Will Your Next Car Stereo Help Save Radio Advertising?
On the heels of a 10 hour holiday road trip, I’m a big believer that one of the innovations yet to hit the market is a way for people to tag stuff when they’re listening to their car radios.
A few weeks ago, Apple took an important first step in making this a reality when it teamed with Alpine to bring a set of car stereos to market that allow listeners to tag songs for later download via the iTunes Music store.
I like this move, but it’s not that big of a breakthrough – after all, Shazam recently eclipsed 50 million users (who are primarily tagging when driving) and closed a round of funding from A-list VC firm Kleiner Perkins–putting them in a nice position to own the music discovery market.
The bigger opportunity – and one that has Google written all over it – lies in an easy way to tag commercials, talk show segments, news and other information while driving. This is underscored by the fact that most songs that get radio play these days are on the pop charts, are in regular circulation and can easily be found of iTunes with a click or two.
But, when you’re in your car, you usually don’t hear the same piece of information twice. News bits are regularly updated, ads are timed to optimize reach and frequency and conversations happen only once.
For marketers, giving consumers that are interested in content or promotional messages but have their hands tied when it comes to taking action, an integrated radio/Web tagging system could be just what it takes to make radio more actionable and most importantly, more measurable.
For terrestrial radio stations, this type of system creates new value for listeners and aligns radio with the important trends that have led to ad dollars moving to digital mediums.
And for everyone involved in the radio ecosystem – advertisers, stations and consumers – it combines the real-time nature of radio (which podcasting can’t deliver) with the direct response nature of the web and could help save this dying medium.
Here’s a prediction – not for 2010 – but for 2012 or beyond. Like Apple, Google will align with car stereo OEMs (or hybrid GPS/car stereo systems as they are doing with Google Earth and the upcoming Audi A8) and integrate tagging capabilities into their devices. In a few clicks, you’ll be able to “tag this segment” or “tag this ad.” These tags will then be queued locally on your stereo and eventually surfaced to iGoogle or some soon-to-be-launched dashboard that aggregates your tags from Gmail, Google Reader, Google Docs and the like.
Then, you’ll be able to listen to the content again using Google Voice (transcribed for reading via Gmail, of course) and with embedded calls to action (call this merchant, comment on this story, etc.), so that stations and their advertising partners extend the relationship with readers beyond drive time. Google could also roll out a “switch pitch” bidding system to allow advertisers to deliver offers and promotions against tagged content.
Right now, the infrastructure isn’t there to make it happen. But as Google rolls out more free wi-fi the US and as current connectivity solutions already in cars, including bluetooth, satellite radio, etc. bring the Web to our cars, it will be. And a new term, “driving the Web” will be coined.
Maybe by then, I’ll need a new mattress.
The Changing Way We Read
Media consumption has always changed over time as new technologies are developed, from fireside storytelling shifting to printed novels, or radio to the evening news on television. For years now, we have adjusted to reading on screens, but today, we are at the brink of a fundamental shift in the way we read.
Earlier this year, Rupert Murdoch suggested that News Corp would restrict all its content within paid walls, perhaps going so far as to remove their content from search engines. With Google responding by very publicly stating how they can help newspapers and adjusting to allow publishers to limit users to view five pages a day without registering, it would seem that media giants still hold power. But this is less a complete collapse of media channels and more a merging of media with new reading platforms – desktop, browser, e-reader, mobile, tablet, etc. Publishers are just now starting to innovate on these mediums, developing new experiences and new ways to read.
The e-reader market has been picking up a lot of steam recently – Kindle just had their biggest sales month since launching and Barnes & Noble’s Nook joining the market, which, despite recent reviews, has continued to pique consumer curiosity. Apple is rumored to be releasing a tablet early next year, and companies such as Vook (a LaunchSquad client), are creating new reading formats. Just in the past few weeks, we’ve seen publishers left and right announce new initiatives that respond to this e-reader and tablet excitement.
