Category — Personal Views on Media Business

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There are not proposals that, in terms of business model we can consider an innovation.  Two recent news:  print on demand, as proposed by Google, or freemium subscription services like the one that is intending spotify have both been tested. The interest to know their outcome is not merely to get potential models that can be imported to other brands, but to demonstrate once again that execution, and not great ideas, are the way to competitive advantage. We are back to what we were talking 10 years ago: subscribers, physical goods, etc.

Many people are dark when it comes to sharing ideas with others, in fact, in Internet, probably less people than in other sectors. It even looks  immature considering  “magical” an idea, and so, trying to protect it. Nowadays, not ideas, but gettings things well done build up competitive advantage, so that, it does not matter we can have the best idea, what really matters is whether we have the capacity to execute it. This is very related with our prior topic, is innovation over-valued? And this is also related with transparency, because since ideas are not as important as their execution, in fact, the key is to share them, to challenge, in order to improve them.

It looks clear that companies like Google know that are not great ideas but great execution what it will make them to continue leading the way. Accordingly, they hire the best, they motivate their people and, therefore, they continue to launch more and better products. Media need to understand what the battlefield is when it comes to playing online, and it is execution,  how we do what we want to do, how we operate and develop our digital operations. We have to think less what to do and focus in how we do it.

Just a few hours after we talked here on a potential outcome of giving all performance-based advertising to Google (or Microsoft), it was published what everyone knew, and it is the jump of Google into display advertising, what media considered to be their home.

The Doubleclick Ad Exchange: growing the display advertising pie for everyone.

What is key for us is not so much the response, logical, even awaited and welcomed but the problem diagnosis they make. In other words, it is not that important to look at what they did, but to why they did it (or, at least, how they explain it). These are not their words, but their statements (remember Popper?):

1. Google is successful in search advertising

2. There is also, out there (out of Google) a world of display advertising

3. But, that world is chaotic and unorganized, difficult to use so that, potential advertisers are pushed out

4. For publishers 80% ad-space is unsold

5. So that, Google can offer a better solution

It is very clear. Because no one else did coordinate a rational system for selling ad-space with standards (well, IAB has standards and they are widely known and used, but this is about selling standards and not merely format standards), we -Google- are going to do it.

Why this move is even wellcome? Because media know Google arguments are right, and it is a failure of media not to work together in the channel and compete in the content (again talking about it) Remember Gerd Leonard? Why this innovation did not come from publishers themselves?

Gerd leonard makes a really good question in his blog: Google Fast Flip – why did this innovation not come from the magazine publishers, themselves? He is also giving an answer: “many publishers don’t seem to want to actually collaborate with each other”. In fact, there is no point in competing against other players in software. Newspapers did not compete in the technology when printing, but they are trying to do it now. This is, because, as said by the report we talked about before we have missed the strategic focus to compete in the channel not in the content. But, this point can be further developed.

What is probably and strategically more important, since the risk innovation can be left to pure players and innovators while media go back to core and concentrate in contents (I know, scandalous to say that) is to assume, admit, recognize the good idea, and “adopt” it. Since first mover advantage is not that real (MySpace has been passed by Facebook and now they say Facebook may be under Twitter), a key accelerator is to  quickly emulate good ideas and innovations. Of course, a Lab made under collaboration and shared risks for publishers. In other words, no so much innovate as quickly detecting and adopting innovations. Nearly as quick as media contents are used by aggregators.

…by the way, this innovation is not coming from Google,  Zinio and others have been doing it for years.

Every time I listen something about launching a product (“editorial” product), my heart beats quicker. Normally, all those products are thought and defined by only one side of the media company and then thrown to the commercials like a hot potato. I guess this is, probably, what happened to Business Week and its social network, which, according to PaidContent  (based on NYT) has already meant more than 21 MM$ investment for no profit.

Again, let’s listen a bit more to business people. We all want free and quality journalism. If it is not sustainable in terms of business model, there will simply not be any journalism, no matter the quality.

