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February 28, 2006
The Divide Between Geeks and My Grandmother
Two months ago, I wrote a post about leaping from "digerati-facing services" to "consumer-facing services" - highlighting a concern that many of the web services currently emerging are focused on a techie audience without the necessary components to generate mainstream consumer usage.
There’s an interesting conversation going on at Umair Haque’s Bubblegeneration blog. Along the same lines, he says,
”Web 2.0 cannot live up to its (enormous) potential to create value that's structurally disruptive until and unless technologists understand consumer dynamics. Web 2.0 can't live up to its game-changing potential until and unless the geeks step outside and think outside their own box of geekery.”
The whole “Great Divide” post is worth reading, as well as the comments. A very insightful one from Fraser Kelton of Disruptive Thoughts blog writes about three stages of development – innovation, commercialization, and scaling – suggesting that “the 'geek' crowd needs to pay more attention” to the commercial stage:
“Commercialization is about a number of things. It's about validating assumptions made in stage 1 and taking the 'geek' out as much as possible in exchange for 'consumer'. It's about finding an initial foothold in the larger market (other than the larger web 2.0 crowd). It's about finding the right product benefits to focus on for the launch and lowering focus on features that don't add much benefit to a consumer (web 2.0 is very guilty of this).”
I take issue with Umair spreading the blame for this disconnect (from the “geeks” to industry figures to VCs), but agree that the importance of marketing and branding has been overlooked (regardless of who’s at “fault”). Both strategic marketing issues (product positioning & communication) and tactical implementations (landing pages & promotions) matter a great deal. In this space, the more successful endeavors (with and without VCs) will be the ones that realize this fact and capitalize on it.
February 27, 2006
Web Innovators Group - New Site and Next Event Mar 20th
Given the success of our previous events, I am excited to announce that we’ve relaunched the Web Innovators Group (WebInno) website and set the details for our next gathering.
The new website is located at http://webinnovatorsgroup.com. I’d highly recommend checking it out. (A special thanks goes to Ryan Sarver of Qiio for his help in designing and creating the site). With an updated look & feel, as well as a dedicated blog and wiki, we now have a richer set of tools for communicating about the group and our events. Rather than continually announce upcoming meetings here on the Genuine VC blog, future WebInno event information will be found on the group’s blog. Both there and on the home page, you can subscribe to updates either via e-mail or RSS feeds.
Secondly, we’ve set the details for our upcoming meeting. In order to accommodate the larger demand, as previous venues were leaving us space-constrained, we’ve moved locations to a conference room at Hotel @ MIT. The next event details:
Monday March 20th at 6:30pm
Taylor Room, Hotel @ MIT, Kendall Square
The event is open to all who are interested in web and mobile innovation. If you are planning to join us, I would appreciate it if you would sign our RSVP wiki page so we can give an accurate assessment of attendance.
As with previous events, the gathering will start with three company demonstrations at 7pm, followed by a few hours of schmoozing. We are currently seeking 1-3 self-funded/early-stage stage start-ups to fill these presentation slots. If you are interested, please e-mail me with a quick overview.
Looking forward to seeing everyone at the upcoming meeting in a few weeks.
February 22, 2006
What is Podcasting? More Importantly, What Will it Be?
With the increased interest and usage of podcasts, I am left scratching my head a bit what the term itself actually means. Admittedly, I have been a little skeptical about the potential of this medium, but it is hard to refute some of the successes we’ve seen, like Ricky Gervais’s show generating 2.9 million downloads since early December.
Perhaps part of my issue has been what I consider to be a podcast. As I was first hearing the term, I came to think of a podcast as a user-generated audio program downloaded to my iPod (read: amateur talk-radio for the iPod). But now my perspective has expanded towards the Oxford English dictionary’s 2005 Word of the Year definition, “a digital recording of a radio broadcast or similar programme, made available on the Internet for downloading to a personal audio player.”