Condé Nast announced last month its Digital Magazine Initiative starting with an e-reader version of Wired magazine, and the publisher has also been experimenting with iPhone app formats for its content, in the form of GQ’s Men of the Year issue. Early this month, Time Inc. released a demo of a new digital version of Sports Illustrated, complete with photo libraries, video and interactive ads. While its own physical tablet prototype has been developed, like Condé Nast, they’re not committed to any one particular platform yet. Hearst, just last week, announced a partnership with Sprint to launch Skiff, an e-reader platform and digital store focused on connecting publishers with marketers, in 2010. To top it all off, the five major periodical publishers – Condé Nast, Meredith, Time Inc., Hearst and News Corp – are coming together to create a “Hulu for magazines,” a digital news stand where readers can purchase and manage their subscriptions. The main challenge will be to develop digital standards and formats, so that their varied content can be viewed equally on a wide variety of devices – soon-to-come color e-readers or more multi-media friendly tablet computers.
Similar to the changing way we approach reading novels and longer-form magazine pieces, the way we consume the news is still taking shape. Customization is the new way to take in news – whether it’s your Tumblr community or your Facebook feed, we are hearing about and reading news in an instant and curated way. Twitter, for some, has come to replace RSS, news sites and even search as a main source for breaking news, and with its newest lists feature, it’s even easier to filter the stream and be selective about how you skim and read. PubSubHubbub is working with blog and social networking platforms to bring these updates and posts instantaneously to your networks and companies like ShareThis (client) are helping media fit into this new “sharing economy,” allowing them to capitalize on the virality and engagement of forwarding, retweeting, liking and voting. Even Google is trying to adjust old-world media to find a place in the online way of reading, with Living Stories, which is a new project in collaboration with the New York Times and The Washington Post that presents on-going, evolving stories in a new online format. All these means are helping us stay informed of content through a closer social circle or curated set of sources.
Mobile devices, and especially iPhone and Android platform, take real-time and personalization to another level by putting the content in your hand wherever you are. Apps from local news sources like Fwix (a LaunchSquad client), Outside.in or Topix show what’s happening in your neighborhood, and Fwix’s even allows users to “report news” in real time, directly from their phones. In addition to news and e-reading, there are also many apps that are useful for saving, noting or commenting on what you read. Instapaper is an iPhone app and bookmarklet that allows users to save articles and blog post to read later, a task that it invaluable for anyone that is keeping track of news during their busy work day. Evernote (another LaunchSquad client) is another great app to save and organize not only your own notes and photos, but Web pages and text from articles. This mobile reading is a shift beyond your typical browser reading – it’s not passive reading and goes beyond the conversation, it’s also personalized, localized and relevant to what we are doing in the physical world.
Technology is changing the way humans are interacting with text, with content. There’s no standard yet as ubiquitous as unfolding the morning paper, but it’s not for lack of trying. Give it some time though, and a few platforms will start to emerge as front-runner in this nascent market. Whatever does emerge as the new way we read, it’s going to be a whole lot different than unfolding that paper.
Working Together For A Better Web
Tim O’Reilly kicked off the Web 2.0 Expo in New York last week with words of caution, an extension of his recent blog post “The War For The Web.” The Web visionary that coined the term “Web 2.0″ and defined the Internet as an “operating system” sees a battle brewing that is very reminiscent of one that took place over a decade ago. In the mid-1990s a browser war started between Netscape and Microsoft as the two fought for desktop penetration, eventually leading to incompatibility across the Web, as some sites were best viewed with a certain browser.
Today, things aren’t so different, as behemoths like Apple, Google, Facebook and Amazon are building their own platforms which are often accused of being “walled gardens,” rather than building upon the Internet as a free, and open platform. Examples include the strict review process for the iTunes App Store, Rupert Murdoch’s recent mention of removing News Corp. sites out of Google’s search index, and the inability to take your personal data with you from sites like Facebook and Twitter. To say these companies are evil is taking things too far, but O’Reilly stressed that more emphasis must be put on creating benefit for the user, instead of solely focusing on building competitive advantage.
O’Reilly sees two sides of the Internet operating system, and in a nod to Lord of the Rings, named them “One Ring To Rule Them All” and “Small Pieces Loosely Jointed.” The path we’re currently headed on is reflective of the former – a no-holds-barred death match between the platform owners, while the latter describes a world that has fewer controls and helps to foster creativity and innovation. Concluding with a quote from Jeff Jarvis, O’Reilly urged businesses to, “Do what you do best, and link to the rest.”
