Wednesday, September 10, 2008

IN THIS ISSUE:

NBC DOES ABOUT-FACE, RETURNS SHOWS TO iTUNES
WIRE SERVICES, CHAOS, AND WHERE IT’S ALL HEADED
WHY THE MICROSOFT SEINFELD-GATES AD DOESN’T WORK
WHAT’S THIS? FORMER NEWS GUY NOW RUNS AUTO DEALER’S “MEDIA COMPANY
ABOUT FACE! METALLICA SUDDENLY COOL WITH MUSIC LEAKED ONLINE

NBC DOES ABOUT-FACE, RETURNS SHOWS TO iTUNES (Steve)
NBC on iTunesOne year ago, NBC decided it didn’t like the way Apple did business with its iTunes Store and pulled its content “off the shelf.” According to an Apple press release at the time, NBC wanted to be able to charge up to $4.99 per episode for its most popular shows. Apple declined, and NBC took its shows (and all NBCU-owned network shows) and went home. Or, at least, it went to Hulu (where it could charge nothing) and to Amazon Unbox, a complicated system that lets you order an NBC show through Amazon to download to your TiVo and watch on your TV.

I like NBC shows, I have a TiVo and I didn’t do this. In fact, I know of nobody who did this.

Now, it seems, NBCU has come to its corporate senses. On Tuesday, at a Steve Jobs worship-a-thon media event in San Francisco, Apple rolled out its usual list of new products and announcements. What is of interest to us is that NBC is rejoining the iTunes fold. A tacit admission that NBC needs this distribution channel? I certainly think so.

Here’s what my partner Terry Heaton wrote in September 2007, when NBC pulled out of the iTunes agreement and took up house with Amazon:

“I’m skeptical of this deal for several reasons. One, it’s anti-consumer at a time when consumers are in control. Two, it runs from the reality that is distributed content. We need “our” content to be ubiquitous, because empowered consumers want “their” content wherever they wander. Three, it’s an incredible gamble on the part of the last-place network. Does NBCU really think that removing NBC programming from iTunes won’t hurt their efforts to build a broadcast audience? Finally, Amazon Unbox requires downloading a proprietary player, which isn’t compatible with iPods. Absent a deal with iTunes, this means NBC programming won’t be viewable on the most popular portable viewing devices out there.”

I hate to say “I told you so.” But I don’t mind saying “Terry told you so.”

NBC does get its way — slightly — in that it can charge a sliding scale for its shows. But it’s not the scale the way NBC wanted before it stormed off. NBC still charges $1.99 for regular programming — the same as the other guys. It can discount archival programming for 99 cents. That’s a good idea, but hardly something to cause a split from a business partner. (“We want half, or we’re walking!”)

And there’s this: NBC will charge $2.99 to download a program in HDTV. Big mistake. Huge mistake. Watch how quickly this changes.

There are so many reasons why charging extra for an HD file is wrong. Let’s begin with the fact that downloaders watch video on their computers and iPods. Try convincing them to part with an extra buck for “higher resolution” on a small screen.

That leaves the Apple TV audience, which is a few million people. Not a bad base — but peanuts compared to the tens of millions of video watchers out there. Apple already tried charging extra for higher-end encoded audio files. They experimented with $1.29 music files that were better quality than the 99 cent files. The experiment is over. Higher quality music files are for sale on iTunes for 99 cents. All they were doing was reminding people they were selling them bad quality audio.

What would have been really bold would have been for NBC to go the other way: charge less for HDTV files. Get people excited about HDTV. Right now we’re in a transition. We want people to purchase HDTVs. We want them to know about hi-def programming. We want them to watch us. Lead the way as the place for HD, online or on TV. Don’t penalize people who want HD — reward them!

It’s good to see NBC back where the audience can find it. It can only help the locals when the programs associated with their brands are easily accessed and purchased. It certainly helps the audience when companies realize we are in the era of distributed content and that the consumers are in charge.   Link>

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WIRE SERVICES, CHAOS, AND WHERE IT’S ALL HEADED (Terry)
As I told Regent Ducas’s class at the University of Texas Arlington this week, it’s very hard to judge history when you’re right in the middle of it. But if we’re to prepare ourselves for what’s around the corner, we need to be making such judgments today and not waiting until it’s already in the textbooks.

Such is the case, I think, with the way the news industry distributes information for its own consumption and subsequent distribution to others. Anybody who’s reading this already knows that technology is rendering old ways of doing things irrelevant every day, and nowhere is this truer than in the world of journalism. There are three events in the news this week that, when taken together, project an image of tomorrow that we ought to consider.