As usual, Wikipedia has a very thoughtful definition of podcasting, “the distribution of audio or video files, such as radio programs or music videos, over the internet using either RSS or Atom syndication for listening on mobile devices and personal computers.” It’s interesting to note three differences here. First, the notion that podcasts can be include a filetype other than audio. The second that a key component is the syndication of the content. And finally, the fact that podcasts can be received on any device, PCs or mobile or otherwise. The Wikipedia article further goes on to support these points, “Subscription feed of automatically delivered new content is what distinguishes a podcast from a simple download or real-time streaming (see below)… In general, these files contain audio or video, but also could be images, text, PDF, or any file type.” It’s also interesting to note that some alternative nomenclatures have been assigned for file types other than audio (vodcast, vidcasts, videocasts) or devices other than personal audio players (mobilecast, palmcast).
In some respects, it doesn’t matter what we call syndicated rich-media content to devices – it is what it is. On the other hand, it makes sense for there to be a general consensus around the term podcast, so everyone is speaking the same language. And I believe it’s just as important for the digerati to have the same common notion of it as my grandmother does, as this clarification and consensus will help further promote this new medium, whatever you call it.
February 16, 2006
The Fonz and the AmazonPod
This morning’s Wall Street Journal included an article (paidContent.org summary) about Amazon’s forthcoming plans for its online music service, which will include “Amazon-branded portable music players, designed and built for the retailer, and a subscription service that would deeply discount and preload those devices with songs.”
I will welcome a music service from Amazon, as I am currently frustrated with Apple’s iTunes and its stringent DRM and proprietary format. Because of that issue and the accuracy of Amazon’s personalized recommendations, I currently purchase all of my music in CD format from the e-retailer. It will be interesting see how Amazon’s offering treats the DRM issues and subscription pricing.
One paragraph in the article opens, “This would be the first time Amazon tries to sell its own branded player, so it’s unclear how consumer would react.” This statement is putting it mildly. While Warner Music Chairman Edgar Bronfman Jr. said subscriptions services’ [like those offered by Napster and Realnetworks] “growth and popularity has been impacted by the lack of an outstanding device,” I think there’s a larger issue at play here. As many have suggested previously, a significant portion of the success of the iPod is due to its “coolness factor.” The device has become a status symbol, a fashion accessory, and a self-expression vehicle.
While Amazon may be able to create a superior or even equivalent device with the aid of Samsung, I question if the Amazon brand can carry the same caché that Apple and its iPod does. If the device and corresponding offerings are superior, the feature-conscious users should switch, but I am not so sure that the fashion-conscious will.
The Fonz used to start the music with a pound of his fist on the jukebox – I wonder if he would use an iPod or “AmazonPod” today.
Posted by at 5:40 PM | Permalink | Comments (2) | TrackBacks (0)February 13, 2006
It's Not Just Fun and Games
Chris Gilmer over at the Search Engine Marketing Weblog wrote about Blingo over the weekend. The year-old search engine delivers Google results, but then also randomly picks users as winners – so every time you search you have a chance to win. Chris writes, “I’m still not convinced whether I like this or not. It’s cool that they offer prizes for searching, but is it really necessary?”
While I was at About.com, my team ran a number of promotions both for our online and e-mail newsletter properties, as well as for those within greater Primedia’s. And the basic lesson which we learned is that online contests and promotions work. Consumers will respond to online contests, if architected correctly, in a very strong and meaningful way.
However, I would make one distinction with the implementation of contests/giveaways, which is between those for attracting and those for sustaining users. My experience is that promotions of this kind are better at the former. With a perceived value in participating in contests, people are more likely to try a new service that they haven’t in the past. They provide an extra nudge to push through any friction points inhibiting users from being attracted to and taking the desired action. In fact, in the race to acquire audience and users for Web 2.0 offerings, I think that contests are an underutilized tool which would help these offerings leap from “digerati-facing” to truly “consumer-facing” services.
On the other side, using contests to sustain usage is more difficult. Over time, as users fail to win prizes, the perceived value of a promotion wanes, even though the economic expected value of the offer remains constant.
Consequently, the challenge for Blingo (as I see it) isn’t necessarily attracting users (which they’ve accomplished successfully), but rather maintaining consistent usage over the long term when their offering is commoditized. Perhaps other emerging web services which do have a differentiated offering, but are struggling for a true consumer audience, could employ some of these tactics to broaden their exposure.