At Web 2.0 Expo NY, several new businesses are doing just that – innovating while also building on what others have successfully created, and opening up further development to even more people. Here are a few examples from the conference:
Boxee
Although Boxee technically didn’t announce anything new (the beta unveiling is on December 7th), CEO Avner Ronen hosted a panel on customers acting as brand evangelists. If you aren’t familiar with Boxee, consider it a social media center for your TV. Not only does it pull in your personal content like videos and photos, but you can also stream content from the MLB, Last.FM, Netflix, Pandora, and more. Since Boxee allows developers to create their own “channel,” more than 150 great applications are available to enhance your living room experience. One of our favorites is Cliqset (a LaunchSquad client), which allows you to have a real-time conversation with friends while watching your favorite video.
Foodspotting
Described as a “foodie-powered field guide,” Foodspotting was born after founder Alexa Andrzejewski realized it was difficult to search for specific dishes on existing city guide services. The Web site (a mobile app is coming soon) allows “food spotters” to post photos and descriptions of dishes they’ve eaten. “Food seekers” can then search through these dishes, and vote them up, which awards credibility points to the original spotter. The service hopes to eventually tie into different products like Foursquare, where foodspottings would be incorporated into location check-ins. Now I won’t be scratching my head when I’m trying to find the best banh mi.
EarthAid
Think of it as a dashboard for all of your utilities, the power meter of the future. Currently compatible with 106 utility companies, EarthAid empowers users by allowing them to monitor and effectively reduce energy consumption. Incentives in the form of points redeemable towards discounts, and offers from partners, and the ability to share data with friends, makes conserving energy fun.
I encourage you to explore the great videos and presentations given at Web 2.0 Expo NY to learn more about how the Web is evolving.
Why Facebook and Twitter Should Start Charging Users
What if Facebook and Twitter started charging users for their services? It’s something I’ve been thinking about for a while and have wondered why at least one of them, especially Facebook, have not experimented with in any way.
Let’s look at Facebook in particular. Over the past few years, the service has evolved into a daily utility for tens of millions of users in the U.S. alone. I’m talking about people who essentially cannot – or at least prefer not to – live without it, whether it’s for the fun, games, social interactions, photo sharing, or like me, as just a virtual and dynamic database of your personal and/or professional contacts. For many of these users, Facebook is probably as important (and for some more so) as having cable TV, a smart phone, satellite radio, or a host of other paid monthly, subscription-based services.
If Facebook was able to get a hearty set of these users to pay a nominal monthly fee for unmitigated access to its services, the company could quickly become a legitimate multi-billion dollar business (instead of an on-paper one). Let’s look at some [admittedly arbitrary] math. Facebook says publicly they have 300 million active users, 50% of which access the site in any given day. Let’s divide that number by half again and say there are 75 million fairly loyal and passionate users that would be significantly affected by not being able to use the site. How much would those people be willing to pay to continue to use the service at the level they currently are? How about $2 per month (or the price of one over-priced coffee)? Voila: that’s a whopping $1.8 billion dollars in pure profit-based revenue. And it’s more than FIVE times the estimated total revenues the company generated in 2008.
How about Twitter? There were 23 million users during the month of September (this excludes those who are consuming content from or through Twitter, which is soon to be just about everybody, knowingly or not). We know there are a lot of people who experiment unsuccessfully with Twitter, or do not use it very often. But there’s also a growing group of daily die-hards, including a good chunk of the 40 or so folks at LaunchSquad. Let’s conservatively peg this number today at one million people who are habitual Twitter users. Would those folks pay the cost of a coffee every month to keep using it in an unlimited fashion as they are today? If they did, Twitter’s suddenly generating $24 million in annual, subscription-based revenue for itself. For the record, that’s about $24 million more than they are currently taking in, give or take a few thousand bucks.
Obviously there are some good reasons why Twitter and Facebook have chosen to not go down this path. They are in high-growth mode and, unlike most startups, they have enough leverage with their investors to keep the “path to profitability” mantra at bay. Anything that might curtail registrations and usage is a big no-no.
Of course, any movement to try and develop this business model would have to be done with great care and deliberation to mitigate the backlash.But I think it may be a mistake though for them to not add this to the short-term plan, and begin experimenting with the most loyal users and seeing what the appetite may be and where the price points are that begin to truly hurt free usage growth. Even if Facebook charged those 75 million users only $5 per year, that potentially doubles their revenues right off the bat.