Bloomberg NewsThe first is the strange case of how the business wire service Bloomberg News erroneously reported that United Airlines had again filed for bankruptcy, sending its stock into the toilet (down 75%). It’s a terribly serious matter that could’ve been avoided, had somebody at Bloomberg not made an assumption about Google News. Google’s aggregator sniffed out an old story about United, as explained in the Google Blog by Josh Cohen:

On Saturday, September 6th at 10:36PM Pacific, the Google crawler discovered a new link on the Florida Sun-Sentinel website in a section of the most viewed stories labeled “Popular Stories: Business.” The link appeared in that section sometime after Googlebot’s last crawl at 10:17PM; because the crawler saw this new link appear, it followed it to an article titled “UAL Files for Bankruptcy.”

In its “Popular Stories” widget, the Sun Sentinel doesn’t date stamp the stories, so Google’s robot just assumed it was current. On a slow news day, it’s possible that just one person reading an old, archived story can make the “popular stories” column. That Google ran it was damaging, but nothing compared to what happened when Bloomberg picked it up and ran with it. As I noted in my blog, Google is not the AP, and Bloomberg had a duty to vet the story before running it.

Associated PressThe story is a stunning reminder of the downside of a connected world, and it’s why we need to pay attention to the second of the three stories: continued talk about media companies cancelling their AP contracts.

Tim McGuire of the Cronkite School of Journalism at Arizona State wrote that history suggests these cancellations are merely negotiation tactics and not representative of anything bigger. I couldn’t disagree more. What McGuire fails to consider is that technology makes options available to media companies today that history never had. It’s what’s allowing Ohio papers to create their own network to share stories. Add to that the reality that newspapers are in dire need of cost reduction, and the handwriting on the wall is pretty clear.

But if the AP is damaged, won’t we be running into more Bloomberg moments? Good question, but again, the responsibility for what goes in one’s own paper (or whatever) is with the publisher, not a distant provider.

PoliticoThe third story is news that the online Washington D.C. news service Politico is making itself available to media companies anywhere based on a revenue share. Revenue shares are common in the Web world, because the amount of money that changes hands is based entirely on performance, so both sides must make it happen. Politico loses nothing by making its content available. The media companies gain content from the nation’s capital, and the only cost is a share of revenue they make based on that content. The AP could never live with such a concept.

On the announcement, Lost Remote’s Cory Bergman made an astute observation:

Hmmm, so drop AP, form a regional exchange and use Politico for DC coverage? Interesting.

Interesting, indeed, and also highly prescient.

So these three events combine to reveal major changes afoot in old systems of moving stories around in a connected world, and it doesn’t take a genius to see the general drift. The future challenge to media companies is to assume more responsibility in an aggregated, connected world, but that’s something we can control. It also reveals to me continued shaking of the foundation that is the AP, and that’s something that impacts everybody.

I’m reminded of that chilling 2004 statement from then FCC Chairman Michael Powell in a candid discussion on the campus of Stanford University:

“I have no problem if a big and venerable company no longer exists tomorrow, as long as that value is transferred somewhere else in the economy.”

Powell’s view is also the Web’s view, and one of the harsh realities of capitalism. We’re in the middle of historic changes in media and beyond, and we need to be paying attention like never before.   Link>

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WHY THE MICROSOFT SEINFELD-GATES AD DOESN’T WORK (Steve)
Bill Gates and Jerry SeinfeldIt’s cute enough. The new Microsoft ad featuring Bill Gates and Jerry Seinfeld is kinda funny and quirky. It got people talking, if briefly. And Microsoft doesn’t usually induce a mild chuckle, so I suppose it’s a success on that front.

But the new Microsoft ad campaign is a dud, and there is something we can learn from it.

First, watch the ad. It features Bill Gates shopping in a generic discount shoe store. Jerry Seinfled, strolling by in the mall, stops in to help him out. That’s pretty much it: two insanely rich guys acting like two normal guys. In between we’re asked to imagine one of the two wearing shoes in the shower, and Gates shakes his butt at the end. Sexy.

This is supposed to be Windows’s answer to the ridiculously successful “I’m a Mac/I’m a PCad campaign which launched in 2006, and it tells you everything you need to know about top down advertising versus bottom up advertising.

If you’re trying to convince people your computers are the lunchboxes of the ordinary people, having a multi-millionaire and a billionaire in their mid-50s may not be the best way to reach them.

The charm of the Mac ads is that they’re simple. Their message is that PCs are confusing and for old business folks, and Macs are easy and hip. For years now, this campaign has gone unchallenged. And this is the answer?

But charm alone is not why the Apple campaign is such a runaway hit. It’s a success because it’s viral. When the campaign came out, people passed it around. They created their own versions. There were International parodies. There were even anti-Mac parodies which would have been better responses to the Mac campaign than the Gates/Seinfeld ad.