RB:

I follow the headlines with interest as media giants continue to purchase large, growing on-line communities. A lesson already learned is that page views do not equal legitimate advertising impression opportunities. Merely owning the asset of an Internet community does not implicitly afford the owner the right to interrupt the activity that creates the community in the first place. Remember the early lessons learned? The congregation of humans, on-line or in-line does not necessarily translate into willing advertising consumers.

Not long ago in Spain we were celebrating the launch of utoi and I agree that innovation is welcome.  Today, I saw a company that offers launching your own microblogging, with your own domain and shared revenue in advertising sold. This fact, brings me back to a recurrent debate, should we focus in innovation or in our core business? My answer at the moment is that we must focus in our core business, in producing quality contents. When digg was out, corank allowed you to build up your own digg, when facebook was out, ning allowed you to build up your own communities, anyone can build up a forum with phpbb or similar systems or open a blog with wordpress or any other. What does all this mean? It means that the technology supporting our contents is increasingly a commodity and that we should not focus in leading technological inventions.

I know it is hard to say it so clearly, I even feel  uncomfortable writing it. Execution and quality are the focus that should be kept in digital media businesses and we should let and encourage technological companies and programmers to compete in developing the best even using our contents through APIs. For me, it is clear now that owning the platform in which the conversation takes place has nothing to see with owning the conversation itself. I check twitter from google reader and many blogs to which I rarely pay a direct visit.  Probably the best way to innovate is to let others innovate, open your contents and be open-minded to accept that the platform can be developed by other people.

The gap that separates the theory from the pratice is something that we assume as business managers. We know that all those things they taught us in our business school are very difficult to implement straight away when landing in an organization. For this reason, if someone keeps on reading theory, white papers or state of the art technological developments and is not the final decision maker but just, and, at most, a “middle manager” then either it is completely frustrating or it is like watching Sci-fi movies. For the sake of our mental health , for sure the dozen of readers of this blog are middle managers at most (if not, we would probably be ”too busy” to read anything) we should adopt the latter attitude.

Reading the PDF behind this form I had again the experience of how obvious it is what is said in that white paper, and how hard is our daily life. We got resources, talent, even money to be closer to the best practice, but we are so far from it. Below, I am just going to copy my summary of ENTERPRISE INFORMATION MANAGEMENT: Strategy, Best Practices & Technologies on Your Path to Success.

EIM (Enterprise Information Management) is the effort to build up an organizational coherent information management so that information is delivered when, how, and to the person who need it. Benefits of EIM are:

EIM is an answer to the unorganized data management that is suffered in many organizations. Middle managers are those who realize it at the beginning because they are using the systems and they are the ones being pushed by objectives. Top management is in a different battlefield. Therefore, it is a middle management responsibility to push this topic in the agenda of top management. Fortunately, some companies have a top management that is able to quickly understand the importance of adopting correct data governance; some others are not.

Before having an EIM strategy there must be a vision. EIM strategy responds to a concrete vision and objectives and change with them, it is also flexible and adpatable. In order to get EIM done it is important:

- IT/Business collaboration, understood as regular and constant communication and cooperation.

- Trusted information. If the information delivered is not trusted, EIM would just be a failure.

- Enterprise-wide standards. Everyone has to talk the same language and use the same tools.

- Data Governance, a corporate agenda for data.

Apart from that nowadays information management must be:

- SOA support. Service Oriented Architecture is a middleware becoming an standard between data and interface applications.

- Centralized data management.

- Complete functionality (it should serve all organizational goals)

- Seamless integration. For each functionality there are world class applications that are able to inter-operate through SOA.

- Easy of use

On the other hand, without data integration it is not possible to build trust.

The purpose is to get information from business processes and to load it to a master data management system. For this, ETL (extract, transform and load) process is key, together  with a data quality infrastructure that should come together with your EIM strategy. To ensure data quality it is necessary to manage metadata (data about data). At the heart of data integration is MDM (master data management) which is more than software, a system of practices policies for data collection.

In economics, a monopoly (from Greek monos / μονος alone or single + polein / πωλειν, to sell) exists when a specific individual or an enterprise has sufficient control over a particular product or service to determine significantly the terms on which other individuals shall have access to it.wikipedia.
I am not the one who hates Google nor their products, on the contrary. I find their products make a great service, and I belive they are a great company with undoubelly first-class professionals. In fact, I personally agree with the arguments given here.