Update: Given the past comments below, I want to more clearly note here that under these hypothetical scenarios, Facebook is still free for the vast majority of users.
Bigger picture, there is a potentially huge domino effect that could happen here. If a company like Facebook or Twitter, or some other big name trendsetter, could ultimately prove that the Internet does not necessarily have to be free, it could have a profound effect on the entire universe of innovation, startups, venture capital, M&A and even the IPO market. It could even hasten and ignite the economic recovery.
Think of all of the companies out there currently pursuing free service models and relying on the combustible and unpredictable advertising market as their path to success. Not to mention the set of “freemium”-model companies, such as Evernote, TimeBridge, SugarSync, Anchorfree (disclosure: all are LaunchSquad clients) and countless others who have to deal with financial markets that question their long term potential despite having innovative, valuable technology and loads of very happy users.
This could also significantly impact media companies who are trying to come up with ways to charge for the content lest they crumble and die. If Twitter and Facebook are no longer free for loyal users, Rupert Murdoch & Co. have a much clearer path to creating pay walls and generating revenue for access to content. Admittedly a lofty thought, but this could be the savior the newspaper industry has been waiting for too.
I may be overstating things here, but a world in which people more readily accept that services like Facebook are not eternally free is a very interesting one to ponder.
Does Jim Spanfeller's Remnant Ads Argument Add Up?
For editorial coverage of the world of business, few publications command more respect than Forbes and its online site Forbes.com. As CEO Jim Spanfeller winds down his tenure at the venerable media company, his assessment of online advertising and how online publishers are preventing it from reaching its true potential is making its way around the Web.
Online publishers, Spanefeller says, are hindering the growth of the industry by adopting the remnant pricing strategies established by the ever-struggling airline industry. Yet, when it comes to pricing reform, is Spanfeller’s characterization of remnant ad units, and the ad networks that sell them, as the major problem facing the industry an oversimplification of the problem?
Fundamentally, Spanfeller’s argument is rooted in the assumption that by offering unsold advertising units to ad networks, who in turn make this inventory available to advertisers at a significant discount, online publishers have created massive price erosion in the market. After all, why buy ads at rate card prices when you get the same or comparable inventory for a song through a network?
Following this logic, Spanfeller suggests that by eschewing the remnant model, publishers will sustain higher prices for their ad inventory and increase revenue at higher profit margins, thus driving the industry to new heights. Mission accomplished? Yes and No.
Truth be told, there are properties that have gone the DIY-only ad sales route. ESPN, for example, announced that it would no longer work with ad networks in May of 2008. As a top online sports property, ESPN made the decision that it would rather lose revenue from unsold ads than face pricing pressure from ad networks. Advantage Spanfeller.
However, for a much larger segment of online publishers that don’t have deep relationships with advertisers, large sales forces and premium content, casting off ad networks is simply not an option. Even NBC Universal’s iVillage unit admits that while some sections drive lots of traffic, they don’t appeal to endemic advertisers, making ad networks a viable way to drive revenue that would otherwise be lost.
The bigger question – one which Spanfeller doesn’t address – is which approach will drive more ad dollars into the market and create a bigger opportunity for publishers long term?
In a recent quarterly report, LaunchSquad client BrightRoll reported that while CPMs across its video ad network were flat between Q1 and Q2 ‘09, overall revenue generated during the same period was up more than 200 percent. BrightRoll’s report illustrates that affordable prices are attracting more dollars into the video advertising segment. A rising tide floats all boats right?
Former client Adify, which delivers a platform for building vertical ad networks, allows media properties to offer reach to customers across their premium content and that of longer tail publishers by aggregating the ad units into a single, easy-to-buy network that streamlines the ad buying process.
Both examples signify that the real problem facing online publishers is not remnant inventory and ad networks, it’s moving more dollars into the medium and providing an easy way for media buyers to spend them at a time when reach, cost-effectiveness and efficiency are king.
Only time will tell if online publishers will embrace the model proposed by Spanfeller. What’s true is that the customer – in this case the media buyers, planners and strategists – is always right and the winning model will be born from an understanding of the unique challenges they face, not the desire to preserve old media pricing strategies.