How does this relate to local news? Easy. Local news is Microsoft. The Web is Mac.

Local news still has the big share of the pie. The web is eating it away.

The Web picks at local news. The Web younger and hipper.

The Web is fast and loves it when people share its ideas. The Web encourages people to mix, re-mix, re-remix and build upon its ideas. If you’re at the base of a concept, people still know it’s you. Local news tells you. The Web asks.

Microsoft took more than two years to come up with a response. Local news lags badly when it comes to responding to the changing ways people use the web. Look no further than the 3+ years it has taken (and counting) to get sites to allow people to embed their video.

And then, when local news, like Microsoft, tries to be like the hipsters, it just sounds like your parents trying to talk cool. “Are the young people still listening to the rock and roll?”

We can learn.

1. We have to act quickly. When local news is criticized, it seethes. I’ve seen it in newsrooms. One bad review or one angry anonymous blogger can send management into a tizzy. Get. Over. It. Keep your eye on your mission. Act quickly, respond to challenges and try new things. Don’t let the fear of the occasional critic get in the way. If you aren’t getting criticized, you aren’t doing it correctly.

2. Change the language of the conversation online. The language of TV news is not hip. You can’t make it hip. “Hey, dudes! How ’bout them murders!” TV news is targeted to a different audience than the Web. It has its own brand, and you’ve worked long and hard to establish that brand — as a TV brand. But online, you risk alienating the young audience that sees that brand as irrelevant. Develop new brands, get over your old brand, and build sites and concepts that will excite an entirely different audience.

Suppose for a moment you were tasked with starting an afternoon cooking show. Would you call it “Cooking With Barry” or “CBS3 News Cooking With Barry?”

You can’t force a campaign to work. You can’t force being hip. Online, however, you can try, try and try again. I’m willing to bet that Microsoft will spend a whole lot more money on this campaign before it moves on. You don’t have to do that. Be experimental. Don’t imitate: innovate.   Link>

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WHAT’S THIS? FORMER NEWS GUY NOW RUNS AUTO DEALER’S “MEDIA COMPANY (Terry)
Ben Boles has worked in television and TV news for 20 years, most of that in Huntsville, Alabama at WAAY-TV, where his wife, Erin Dacy, is still the main anchor. His most recent position was to run the station’s online efforts as Director of New Media. He’s now embarked on a new career, and his story is one of hope and opportunity but also a chilling message to broadcasters and other local media companies about a key reality of today’s online world.

That reality is something that Steve and I have been teaching here for a long time: everybody is a media company these days, and that includes the people formerly known as advertisers.

In March, we told you that Borrell Associates research revealed that local advertiser spending in the “Marketing and Promotions” category had jumped 130% in just a year. This means local advertisers are taking money they used to spend on traditional forms of advertising and using it to build their own platforms and ways of reaching people directly.

And that’s exactly what Ben is doing. “I have the best media job in Alabama,” he said. He hasn’t just jumped ship to another traditional media company; he’s now the Director of Digital Media for the Damson Auto Group in Huntsville, where he runs their online operation like the media company that it really is. “They were the smartest client I had when I worked with them at the TV station,” Ben told me via email. “As a broadcaster, I understood the significance of Automotive (40% of total revenue, for cryin’ out loud) and I also understood that at the end of the day, the dealership wanted to …just…sell…cars.”

And Ben is helping them sell those cars through a very smart and creative process that includes every conceivable tactic that any other kind of media company would use in reaching customers. He’s exploring social media, such as MySpace and Facebook. He’s creating his own ad agency/network, serving ads himself and running those ads wherever and however he wants. Instead of begging for money, he’s become the guy with the thick wallet.

On Monday, for example, he’s invited sales people from all of the local stations to lunch at a major restaurant. He calls it a “backwards media cattle call.” “Instead of bringing AE‑s to us and asking what THEY have for US, we are hosting them…to tell THEM what WE expect. Nobody knows what WE need better than US. So in order to get the best service from electronic and print AE‑s, we need to let THEM know what OUR expectations are. This includes serving our own ads, and holding partners accountable for analytics.

“Instead of sending them ads,” he explains, “I’m going to be sending them code.” By employing widgets instead of static or animated ads, the auto company will be able to alter the content of any ad at any time, and he plans to do all the ad-serving himself.

“Anyone with a website is a media company,” he wrote. “Great media companies even add artwork and video (I can hear TV stations gasping)! It is a new day where advertising IS content and content is defined by the user. We have tens of thousands of people consuming our content via the internet every month, and that number is growing. Our stores are definitely media companies.

“We serve the same geographic area that the television station does. We target car buyers just like TV stations target viewers. In effect, we are doing exactly the type of outreach that traditional media companies are doing. We realize folks are getting content from lots of sources, and we intend to be extremely visible on all of these platforms.”

