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November 28, 2006
The Royal Throne in the Entertainment Business – Don’t Kill the Messenger
Analyst Spencer Wang of Bear Stearns just published a very good overview of the dynamics of the entertainment industry which argues that “aggregation & context and not content are king.” There isn’t anything entirely ground-breaking in the report, but it’s a great overview synopsis of a lot of the trends occurring in the industry.
Nicholas Carr summaries the report well, “Wang argues that both ends of the value chain - content creation and content distribution - are increasingly characterized by oversupply and hence weak profitability. Value, as a result, is migrating to the center of the value chain, where content aggregation and branding take place. The profit, in other words, is in packaging.”
Wang makes a number of valid points, but it’s also worth highlighting an additional trend which wasn’t cited in the document. Although user-generated content is proliferating because new technology is affecting economics (of content creation, storage, and distribution), it is also flourishing because new technology allows the incorporation of connectivity into content itself. Previously, we saw two distinct forms of communication – point-to-point communication of individuals and produced content communication – which manifested in the telecommunications and entertainment industries, respectively. (This somewhat stale academic paper which I’ve cited before makes a good case why the former has been historically more important.) However, the distinctions between these two communication forms are blurring, as people are increasingly entertained by connecting with other people. What is MySpace other than a value-added site messaging platform? What about the multitude of conversations that occur on YouTube about the videos in addition to the consumer-created videos themselves?
I largely agree with Wang’s conclusions – that “new competitors… [of] viable aggregators [are going] to emerge” and that “startups are likely to be more nimble [than incumbent creators of content],” However, I’d like to add that messaging with others, and the intersection of that activity with content creation is a large piece in the puzzle. Yes, the profit is in the packaging of entertainment, but also in the packaging of messages as well.
November 15, 2006
Does "Live" Video Matter on the Web?
Nearly all of the online video successes in the past year or two have been of pre-recorded video content. YouTube as a primary example, but the dozens of other key moments in online video have been time-shifted non-live content, save perhaps AOL’s streaming event of the Live8 concert. This leads to the question – does glass-to-glass live video matter on the web?
Are the successes of pre-recorded content an artifact of where we are in terms of supporting infrastructure? Or are they a result of demand/consumption patterns? We can first turn to broadcast television for an analog analogy to frame our thinking. If you examine broadcast TV, there are three primary types of truly live content: news, weather, and sporting events. And of the first of these, news, how much is really truly live? In reality, the fading-in-importance nightly news is comprised of recorded segments pulled together and packaged by a live moderator. While there are a number of talk shows which are conducted and broadcast live, many of these are also taped and rebroadcast, still retaining their consumption value.
Moving from just a qualitative look to a quantitative one, Accenture analysis reveals that only 3% of broadcast television viewing time is actually live. Smaller than I would have anticipated, but perhaps “live” television is more salient so it seems like it should be larger. And there are many reasons why truly live will be even less on broadband than on broadcast. First, an increase the supply of long-tail pre-recorded content available and the discoverability of that content could draw viewers even further away from live broadcast. Second, the web affords alternative methods of communicating what was previously live content, like text headlines for weather and play-by-play summary with on-demand highlight clips for sports information.
Moreover, the current infrastructure trends appear to facilitate pre-recorded content – we’re in the midst of massive improvement in the price / performance of storage both in home and portable video viewing devices. Plus, while we have the potential to utilize P2P technologies for movement of pre-recorded files, existing broadcast models for delivery of live content broadcast don’t appear to be going away soon, as they largely meet the needs of the consumer (at lease in the home).
The counter argument here is that as an infrastructure becomes available to produce and publish long-tail live content – concerts, international sporting events, along with user-generated material – that it will provide a set of content to an audience that was completely unavailable under previous broadcast distribution architecture.
Perhaps what’s important isn’t that a program is truly live, but rather that it is near-live. Yes, there’s something intangibly special about having video actually live – Saturday Night Live is a perfect example in which the format wouldn’t work without it, but that’s likely an exception. These above illustrations direct us to consider the idea that being “nearly live” is good enough and that the live broadcast could become a legacy artifact. What matters is that video content is time appropriate. Content value generally deteriorates in value over time, but different types differ as to what degree. News has a short half-life, whereas some sit-coms live in syndication for decades. The transition to broadband video should resurrect a number of pre-recorded videos lost in the archives, but will it resurrect the golden age of live television? Talk shows where viewers call in and game shows with viewer participation necessitate at least the semblance of a live interactive session – but are these meaningful categories of content? It will be interesting to see what will be coming live to a laptop near you – maybe not much more than today.