But this does not prevent me from seeing manipulation in an article like this one in TechCrunch:  Who Dominates Online News In Italy? Not Google News. Being purely liberal, we may even accept market decided monopolies, but, even we accept them and consider them a fair market process outcome, we have to know when there is a monopoly.

The graphic shown by TechCrunch does not make sense with their comments:

1. The monopoly is not in the news market, but in the news aggregation market, in the access to news, which is different. The product in question monopolized (by a great and unique product) is news aggregation.

2. The nature of traffic in google news is normally just passing by while in news sites they stay, so traffic transfer from google news may have a big impact in those papers audiences. Therefore, proportions show by that graphic cannot inform us on a potential dominant (monopolistic) situation.

Now, we may argue that because fairly through the process of the invisible hand google reached such a position, neither state nor law than can judge their behaviour. That would be an ideological position. I may not even disagree. But, what we cannot do is not to recognize that there is a clear dominant position in a market (news aggregation, remember, not news themselves) that is extremely critical and crucial not just for those newspapers, but for democracies.

And this is what I meant when I said this blog was about democracy. About democracy and, of course, pluralism, and, from my view, this clear manipulation, either made in purpose or by ignorance, does not consider democracy as a superior goal. ((This is the advantage of blogs as “media”, although no one will ever read this post, at least I can give my opinion (even maybe, and probably, I am wrong)). But, what happens if I am excluded from google news and google news is the dominant player in finding news? That is the debate. There is a clear asymmetry between Techcrunch and me in order to reach audiences, the key is in the one who has the key  (:)) of the castle.

Finally, there is something clear that we cannot avoid nor hide down “technical” nor “liberal” arguments. There are clear political implications, and, therefore, ideological. Google knows it, and that is why they play with fair values and behave at their best possible standards (don’t be the evil).  Microsoft is also a market-decided monopoly and I do not see many defenders when they are so often brought to court. In fact, my position is not against market-made monopolies, I think if they arise there is a logic behind and the government should not interfere unless clearly necessary. Although, if Microsoft did not have the state to stop them, probably google would not be what it is now.

After a while, back to blog. A month of intensive Chinese languange in WeiHai (Shandong-China), taking the GMAT exam (660 marks) and the TOEFL (110 marks), kept me quite busy.

Internet allows brands to remove intermediaries to talk to their customers and they are doing it. This is why, probably, we start listening topics like “Is the Advertising Model Dead?” (by the way, after watching the video that question remains, of course, unanswered). Do we need to use Advertising, considered as placing messages in third parties places, in order to talk to our existing customers or increase our customer base?

Converting advertising into a service is something successfuly done by Google. Most people do not identify AdWords as advertising. By making ads very relevant, they are even a service. This makes ads a very acceptable reality. By contrast, irrelevant ads placed “for branding” wherever as long as it is cheap (bulk), is deffinitely getting into trouble (in other words, into an ever decreasing CPM).

CPMs trend are an objective reality and a result of a growing audience without a growing investment. And, in the other hand, they are a great opportunity and, finally, the way of reaching independent media. Socially, a decreasing role of mass-bulk-indiscriminated advertising is an step forward. The marketing mix is swifting towards more importance of price, place and product while promotion starts to be rooted on those three qualities and, therefore, word of mouth, than in pushed messages. IKEA, Ryanair, Dell, Google, and many others know it and focus on them investing less in advertising than companies previously doing the same.

For human, the fact that added value comes more from product and convenience to reach it in terms of price and location, is going back to a reality we have been forgetting after being pushed to a supposed and imaginary value.  Imagination and aspiration will continue to play a role, but, likely (and hopefuly) less relevant.

In this environment we are already, and this is how we have to think on adding value to our audiences. Advertising should also be a service, and media can still play a role, within this new game.  The opportunity is not pushing commercial messages to our readers, but, on the contrary, letting them know exactly what product is best and cheaper, where to get it, and how to better use it.

Imabe by Pieter Musterd