February 9, 2006
Vertical Social Networks
In the past couple weeks, we’ve seen an additional couple of fundings in social networking. While I think that there is a lot of opportunity (i.e. ripe ad dollars for the teen/music demographic) that many of these hot new start-ups are chasing, the space appears to be rife with competition.
As David Hornik described in his December post, Social Networks 3.0, we are entering another stage in the progression of networks. He outlines the transformation that “social networks are becoming an important ingredient of all sorts of consumer experience,” is due to the fact that “[it’s] clear that the building and management of a social network was not, in and of itself, a compelling consumer experience.” I completely agree that the new social sites provide “valuable consumer experiences that are enhanced by the underpinnings of the network,” but I think that this difference can be described in another way as well.
“Social Networks 2.0,” as David calls them (Friendster, Tribe, Orkut, LinkedIn, Spoke), were centrally about connecting people. The sole reason d’etre to be on Friendster was to have and demonstrate a friend network. In this this newest generation of social networking sites, people are connecting about something. MySpace and many of the other teen sites is about “me” and music, in The Facebook they’re connecting over the common bond of school experiences, etc. People want to share their experiences about subject areas in which they are passionate, and these latest networks give youth a vehicle to do that.
However, I believe that there are other areas which people are passionate about which would drive them to connect. And this desire is going to drive the creation and adoption of other vertical social networks. Just like we are seeing a proliferation of vertical search sites based on the unique needs and abilities to find information with a specific data type, I think we are going to see a rise in the number of successful (and potentially venture backed?) social networks covering many subject areas where people are very passionate about a subject. I’ve mentioned Ted Rheingold’s Dogster and Catster as an example in the past, but was only recently made aware of Leah Kramer’s Boston-based Craftster.org (profitable, 50K members and growing). It looks like the recipe is: pick your passionate subject, fill in your topic here: ----ster, and stir. Long tail, anyone?
One problem here is that the value of a network increases at an exponential rate based on the number of nodes in the network. So the more niche and limited audience a given subject area, the less able the network is able to take advantage of this exponential effect. But I’ve also argued that in the long run, the value of the network is not only determined by the number of nodes in it, but in the ability for the network to monetize those nodes. The question then is that if there’s a greater ability to monetize niche subject areas than more general ones because of the passion and interest-level involved in some of them. The answer is probably that it varies from vertical to vertical, subject to subject.
Another additional difficulty here is identifying a “social network” when more and more online consumer sites will contain social elements. So while it’s social networks moving vertical or vertical content sites moving social, both trends are headed towards the same place. And finally, as the number of social networks and connection-services grows, the likelihood of achieving the necessary critical mass for each one diminishes. How many services is the average consumer going to want to use to connect?
All that being said, I am anticipating a verticalization of social networks trend in the coming year or two outside the teen/music space, and potentially a few with the right combination of network size and monetization capability to really break out of the pack.
February 6, 2006
"Paying" For Video Content - Let Me Count The Ways
Ben Grossman summed it up well last month writing, “Last year, the TV industry discovered [sic] a variety of new ways to deliver their shows - on iPods, on video phones, even online. This year, they vow to figure out how to make money off of them.”
In this context, it’s interesting to note, like this Media Daily News article did, that “In the flurry of VOD deals that have been announced by major media companies, only one deal has been structured in which consumers could download with no fee.” The high-profile initiatives, like those with NBC and iTunes, have all been pay-per-unit pricing. But these endeavors haven’t really been significant money-makers to date, with “NBC U [saying] that it will only generate about $10 million from iTunes sales in 2006—or the rough equivalent of ad revenues for one typical Thursday night on NBC.”
These results, along with surveys reporting that “consumers prefer ads to VOD fees” have some saying that the right way to offer downloadable digital video content is through an ad-supported model.
Kenneth Musante writes, “One of the exciting things about the rise in broadband use and the decline of television is the potential for free video entertainment online. Wait… let me rephrase… free ad-supported video entertainment online. Premium commercial-free video content is fine too, but a majority of people aren’t going to want to pay to watch video.”