In Memoriam: My Last Desktop PC
I have always loved my desktop computer. Regardless of improvements in the computing power, graphics or RAM of the various laptops I’ve owned, my trusty desktop has always been a bit cheaper, a bit faster, a bit better than its portable kin. But last month it happened. Moore’s Law, which always seemed to side with my desktop, broke completely down on the side of the information super-highway. The speed of the CPU, the size of the hard drive, the clarity of the screen just didn’t make much of a difference anymore for a user looking to stream some TV, surf the Internet, take part in some social media, play music and use all of the usual suspect office software products.
Am I alone? Hardly. iSuppli recently noted that desktop sales are expected to fall 18.1 percent this year to 124.4 million from 151.9 million in 2008.
Perhaps you just need a netbook you say? Perhaps. I like the concept of the netbook, and I really like the all-in-all lightweight approach to its hardware and software. However, I have an iPhone that meets my ultra-portable needs, and with a large HD screen, HDMI, ample ram, huge hard drive and all the other expected current-gen goodies, a powerful laptop covers me perfectly.
I admit I will strangely miss the ever present sound of the desktop fan whirring near my knees, and the comforting of knowing that if I ever need that retro feel I could still add a 3.5-inch disc drive from eBay into any of the desktop’s vacant drive bays. However, innovation marches forward and in this replacement cycle the desktop is simply being left behind.
Ad Invasion: What’s the Next New Media Channel?
At lunch the other day, I picked up a couple of slices of pizza and noticed a Dasani ad actually printed on the pizza box. The company responsible was called Pizza Adz, a division of DoMedia, which specializes in advertising in alternative media channels, an idea I have always been intrigued by. What is the next vehicle for advertising that we haven’t thought of yet?
I first started noticing this trend when ads on movie theater screens started popping up years ago. Then brands and their agencies started getting creative: the top of UPS trucks (targeting office workers in skyscrapers), subway turnstyles, the liners of dry cleaning hangers. Where does it stop? I think this is just the beginning, but I also don’t think it’s a bad thing. While some people get really annoyed by all of these new ways that brands try and get their messages out there, I’m always looking for the next new channel. Maybe part of me just wants to be the one to discover it. …
Creative corporate sponsorships are also on the rise. Professional sports teams have been selling stadium rights for years. Critics say the owners are selling out, but hey, if my favorite team can sign better players due to the extra revenue coming in, I say go for it.
The next wave of corporate sponsorships could be your local subway station. In June, The New York Times reported that the subway stop that connects Atlantic Avenue, Pacific Street and Flatbush Avenue in Brooklyn is being sponsored by Barclays. Barclays is based in London, you ask? Sure is, and while it has offices in Manhattan, the Barclays Center is the Brooklyn-based sports arena for the New Jersey Nets that is part of the Atlantic Yards project planned to open in 2011. Seems like a logical fit and we know that the cashed-strapped Metropolitan Transportation Authority needs the money, but as my colleague legitimately asked me the other day, does this mean that the Atlantic Avenue subway station will be cleaner if a corporate name is attached to it?
I don’t see the problem in these type of ads or sponsorships, because they often lead to better products and services for consumers, whether it’s a more competitive baseball team or a more enjoyable subway ride. Like it or hate it, it seems like we are marching to the inevitable future that is portrayed in movies like “The Running Man” where everything you can think of has an ad attached to it.
Think you have the next big alternative media channel? Let us know.
Balancing Optimism and Realism in the Tech Industry
It’s Internet Week in New York! For those people that don’t live in New York, what does that mean? It’s a week packed with panels, networking events, conferences and parties, all celebrating the Internet and technology in New York City.
This morning I attended a panel titled: “START ME UP. Investing in New York’s Digital Industry” that included Steve Brill (founder of Court TV, FlyClear and Journalism Online), Marc Cenedella (founder of TheLadders.com), Jalak Jobanputra (SVP of the NYC Investment Fund) and Andrew Cleland (executive director of Time Warner Investments).
One of the most interesting points made during the discussion — and most panelists agreed — was the difference between the Silicon Valley and New York technology industries. Steve Brill said that New York is more focused on the idea and Silicon Valley is more focused on the technology behind the idea. Marc Cenedella continued this thought by arguing that New Yorkers are constantly surrounded by media and have become “jaded” when it comes to new technology. New Yorkers are more skeptical and only get excited about something if it’s real and proven. Just because something is new, doesn’t mean it’s cool.
