Our (We) Media Dissonance

(Follow the We Media conference on Twitter #wemedia, also at wemedia.com .)

The sky is falling! Newspapers aren’t going to survive. They’re declaring bankruptcy en masse. The Seattle Post Intelligencer is the latest considering going digital-only, I was told last night at We Media, along with the San Francisco Chronicle. Others already have given up some or all of their print editions. TV networks are bleeding, book publishers are laying off hundreds, magazines are shuttering. Even Web advertising is down for the big guys.

And, yet, it’s a time of incredible creative foment, when tools of creation, distribution and connection -- and the ability to make money from it all -- have been given to more of us than ever. When multi-billion-dollar companies can be created in a few years on the back of a search algorithm or by using the Web’s distributive power to sell books and the Kindle electronic book reader. When solo bloggers can make fine livings with nothing more than a laptop, energy and a few writing and coding skills. And connections the technology gives us all the ability to make. (Witness Ushahidi's ability to save lives using open-source tools avaialble to all)

Last night at the We Media conference opening reception, I asked keynoter John Zogby, the noted pollster (who was flogging his new book , “The Way We’ll Be”), about this dissonance, about what he finds in his survey of America, this odd mix of hype and near-hysteria about the economic downturn against the more than half-full part of the glass I also see.

He, like many , cited Schumpeter’s creative destruction. And he said that while the American <i>people</i> get it (they have adjusted to lower pay and expectations, and realize what’s happening, and have been realizing it lo these past 15 years), it seems our institutions haven’t, that they don’t realize what’s happening to them. (That in a way is a quick definition of Schumpeter’s thesis: that the big don’t get it and fall as the upstarts come in to disrupt them.) He also framed much of his remarks in terms of his findings that apparently form the foundation of his book: 18-29 year-olds are part of a new, international world citizenry, more interested in making friends and connection via interest than geography, able to travel widely and easily, expecting to have 10 or more places of employment in their lives, expecting to feel personally empowerd.

It is odd, though, that the institutions are ultimately a combine of the people who presumably “get” what Zogby says they do. Zogby and We conducted a poll that supports the assertion of distrust in institutions: “Americans are deeply dissatisfied with the leadership currently provided by large companies, government and traditional media – and they are not confident the leadership from these groups will improve in the future.” The poll found much more confidence in small business, entrepreneurship and science. In the words of We Media co-founder Andrew Nachison, it’s “a historic, global shift in human behavior and organization. A new era.”

(An aside: I remember the feeling of disorientation I felt in 1997 in Hong Kong, having gone there for Handover of the territory back to China from Britain. It was early days of the Web. I was the founding international producer of ABCNEWS.com, and was there on my first international assignment for the site. It was me, my camera, and a reporter’s notebook, shooting video of artists, dissidents, shoppers, businesspeople, politicians, and putting it up for all to see, combined with a bunch of writing and still photos. Total cost: airfare, hotel room, and some telecommunications and videotape. In the hotel, the news anchors like Peter Jennings and Ted Koppel had taken over a floor, running thick cable, established large editing suites and lit studios, spending, I would guess, hundreds of thousands of dollars to put together their broadcasts. Of course, the order of magnitude was incomparable, as was the quality. But I felt, then, the beginnings of a gulf between the solo and institutional practitioner -- even though I was part of the institution -- that is now coming home to roost more strongly.)

We Media, Miami

I'm at the We Media conference in Miami through Thursday. Already, tonight got to ask noted pollster John Zogby about the dissonance I feel -- the incredible feeling of hope and possibility rendered by our new technologies, attitudes, international outlook, generational change, while being barraged on the other hand about economic crash, doom and gloom around us.

He said short-term people are worried, long-term Americans are optimistic. Also said they've largely adjusted to the difficulties in the economy lo these past 15 years, many with incomes more than a quarter less than previously. So, they now have less but understand that as the case for them.

We Media's Andrew Nachison and Dale Peskin also asked me to write up the Game Changer awards.

Seminar: Finance for Media Professionals

Dorian's Teeming Media is sponsoring the following course. It's a great deal.

The budget in an organization doesn’t go to the best projects. It goes to good projects that are best presented in financial terms. The more you understand about how the company makes financial decisions, the greater your ability is to get the funding.

In these financially distressed times, you need more than ever to:

* understand the way money flows in your organization;
* bolster your financial skills and learn the finance behind decision-making;
* know how to interpret budgets, secure funds, earn revenue, and do more with available resources.

Whether you’re a creative media professional, an advertising executive, a producer, a publisher, an entrepreneur or in any other area of the media industry, this seminar will help you build skills that will make you more valuable, help you keep the job you have, get a new job, secure new business and make you a stronger competitor in today’s marketplace.

