and one of the reasons media companies struggle in the new world. If you follow this stuff long enough, you’ll eventually come to realize that nearly everything about the Web is counterintuitive to those trained in the rules and paradigms of mass marketing. By instinct and training, we strive to “drive traffic” to us, but the Web says, “No, send it away.”

How does this work, and how DO you make money when you send people away?

The problem begins with that question, for in sending people away, you’re actually guaranteeing their return, and that’s how you make money. Moreover, if you send them away with your own unbundled content, your marketing travels with them, but that’s another subject altogether (see RSS above).

So let’s examine this guarantee, because it’s a tough one to explain.

The Web is not a static, top-down medium but rather one that is alive with the people who make up its millions and millions of connections. The ability to jump from node to node on this vast network is its real beauty, and it disrupts entirely the idea of building mass as we know it. Moreover, the ease with which people can do all this jumping increases with experience online. There may have been a day when people needed elaborate navigation systems to find their way around, but every year that passes finds more and more users equipped to help themselves, thank you very much.

So the fundamental business notion may still be getting people into the tent and keeping them there, but the tactics to execute that strategy are entirely different than “driving” people there and deliberately making it hard for them to leave. It’s the law of attraction at work in a world where we only understand promotion and showing off. The bottom line is learning to play by the rules of empowered consumers instead of those that make us in control.

Let’s face it; we’re all control freaks, and we don’t want to let go.

And remember, the more experience people have, the more they bolt from corrals and walled gardens. This is why the original AOL was doomed, though few could see it at the time. It’s also one of the reasons why Google will always beat Yahoo, even though Yahoo practices sending people away, too. Yahoo is a content portal; Google is a search portal. You can find things “within” Yahoo, while Google always sends you away.

In fact, Google is constantly refining the process of sending people away, because they understand that the Web is much bigger than anything they could capture or create for themselves. AOL collapsed, because it tried to do just that. To Google, the Web itself is their platform anyway, so why not send people away?

Winer used an illustration years ago to help people understand his “send away” thinking:

Yahoo doubled their share of the online news market by adopting RSS and sending readers away as fast as they can. Who to? Their competitors, of course.

Where do you go to get the latest from CNN and MSNBC? Yahoo. Makes sense.

So if you’re a local media outlet and you’re trying to meet the information needs of users, do you pretend — yes, pretend — that you have a lock on all news and information, or do you accept that nobody has it all and link to others who provide other bits and pieces? Try to put yourself in the user’s mind. If a, b, c, d, and e are all providing news in my market, what’s the best way for me to get at it — visiting each site, or going to the place that provides me with access to all? If I’m media site “a,” and I link to b, c, d and e, am I not making it convenient for users to get the whole story? Why would they not come back to me then, even if I’m not the strongest media voice in the market?

But this is contrary to everything we believe about media — mass media, that is — and we’re afraid that if we send people away, they might fall in love with somebody else, and we’ll lose a viewer, reader or user. This kind of thinking makes sense to traditional media people, but it makes no sense, if you stop and think about how the Web is constructed and how it works to serve the best interests of consumers.

We can choose to fight this, if we wish, but there’s a lot more to be gained by playing with a different set of rules.   Link>

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QUOTE OF THE WEEK:
Just surviving takes constant innovation — new labels, products, store features — which in itself is risky. But then again, it’s less risky than standing still. Karen Hoguet, Macy’s chief financial officer

Wisdom for local media companies, too.