While these are all very general statements, they do parallel some trends in each of these geographic areas. New York has a lack of engineering talent since most of it is gobbled up by big banks and corporations with huge amounts of money to pay their salaries — hence the lack of focus on the technology. In California, most of the best engineers are in tech.
California has always been a hub of innovation, a forward-thinking state, and one that believes in the possibility of new things. While this mindset has led to some great developments in the Golden State, the bad has also reared its ugly head quite a bit too (web 1.0 bubble, housing crisis, current fiscal situation, etc.). New York, on the other hand, takes a much more conservative and critical approach to new ideas and industries. If the New York Post is any indication, there’s no time or tolerance for fluff and ineptitude. But, perhaps this has also stymied the technology industry here, preventing successful ideas and companies from ever reaching their potential.
This was a general, yet seemingly accurate take on the technology industries from our respective coasts. It’s hard not to imagine what it would be like if a happy medium could be found between these two — concentrated innovation with a better appropriation of engineering resources, less funding money wasted and a more modest level of “stupid optimism” as Steve Brill put it.
Who knows, maybe somewhere in the middle of the United States, they have found that medium — Austin, Texas comes to mind.
The Open-Source White House
A couple of weeks ago, Tony Hsieh, also known as @zappos on Twitter, sent this Tweet to his almost quarter million followers:
Meeting at White House tomorrow to discuss ways to help economy that administration may not have thought of yet. What are your suggestions?
139 characters and an open invitation to offer your ideas for economic recovery to the White House. At first, it was interesting to see that the CEO of an online shoe company founded only 10 years ago was being called on to share his ideas with the new administration. Also, while he may have taken some liberties here, the way he positioned his meeting — “that administration may not have thought of yet” — implied that the administration was open about the fact that they may not have all the answers and are looking for outside ideas to spark discourse and new ways of thinking. Most significantly, however, was that Hsieh was offering to take ideas from his Twitter followers and submit them to decision makers in the White House.
I could not help but see the parallels here between this approach to government and the open-source software philosophy. Much like open-source, the foundation for governance was laid down, but it had also been opened up to the outside world. The administration started this process by inviting Hsieh, but social media finished the job by enabling him to connect with his audience to solicit ideas.
It’s a huge shift in how we think about a government “of the people, by the people and for the people” that will hopefully spread throughout various areas of government and even business … even if writing the solution to our economic recovery in 140 characters (or even 140,000) may prove to be a bit challenging.
Why Innovation Will Bite Back: An Interview with Andrew Razeghi
It’s been nine years since we started LaunchSquad and I’m still amazed at how excited I am by the innovation we see everyday. To use a popular phrase from the 1999 boom, I feel like we’re in the early innings of the Internet revolution. But when the bottom fell out of the market, when Silicon Valley VCs grabbed their bullhorns and told everyone to cut their spending, double their runways and batten down the hatches for a dire future, my faith in innovation was a bit shaken. I started to wonder: “Is it over? Is the dream of entrepreneurship and technology in Silicon Valley coming to a crashing halt?” “What future do we have?”
Back in 2000, it was an Internet thing and we knew we’d eventually come out of it. But this time it’s a global thing, a heartland thing, a recession of proportions we’ve obviously never seen. I began to reach out for perspective. I talked with people, read some articles and dug into the topic of innovation in a downturn. My goal was to find hope, to calm my fears.
It turns out that many of the most important, coolest products, companies and innovations were born in the teeth of recessions⎯companies like Apple and Microsoft and products like the iPod and the Clif Bar. And so were several of our own companies, including 3VR, NetBase and SuccessFactors⎯all thriving!
While we know the road ahead will have bumps and we’ll have to make some tough calls and exercise prudence, we also know that the spirit of entrepreneurship and innovation is getting a huge shot in the arm. NOW is the time for great talent to come together, for great ideas to emerge and for the hunger created by less than great times to drive a whole new generation of companies, products and stories. I could not be more fired up about where we are today.
In my research, I happened upon a paper on innovation by Kellogg innovation professor Andrew Razeghi that helped calm my fears and inspire me to get back on the innovation horse. I reached out to Professor Razeghi and he was gracious enough to take the time to answer some questions I had around innovation. Here’s the interview. Enjoy. Continued…