In less than three hours, we will teach you in depth how to read and understand:

* Balance Sheets;
* Income Statements;
* Cash Flow Statements;
and, crucially, why you should care about all of them.

Register here! Only 15 Seats Available. Special $50 rate for an intensive 3-hour seminar. March 23, 6-9 p.m.

Where Does For-Profit End and Social Good Begin?

Michael Cervieri at Scribe, whom I work closely with on Naked Media and other projects, writes about a complaint against the Boston Globe website, which has used material under a Creative Commons license, but may be violating its terms because it's for-profit. Here's my take, left on their site as a comment:

The discussion of commercial vs. non-commercial is becoming ever more difficult. Innocentive -- a Game Changer award-winner from our Naked Media media partners "We Media" is venture funded and helps companies get crowd-sourced solutions to their scientifically oriented challenges (injecting flouride into toohpaste, finding a new chemical compound, etc.) but is also helping find cures to AIDS and ALS for charitable foundations.

SocialVibe, another award-winner that's also venture-funded and for-profit, helps users place ads on social networks like Facebook, and elect a charity to which the ad money goes.

We could be cut and dry: is the entity created and incorporated, is its legal tax status "not-for-profit." In that case, both the above companies fail the sniff test Michael alludes to. But, isn't that, then, shooting some not-for-profits in the foot, if we force the narrow interpretation on them?

I have been personally working with We Media, and will be going to the conference in Miami next week. Having interviewed all the award-winners, I came across this new trend of holding both capitalistic and social ideas in one's head at the same time. I don't think one has to say it's one or the other.

Still, Facebook is Thriving

OK, I may have jumped the gun in saying Facebook has "jumped the shark." Maybe it's just gone mainstream, just as broadcast TV networks did decades ago. And, in going mass, it's got a real (potential) business, but also lost some of the specialness, and become more of a platform for things like marketing and ads and so on.

As everyone's been saying all over the "mainstream" media, it's still getting hundreds of thousands to sign up every day, has something like 175 million profiles and so on. But, I'd still like to see some real figures -- how many profiles are active, how active are people 1, 3, 5, 24 months after signing up (growth or diminished)? for how many people is it a regular habit? Is Facebook Connect -- which allows folks to do Facebook stuff outside the Facebook universe -- a boon, a help? Is there a sweet-spot demographic group? What types of users use it most? Who's really made money off it? What utility does it really serve for people? What are the revenues vs. the costs, and what's the cashflow?

Maybe the parodies (aluded to in the post linked above) are a sign of how popular it is.

How Facebook is Jumping the Shark

Update: Still Facebook is Thriving. (If this makes me seem like Tevye in "Fiddler on the Roof" (on the other hand, on the other hand), so be it.)
= = = = =

OK, ok, the phrase "jumping the shark" has also "jumped the shark," (gotten stinky old and stale), but here's why: It's not just the recent brou-ha-ha over the change in Terms of Service reported on Consumerist (which according to reports basically gives FB ownership of your information in perpetuity -- FB has since rescinded the change, says Consumerist.)

It's because Facebook is following the typical pattern:

- Write the cool new app
- Get it to be popular
- Get some press
- Make it more open, to make it more popular
- Become a place where marketers can reach people in a very targeted way
- Become a place where the marketers then climb aboard en-masse, along with everyone else who's got an agenda in trying to reach out to tons of people. PILE ON, everyone
- Get lots of press for a few things (25 Things ..., "poking,")
- Make a few fumbles
- Get to be a place where your "friends" get overwhelmed by people who aren't, really, but instead just want something from you.
- Get bad press
- See parodies from folks who should be in the "target audience group."
- Start to plateau. See user profiles lay fallow en masse
- Start to decline or become less "hot" as people move on to the next new new thing.

Here, thanks to AllFacebook's Nick O'Neill, is a funny parody of 25 things. Note that a comment on YouTube says "People Still Use Facebook?" That sentiment is becoming more frequent.

Reply to Fred Wilson on Apple's Closed System

Fred, I don't believe you're talking about technology, here, though that is the tenor of many of the comments. I would guess that your real point is about open vs. closed systems -- and that open is the ethos of the day. Closed systems have a more limited lifespan now.

Whether the technology for going from one screen to another is Flash or AIR or anything else ( and I know people who make little distinction among screens) what you want is to be able to watch and listen to what you want, when, where you happen to be. If Flash is the current lingua franca for that type of experience, so be it, and that's why (I'm guessing) you're encouraging Apple to allow Flash.

