AxleMEDIA.com is for Sale

To Our Readers

As you're probably aware, Gartner recently launched a new blog network, and most of the recent posts to this blog have been cross-posted there. We remain committed to continuing the Media blog, so we're working on a solution to be able to have all of our posts appear in both places, without having to hold two separate conversations. In the meantime, we're temporarily suspending the policy of duplicate posts to keep the conversations in one place. You can follow our latest posts here:
http://blogs.gartner.com/allen_weiner
http://blogs.gartner.com/andrew_frank
http://blogs.gartner.com/michael_mcguire

We hope you'l stay tuned to this spot for our announcement, coming soon, of the availability of all of our media-related posts in one location.

Thanks for your patience,
The Gartner Media IAS team

The Watchdogs are Alert!

Yesterday's experimental call-out to social media monitors produced an eye-opening result: 27 responses in just over 24 hours from social media monitor companies who proved they were listening.

Of the 34 companies I mentioned, 16 responded (some more than once). In addition, 4 responded that I hadn't mentioned.

The ones I mentioned who responded as of this posting were:

Converseon, Radian6 (two responses), Scout Labs, RelevantNoise, New Media Strategies, Trackur, Nielsen (2 responses), Visible Technologies (3 responses), Market Sentinel, Buzzlogic, Custom Scoop, PopularMedia, Techrigy (three responses), Biz360, MotiveQuest, Onalytica, and Umbria (JD Power)

and the ones that I didn't mention who picked it up anyway were:

Cision, Enterprise RSS, VibeMetrix, CyberAlert

I'm still hoping to hear from the rest.

Although this was in no way meant to be a scientific poll, it does strongly support the thesis that these technologies are for real, and agencies and marketers must take notice or risk being left behind. If you really want to know what's happening to your brands in social media, you need to find the right tools and the right partners.

Major U.S. Metros Face the Unthinkable

As a native Philadelphian, it is always fun to poke fun at everything "New Jersey," but I find nothing funny about the possibility of the Newark Star Ledger (yes, the paper Tony Sorpano would pick up at the bottom of his driveway) going out of business. Despite a huge number of buyouts (200 to be exact) and the renegotiation of two major union contracts (the drivers have yet to ratify a new agreement), the paper is not out of the woods and faces projected losses of between $30 million and $40 million for 2008.

Major metro newspapers teetering on the edge is not a problem limited to the Garden State. The Newspaper Association of America reports that overall ad revenue for 2008 is expected to decline 11.5%, which comes in the wake of recent reports that online ad revenue - the future life raft many newspapers cling to - was down 2.4% in Q2 of 2008. Layoffs, downsizing, fewer print pages, combining or eliminating sections and other cost-cutting measures have been a matter of course for the past few years, but the added dimension of a credit crunch means that chains that have newspapers for sale - and the list includes Cox, Copley, Journal Register and McClatchy - are going to have a tough time finding buyers with enough cash in hand who are willing to make the long shot bet that daily newspapers will make a comeback. The net result is that a number of major daily newspapers will close in domino fashion, with the only question being who will fall first.

One candidate is the Minneapolis Star Tribune, which recently missed a $9 million debt payment. If you are placing bets, also consider the Spokane Spokesman Review, which recently slashed 21 of 104 newsroom employees and the Harrisburg Patriot-Review, which aims to cut 25 percent of its staff. Others are in the same boat, but the list is too long and too depressing to name. If you are looking for the gory details, one popular blog, Newspaper Death Watch, is the official biographer of this sad trend.

Which Social Media Monitors Eat Their Own Dog Food?

I, for one, try to practice what I preach by keeping up with how my output reverberates in the blogosphere. So I noticed this recent post by Blake Cahill at Visible Technologies referencing a note I recently released called Social Media Delivers Marketing Intelligence (subscription required) that examined the burgeoning world of social media monitors. If you're a marketer or an agency, this is a topic you should know about.

This made me wonder whether social media monitoring vendors in general are mining the social net for references to their own products. So here's simple - and, yes, self-serving - test: check in below if you are monitoring the net for blog posts (however obscure) that mention your social media monitoring service. Or, if let me know if I've missed you.