I agree that the ad-supported video model is currently underrepresented and carries huge potential. However, in the medium- and long-term, I believe that we’ll see an array of sustainable digital video pricing models emerge. In the same vein as analog television today, we have ad-supported pricing (broadcast), ad-supported plus subscription (basic cable), subscription (premium cable), pay-per-use (pay-per-view and DVD). The same models break out for other media as well, like print (which has free pubs, periodicals, exclusive newsletters, books, respectively) and music (radio, music magazines, CDs, etc.). What’s interesting to note is that the digital video, unlike modern media radio of and analog television, started with pay-per-use, as opposed to an ad-supported model. (Counter-argument: if you look back, the “original medium” was pay-per pricing - Guttenberg bible with ads, anyone?).
As the field matures, we’ll see a mix of pricing which will discriminate among customers’ tastes for immediacy, location, viewing screen size, and whole number of factors. Ad-supported will likely emerge as the predominant driver of revenue, but the mix among the pricing models will change over time as technology and tastes change evolve.
Overall, I agree with the fundamental premise of the importance of ad-supported video content and with Martino Mingione, who writes, “One of my core business beliefs is that there are opportunities in connecting advertisers to non-linear, video on demand streams. I say it because people accept advertising as a necessary factor in keeping television free and there is a lot of money spent today on linear television programs.” However, I believe that we’ll see an emergence of a wide variety of pricing schemes emerge (paid and non-paid) that match consumers desires to the content.
February 2, 2006
Super Bowl, Super Digital Media, and the Super Steelers
Rafat Ali of paidcontent.org lists the multitude of platforms on which Super Bowl advertisements will be viewable following the game, including mobile, digital cable, and on-demand. Plus, MSN is going to stream them and Yahoo archive them online, while Heavy.com already offers the (very funny) “banned” ads. As this USA Today article states, “Super Bowl ads will be anywhere you want them to be.”
This treatment is a great example of the potential of how widely dispersed digital microchunked content can spread if producers are willing to untether it from restrictions to time-, place-, and platform-shifting. Of course, the content producers in this case are the advertisers (a great example of advertorial content), and perhaps this case of Super Bowl ads is unique. But I am left thinking that there are some lessons which could be gleaned here.
While the above is notable, the most interesting thing (in the context of “digital change”) I’ve found in the build-up to this weekend’s game is the number of microchunked video clips people have forwarded to me via e-mail from my hometown of Pittsburgh. Whether it’s the newest version of the classic Here We Go song on YouTube or a local KDKA broadcast of the rally today in downtown Pittsburgh, these clips have been spreading like wildfire among Pittsburghers. It’s amazing to see uncontained digital video content spread.
I find myself agreeing with a lot of the things that Fred Wilson has been writing on the subject of rich-media content recently, including a nice soundbite this week, “Bits are bits. They are going to get widely distributed... That’s how this medium works.”
I am looking forward to watching the ads again, game highlights, and hopefully Pittsburgh receiving the Vince Lombardi trophy - when I want, where I want, and how I want.
Go Steelers.
Posted by at 2:16 PM | Permalink | Comments (1) | TrackBacks (0)February 1, 2006
Musing on Social Advertising
Sometimes I enjoy writing about ideas that aren’t fully thought through (like the post Musing on Three Not-So-Fully-Baked Ideas from last summer) – these are often the posts in which I receive some of the most interesting reader feedback (both in the comments and e-mails). I’ve written in the past about the notion of social commerce, content which doubles as product advertising shared/recommended by others. But what about the more general notion of “social advertising?”
Yahoo and a few start-ups are playing a hand at social search, but I haven’t seen much talk about the notion of social advertising. I am not referring to the notion of marketing with a goal towards positive societal change, but rather the concept that relevant online advertising could be potentially delivered to consumers based on information about which ads were well received by those in their social network? For example, if I click on an ad about, say a specific car, it’s likely that those who I know are also in a demo/psycho-graphic would also be interested in the same advertising content. In other words, would a MySpace or a Yahoo360 benefit from displaying ads also based on relevant data known about the user’s connections in conjunction with the other methodologies available? I don’t think that this concept is limited to social networks per se, but rather any content site which collects and contains social connection data. Perhaps a full implementation of this type of ad-serving is a few years off, but the idea of influencing advertising content based on the knowledge of a user’s peer-set isn’t necessarily a distant dream. Thoughts?