(Thanks to Robin Murdoch of Accenture for helping me with much of the thinking and data behind this post.)
November 2, 2006
Headed to Web2.0 Conference Next Week - Are You?
After really enjoying last year’s event, I am looking forward to attending the Web 2.0 Conference next week out in San Francisco. Like all conferences, it’s really about connecting with people, as opposed to the content in the sessions themselves. If you’ve been meaning to reach out or just want to ensure that we reconnect while we’re both at the show, drop me an e-mail at [david at genuinevc dot com], and we’ll try to meet.
Posted by at 2:45 PM | Permalink | Comments (1) | TrackBacks (0)November 1, 2006
The Emerging Field of Social Commerce and Social Shopping
Just under a year ago, I blogged about “(the beginnings of) social commerce” services which would “would provide consumers with rich social context and relevancy to the purchases which they are making.”
Steve Rubel soon after picked up on the theme and called it a “trend to watch” in 2006, saying last December,
“Social commerce can take several forms, but in sum it means creating places where people can collaborate online, get advice from trusted individuals, find goods and services and then purchase them. It shrinks the research and purchasing cycle by creating a single destination powered by the power of many.”
Since that time we’ve seen an onslaught of developments in this area, most notably by startups, some of which I’ve blogged about (like the emergence of badge proliferation). But I personally am now refocusing on the categories of services which have emerged in the past year as new startups have begun to fill this space.
Most notable is the field of “social shopping.” Social shopping is about sharing the act of shopping itself with others, and I view it as a subset of social commerce as a whole. Just as some people enjoy shopping with others in the real world, some will enjoy doing it virtually within a social network. Nearly all of these players have promoted a meme of three activities which people can do collectively: discover/find, collect/organize, and promote/share/connect/recommend/publish. It is these three acts which compose the endeavor of shopping together with others.
It’s interesting to see that while the number of startup companies launching services in this space has exploded (in additional to Yahoo's Shoposphere), the new players clearly fall into two camps: the leaders and the laggards. The laggards – MyPickList, StyleFeeder, Slister, ClipClip, and I am sure there are others – just don’t seem have garnered any user traction (at least according to Alexa stats). On the other hand, the leaders – ThisNext, Kaboodle, Stylehive, Wists, and Crowdstorm – are all currently running neck and neck in terms of traffic, despite having launched at different points in the year. Also note that while this group has generated some traction, it clearly isn’t knocking the ball out of the park like other unrelated consumer web services launched in that timeframe have. [see link to graph]
Some consumers, however, will prefer not to shop with others. That doesn’t mean, however, that these people who don’t purchase goods and services in a social vacuum. Nor does it mean that they won’t benefit from information about social relevancy and context in the goods that they are purchasing. An element of social input in online shopping services augments the experience, even if it isn’t central to it. There are numerous opportunities to add a layer of social features to an existing set of commerce functionality or to new services which aren’t primarily social. These instances of social commerce aren’t social shopping per se, but rather integration of social software features into an entire commerce product.
A good example of these is the emerging set of deals focused sites. While deal-tracking sites have been around since the late 90’s, the newest generation of them add social input into which are the “best” and “most relevant deals.” The revamped Judy’s Book is taking a spin at this, as well as Dealplumber, Dealspl.us, and Clipfire. Other cool services which I’ve seen recently that I’d characterize as social commerce, but not strictly social shopping include Shopwiki & to-be-launched Zanbazaar (wiki-style buying guides) and Rightcart & Bloggerkit (tools for bloggers and small publishers to integrate product content), among others. And, of course, the big players like Amazon and eBay are making strides towards incorporating social elements into their offering as well.
There’s been a lot of progress made in the past year in social commerce, but it’s clear that there is still quite a long way to go. We are at the beginning of exploring the opportunity that adding social context and relevancy information to products can create. Social commerce can encompass and influence a wide array of points on the purchase process, both before and after, and I continue to believe there are multiple large opportunities for startups to capitalize on this basic thesis.