How many can say "we’re listening?"

1st2c, Biz360, BrandIntel, BuzzLogic, Nielsen Buzzmetrics, CIC, Clarabridge, Collective Intellect, Converseon, CoreX Technologies, Crawdad Technologies, CSC NameProtect, CustomScoop, TNS Cymfony, Echo Research, Envisional, Factiva, Kaava, Market Sentinel, MotiveQuest, Networked Insights, New Media Strategies, Onalytica, Opinmind, Popularmedia, Radian6 Technologies, RelevantNoise, ScoutLabs, SentiMetrix, Techrigy, Trackur, Umbria, Unbound Technologies, Visible Technologies, Waggener Edstrom Narrative Network

DRM, Copy Protection, Copyright Law and Consumers

What an interesting confluence of events this week. If anyone ever needed proof of the notion that lawyers are the only stakeholders making money on the analog-to-digital/physical-media-to-digital transitions for the media, the last couple of days should be confirmation.

First, RealNetworks releases its DVD-copying software, RealDVD, today. The software download lets a user "rip" a secure copy of a DVD so the user can watch the movie on a notebook PC (which also has to have a copy of the RealDVD software). The software, by the way, is being sold as a download from Real that will be priced at $30 for a limited time but will carry a $50 price tag. (Users have to pay another $20 for every copy of the software they want to put on up to five additional computers.)

Apparently sensing some hostility in their pre-launch visits with Hollywood studios, Real Networks filed a pre-emptive lawsuit today a asking a court to rule that the software is legal. The defendants? The major Hollywood studios and the DVD Copy Control Association which maintains the standards for copy protection schemes such as the Content Scramble System (CSS) used to (more or less) protect commercial DVDs. (Here’s a copy of Real's press release in which they paint themselves as the victim of Hollywood and the champions of technology innovation.) The labels are arguing that Real's software will allow people to copy rented DVDs onto their hard-drives to build permanent libraries. Real's press release cited a recent court decision in favor of Kaleidescape, which notes that the actual disc did not have to be in the computer during playback.

OK, that's one case that will soak up some billable hours as all parties fight it out.

The second one doesn't directly involve any media companies, but does involve the Norwegian government's consumer protection group, the Consumer Market Council, and Apple. On Monday, the Consumer Ombudsman accused Apple of failing to unlock the iTunes store and allow consumers with other devices to purchase content. This case started two years ago and, according to press reports, Apple argued it was working to get the music labels to provide DRM-free versions for sale. Apparently, the ombudsman has ruled that Apple has until November to rectify the situation or will face penalties which may include fines.

Assuming Apple can't get the rest of the major labels and independents to provide DRM-free versions of content, as EMI currently does, the Norwegian iTunes store might be shuttered.

Eight years into the 21st century and the battles between technology companies, content companies and legislators continue and just seem to be treading the same old ground: technological measures demanded by rights holders, implemented by technology companies and either pushed or scorned by legislators, depending on the country.

Does anybody see a logical end? I do, but I wonder what others think.

MySpace Music Provides Multi-Million-User UI for Amazon’s MP3 Store

MySpace launched its online music service named, not surprisingly, MySpace Music on Thursday. The News Corporation-owned social network pulled back the curtain on a portal that will allow MySpace users to build an infinite number of playlists of major- and independent-label songs of ad-supported streams while also enabling direct purchases of songs from Amazon's MP3 store.

My initial verdict: It's a start but for something they've been allegedly working for many months, the performance is not terribly consistent.

As users have been able to do on sites like Last.FM, iMeem, iLike for a year or longer, MySpace music users will be able to stream complete songs from the Universal Music, EMI, SonyBMG and Warner Music catalogs, as well as those from independent music distributors such as the Orchard, ADA and Fontana. Like the other sites, MySpace Music's business model will be a hybrid ad-supported and affiliate-fee model. (Affiliate fee meaning just as iMeem gets a small percentage of the sale for every buyer they drive to the iTunes store; MySpace Music will get something from Amazon. MySpace Music personnel declined to go into any detail about the licensing agreement is has with Amazon.) For Amazon, this could be a very nice customer acquisition agreement assuming a significant, or at least meaningful number of MySpace users are willing to actually pay for content.