Former television news director, Ben Boles

Ben says he expects he’s about to get a lot of attention from his new industry, and I suspect he’s right. But the idea of a car dealer functioning as a media company will only catch on with results, and Ben is quick to point out that the company that hired him is “the 900 pound gorilla” in Alabama. In just a couple of weeks, he’s already made a difference, building a call center that will track all leads and increasing online spending through local TV station websites, which boosted his site’s awareness through search engines. “We have pushed for more analytical data from our vendor partners and are starting to see results from that already,” he said. “We’ve installed some new controls and systems to better track messages and leads, and in general, our outreach to customers is our total focus. We plan on utilizing every advantage the internet affords us and that’s not lip service.”

The news business was Ben Boles’ business until he found a way to reinvent himself through the Web. This former news director is now in a whole new world, one with resources and a bottom line that’s climbing (Damson is the exception to the rule in the auto industry). And he’s taking knowledge acquired about the Web while doing his job at a TV station and applying it in a whole new way. He shared a lot of his plans with me, but I’ve promised to keep them quiet for awhile. You’ll have to trust me on this; it’s really inventive, and I have no doubt he’ll be successful.

And the message for traditional local media companies couldn’t be clearer. A role reversal has taken place, because we’re not the only people with an audience anymore. We can’t sit back and wait for the orders to come in. We’ve got to be as creative and aggressive as the people formerly known as advertisers are. And increasingly, if we want their money, we’re going to have to do things their way.

(DISCLOSURE: Ben was my assistant news director in Huntsville when I worked there in the mid-90s. He was also an AR&D client of mine while at WAAY-TV.)   Link>

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ABOUT FACE! METALLICA SUDDENLY COOL WITH MUSIC LEAKED ONLINE (Steve)
MetallicaThis may be slightly off topic, but when you’ve been writing about counter-intuitive thinking as long as Terry and I have, occasionally you stop and smile. And this is a big “stop and smile” story.

The rock band Metallica led the charge against music file sharing in 2003. They did this when they found that one song off their then-forthcoming album, “St. Anger,” was being shared on Napster. Metallica became the band that, essentially, put the heavy pressure on to get Napster shut down. In the process, they alienated fans who saw them as heavy-handed rich guys who were against the very people who made them big. The album became its lowest-selling ever in the U.S. Metallica had singled out its fans as crooks, and the fans spoke back.

Metallica has a new album out this week. “Death Magnetic” (charming, no?) is the band’s first album since 2003. A lot has changed in the music biz in the last five years. The online music genie is out of the bottle. And apparently, Metallica has found religion.

“Death Magnetic” has leaked online, complete with album artwork. (And I can’t help but wonder if I should be putting “leaked” in quotes…) So, the Kings of Anti-Piracy should be getting the cannons ready, right? Here’s Metallica drummer Lars Ulrich, interviewed on the radio this week:

“Listen, we’re ten days from release. I mean, from here, we’re golden. If this thing leaks all over the world today or tomorrow, happy days. Happy days. Ten days out and it hasn’t quote-unquote fallen off the truck yet? It’s 2008 and it’s part of how it is these days, so it’s fine. We’re happy.”

The band that helped shut down Napster for leaking one song off a forthcoming album in 2003 is now cool with its whole album being online for free in 2008.

Five years is a lifetime in rock. There’s no way of knowing if “Death Magnetic” will appeal to teens in 2008. I’ve only seen a couple of reviews, both of which seem to indicate it’s an improvement over “St. Anger.” But certainly, you have to think that taking the position that the audience isn’t your enemy won’t hurt album sales. I’m going out on a limb here and I’m going to say the new album will outsell the 2003 album. I’ll come back to this space and admit my error if I’m wrong.

What do we take from this? You’ve probably guessed. Any time you see one of your pieces on YouTube, any time someone is remixing one of your videos online or using it in a blog — be happy. They’re your audience and they’re talking about you. You may even wish to talk back — politely and with good humor, of course. Don’t invoke St. Anger, certainly.   Link>

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NOTE: STEVE AT ONA IN DC THIS WEEK
ONA '08Steve Safran will be at the Online News Association’s annual conference in Washington, DC this week. Steve is hosting a panel on “Going Mobile,” the mobile future (and present) needs for the media. The event is at the Capital Hilton, from Sept. 11 — 13th. “Going Mobile” is on Saturday the 13th from 2:30 — 3:30. Steve always loves meeting up with folks at these events, so if you’re going to be there or in the area, email him at ssafran@ar-d.com or give him a call at 508–479-9089.

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QUOTE OF THE WEEK
“Don’t be afraid of infinity. There’s a lot of it going around.” Seth Godin, in a reference to the chaos that is the Web.