I played around with it on Thursday. The browser-based player, generally speaking, looks very nice. There's a slot for banner ads in the player and during the demo it didn't appear to be too intrusive. Creating playlists seemed relatively straightforward. For most songs, there will be a "buy" button next to any version cleared for sale. Users are redirected to the Amazon MP3 song where, if they already have an account, they can go straight to the download. For those without an account, they'll be asked to create one. Users younger than 18 or without a credit card simply have to go buy one of Amazon's prepaid cards.

While they've created a nice, average user interface, and the player works reliably well the overall experience of song searches was, and I'm being blunt now, really "old school." Like early versions of pressplay or the Sony Connect store, and not in a fondly nostalgic way. It seems that in a rush to get a bunch of content, a lot of chaff got through. Some examples:

- When I did an artist search for Stevie Ray Vaughn, I got the requisite number of SRV songs but also a ton of terrible remixes of SRV songs; poorly encoded copies of SRV material and just plain dead files. (Meaning when I hit play, I got a "Cannot play this song" error message. If it can't be played, why is it showing up in any search result?) To me, using search/discovery/recommendation tools doesn't mean I want to play hide and seek.

- Consistency: if one can search for a song and the song shows up in results and includes the original album art (to me indicating maybe it's legit) and one can add it to a playlist, shouldn't it play? (Grateful Dead, some Mogwai, number of other examples were found.)

- There were too many dupes – multiple entries for the same artists/song/album – on multiple searches. The results for "Eric Clapton" were particularly egregious.

- I'm sorry, when I punch in "Jerry Garcia" in search, I shouldn't get "Gurls Wit da' Boom" by some guy named "Proof" in the search results. That's just wrong. Funny, but still wrong.

- While I agree humor has a place in music, am I supposed to be laughing at the search results?

But here's what I can't argue with: MySpace has tremendous reach as a portal – millions and millions and millions of users. It is important that MySpace was able to secure the deal with the labels to get licensed content into the service that users can play for free. What matters now is how they plan to evolve the service, to differentiate it from the many other sites providing free (ad-supported) streams.

How do we measure the impact on the online music market? For the moment, I think it's going to be what kind of sales it can drive to Amazon.

ISPs Talk Privacy on Capitol Hill

Watching AT&T, Time Warner Cable, and Verizon representatives testify at the U.S. Senate Commerce Committee hearing on broadband providers and consumer privacy made me wonder how long we can talk in generalities about online privacy and advertising without rolling out some storyboards.

Behavioral targeting veteran Dave Morgan offers a nice summary on MediaPost of the background and arguments for industry self-regulation, and both the House and Senate have made it pretty clear that they would like to avoid any legislation that might damage the online advertising economy. Plus, some of them seem a bit distracted at the moment. But there's a catch-phrase here that everyone appears to be lining up behind which makes me wince. It's "advance affirmative informed consent" – or some variant – which begs to be acronymed: AAIC.

Of course, AAIC sounds good: give consumers the information they need to make an informed decision about things like deep packet inspection and third-party tracking cookies and make them decide what they're willing to tolerate. I imagine my ISP presenting some kind of long EULA-like consent form the next time I open my browser, probably two minutes before I have to get on the phone with a client, blocking my access until I click a radio button indicating whether I agree or not.

As it happens, there's a much better way. I saw it demonstrated at Microsoft over a year ago, but I haven't seen it since. It's a small standard semi-transparent icon (call it a "disclosure bug") that appears in the corner of any display ad. When rolled over, it opens an overlay that explains why you're being shown this ad, which ad network or publisher is responsible, what your profile looks like to them and what method was used to obtain it, and gives you the opportunity to either immediately opt-out of the network (and wipe your profile), or adjust your interest categories if they've got it wrong. This puts the focus where it should be: on full transparency and granular control in the relevant context, rather than an AAIC that's likely to seem more like annoyance than empowerment.

I discussed disclosure bugs with many leading ad network executives at OMMA last week, and for the most part they thought it was a great idea. There are several reasons why behavioral targeting networks should like this, not the least of which is that consumers will soon learn that targeted ads actually are more relevant to them than non-targeted ads, which tend toward the "you have just won $1,000,000!!" sensibility. It would also allow consumers to improve the accuracy of their profiles and manage privacy pro-actively, and provide law-makers and privacy advocates with evidence of tangible progress in self-regulation. Last but not least, it would expose the networks who believe full transparency is a bad idea.

Unfortunately the IAB, whose privacy principles are still at the level of generalities, is probably not up to the challenge of pursuing such aggressive standards. Congress, for its part, is even more unlikely to get involved at such a level of detail. ISPs are arguably in the best position to take the lead on the concept of active disclosure for targeted ads. Although few of them practice behavioral targeting today, and DPI in the U.S. seems for the moment to have followed NebuAd into hiding, their long-term interest in advertising is likely to grow along with their triple-play aspirations. But they also have the distinction, unlike online ad networks, of having to answer directly to consumers.

Your TV Comes Pre-Loaded

According to a story in The New York Times, General Electric is getting back into the TV manufacturing business, partnering with Tatung, a Taiwanese electronic company, creating a series of new sets that have Internet capability. The plan is to start with Internet access via a separate box migrating to in-set Internet access next year. This is hardly first-mover advantage as a number of manufacturers, including Sony, already produce or have announced production of TVs with similar capabilities. The twist here is that GE, who owns NBC-U, plans on pre-loading content from the Peacock Network (and its subsidiaries) on the sets so you can watch "The Office" or recaps of Notre Dame football by clicking your remote on an on-screen widget. Yes, it's like turning on your PC to find myriad cheery icons offering free trials of AOL (sorry, couldn't resist), Microsoft Office or Quicken. Increasingly, hardware OEMs are looking with greater circumspection at third-party pre-loads believing that the valuable real estate on a PC screen could be something they mine with their own branded software and services.

So now we face a future where the next valuable virtual real estate could be on your plasma screen. And while the GEs of the world will naturally want to differentiate their widgets from others, IP-delivered content icons that pop up on your TV, this scheme will only work in open delivery platforms such as the one Yahoo! has planned for its TV widget plan announced at the recent Intel Developer Forum. If TV widgets beget more widgets then this could be just the fuel the electronic program guide businesses need to move forward with greater speed and add order to on-screen chaos.

Of even greater consideration is what impact IP-delivered TV content directly to the consumer could have on cable and satellite providers as well as telco’s hope for IPTV. For all consumers except those served by fiber optic networks such as Fios or U-Verse, bandwidth to the home will fall short of delivering a continuous reliable TV experience that comes close to today’s HD programming. With bandwidth caps and tiered pricing under consideration by leading ISPs, a likely outcome could be a premium service bundle that gives consumers the IP juice they need to fully deploy their TV widgets. This could provide an alternative revenue stream for cable company ISPs who may be threatened by cable service exodus. Such a move does puts IPTV in the form of telco TV in peril, replicating the business issue facing telco service providers on a number of fronts: what’s our future beyond the plumbing business? As of yet, no good answer has emerged.

'slotMusic' - Last Gasp for Bundled Music?

In hopes of giving the physical-format-upgrade cycle one last spin - not to mention maybe increasing the standard unit price that the majority of consumers pay for prerecorded music to anything more than $0.99/song - all four major music labels have banded together with SanDisk to announce "slotMusic," an effort to build consumer interest in the distribution of DRM-free, high-bit-rate-encoded songs on 1GB microSD memory cards.

But wait a minute, we're about six years into the legitimate online music market, and the labels want to take us back to the days of physical media?

Apparently, they do want to focus on physical. For SanDisk, the motivations are easy to understand: another way to ship more packaged flash memory. For the labels, however, the reasoning is a bit more elusive. I believe what we're seeing is the last gasp of the bundle for music. By throwing more "stuff" onto the microSD "album," the industry is looking to make the package as attractive and profitable as possible. I say that because my guess is that the unit pricing for a slotMusic card will be more than a CD. Retail pricing for a slotMusic card has not been released, and no availability date was announced today. SanDisk executives said they expect the slotMusic cards to be in the channel by the holiday buying season. (Wal-Mart and Best Buy are the two retailers on board first. Interestingly, both have been mentioned in news reports as reducing the amount of square footage they dedicate to CDs.)

SanDisk and the labels are touting the slotMusic effort as the answer for what they claim is a significant number of music consumers who desire not just ownership of music bits on a hard drive but also the packaging and everything else - liner notes, etc. (SanDisk said the parties had done market research to support this claim but did not have the methodology, sample size, etc. available when we spoke last week.) Some key benefits cited by the SanDisk executives:

• The growing number of mobile phones with microSD slots.

• Instant gratification: The SanDisk argument is that "buying" a song online involves finding it, downloading it and syncing it to a portable device. The "time to play" can be hours. With the slotMusic cards, one can buy them at retail and pop them in a device's slot and play immediately.

• As previously mentioned, no DRM and minimum encode rates will be 256 Kbps, with many planned to be released at 300 Kbps or higher. (By comparison, most of the songs in Apple's iTunes store are encoded at 128 Kbps.)

To me, it remains an open question whether a significant number of consumers will actually respond to the notion of extending the old concept of the "bundle," even though the bundle can now include not only songs but also video, lyrics and any number of items. It's the songs consumers are after, and today's digital natives seem to be quite comfortable going out and acquiring that other information as needed.

It will be interesting to see whether the slotMusic cards can become the '08 holiday season's must-have stocking stuffer or the latest example of a technology that misses a market shift.

Then again, "green" consumers might be crossing it off their lists, since it appears the retail packaging for the fingernail-sized microSD cards is about the same size as that of a CD.

Economic Uncertainty Casts a Shadow at OMMA

The Online Media, Marketing and Advertising annual conference in NYC is on and, as has been the custom for the last few years, Geoff Ramsey, CEO of eMarketer, gave his trademark opening keynote, "Warp Speed." This year, however, the pitch felt more like it was running on impulse power. (Sorry, no more Trek jokes, I promise.) The theme was supposed to be "Platform Wars," but this quickly gave way to current economic conditions. Early on, Ramsey cited a recent ANA (Association of National Advertisers) survey that revealed "53% of [U.S.] marketers expect a reduction in their ad budgets in the next six months," and also revealed eMarketer's latest reduction in overall U.S. ad spending forecast: 1.9% growth, despite the Olympics and the election. That's pretty grim.

Of course, online advertising remains a relative bright spot, if somewhat dimmer than in recent years: eMarketer forecasts for growth in U.S. online ad spending have been reduced from 27% to 17.4% for '08, although online media companies can take solace in the notion that, at $24.9B in U.S. '08 spending, online media is poised to overtake consumer magazine spending this year, having bested radio last year and outdoor the year before. In other good news, comScore revealed that, for the first time, social media has eclipsed porn as the No. 1 destination category on the Web.

Hulu CEO Jason Kilar offered more positive news: Hulu is now serving 11.4 billion video streams a month according to comScore - which is a lot - and it's rolling out some exciting new video advertising formats.

But the main story here seems to be the complex relationship among Wall Street, Madison Avenue and the global Internet. I think there's an unspoken fear that advertising - digital advertising in particular - has some very unnerving similarities with the financial services industry. They've both become swamped with data. They've both become dominated by increasingly complex and fragmented webs of intermediaries transacting around complex information products that often seem to lose contact with tangible assets. And they're both proponents of self-regulation and the hypothetical stability of self-organizing systems, which can collapse very quickly.

One important difference is marketing's clarifying relationship with sales, which are of tangible value. Google endures because it's connected fairly closely to sales, and it creates, rather than obscures, efficiency. Of course, Google is not Madison Avenue, and from Madison Avenue's viewpoint as expressed by panelists at OMMA, Google seems to be looking more like friend than enemy at this juncture. Under duress, agencies tend to revert to extolling branding as a religion and creative (always a noun) as revelation, even as these concepts are challenged by what Nigel Morris, CEO of advertising firm Isobar, summarized as the idea of "brand as service." But the tension is on the media side, where ad networks and Google are indeed pushing into territory formerly controlled by agencies and media companies with efficiency and disintermediation. If there is another collapse in store for advertising, it seems this time the industry's most venerable institutions are at greater risk than its young Turks.