The point you make about Apple being closed has been a long-standing complaint and a reason it took me a long time to come over to using Apple computers. Even now, they're more open than they were -- one can, for example, use Windows on them, and there are various syncing capabilities with non-Apple products -- but the system is clearly still built to create the preference for Apple's closed ecosystem.

That's ultimately, i think, going to hurt -- unless their strategy is to be a high-end niche product for very specific groups, and not reach ever-widening scale.

(I could play devil's advocate and talk about how Apple computers work, bug-free and the devices that ARE approved work fairly seamlessly together with minimum hassle, unlike PCs. But that's a different discussion.)

Disclosure: typed this on a Mac. A PC laptop is on the shelf over my shoulder in the kitchen.

Originally posted as a comment by DorianBenkoil on A VC using Disqus.


Thanks to Fortune's Apple 2.0 blog for pointing out this YouTube video of Apple products through the ages. 

Without paying attention to the fact that they're Apple, they're like a trip through our technological form-factor development-- getting more and more like our science fiction imaginings over time. (Those who read or watch science fiction will get what I mean. If you don't, that's OK.) More curvy, metallic, less boxy. What's important is the stuff inside, software miniaturization, power -- but the human 'touch' aspect matters, too.

"Web 2.0" Declines - Because it's Part of Us

Robin Wauters on TechCrunch talks about the end of "Web 2.0" as a term, and ponderswhat the decline in use of the term means (giving some evidence as to why it's declining).

But as "Web 2.0" declines as a term, that doesn't mean that what Tim O'Reilly was describing in coining the phrase is declining, as well. As we use the linking, grafting, sifting and sorting technologies, mashup our own media, build a continuing Web of interlinking info-clouds, Web 2.0 is a meaningless term because we all know what it is. It's just air. It's there. We don't talk about Web 2.0 any more than we talk about the technology that brings TV signals to our TV sets or voices into our ears via the telephone.

Some day, we won't talk about ".com" (just as we seldom say "www" anymore). We'll just do what we want via whatever interface without talking about . We'll use Twitter-like short bursts, and share photos mapped via locating technologies and share videos and photos and accessing information, and conducting commerce and what-not. But less and less will we talk about the methodology. Rather than fascination with HOW things get done via whatever fulfillment mechanism or description of the technology or methodology, we'll just be doing it.

Kindle 2: More Open?

Finished the Amazon Kindle 2 e-reader news conference this morning, and you can read all about it all over the place, including my twitter feed, with hashtag #kindle.

I've asked for a review copy and will let you know (at Naked Media) what I think of it. From appearance, it's a next generation of the device: thinner, a tad lighter, easier to navigate with a new 5-way button, better resolution with its e-ink, and importantly, charging via a USB and a strong text-to-speech reader.

But what strikes me is something Amazon isn't revealing details about, but which has been rumored and CEO Jeff Bezos confirmed: Users will be able to read Kindle purchases on the Kindle 1, the Kindle 2 and unspecified other devices, apparently smartphones. A Kindle exec I asked wouldn't say which ones, or what the pricing or terms would be, but the aim he said is to have multiple devices. Bezos said reading something on one device, then moving over to another you'd be able to pick up where you left off. That's a tiny hint of the kind of openness Kindle will need, I think, to survive long-term. As I've written before, I tried to love my Kindle, but couldn't get into it because though it is an electronic device it is a closed system that doesn't allow me to grab pieces, move the pieces around, access them from anywhere and so on.

One other thing I noticed: the test customers on a video Amazon showed, maybe 8-10 of them, all appeared to be 40 or older, or youngest in their thirties.

Fundamental, Not Cyclical - Media Becoming a Different Beast

While the current economic crisis is unveiling a wealth of troubles for many businesses and industries, it’s also masking some fundamental issues. Advertisers, publishers and media companies will presume that, once the economy picks up again, and marketers assign larger budgets, that they, ad-supported media, will come roaring back with the economy.

But even Disney CEO Bob Iger acknowledges that changes in consumer behavior are due to more than the economy. Craig Moffett, an industry analyst at Sanford C. Bernstein & Company, told The New York Times that it's not correct to call the slowdown in cellphone sales "a cyclical problem."

Companies that seize market share and are able to do well over the next six months or year may, indeed, shoot out of the gates toward the end of ’09, or beginning of ’10 (advertising tends to be a trailing economic indicator, unlike the stock market, which leads). Traditional media that hasn’t done a good enough job of addressing the market shifts may do better then, but over time will be in jeopardy -- a possibility picked up noted by NY Convergence (which I've helped build as a consultant), contrasting the forward-looking mood at the AlwaysOn On Media conference with the somber orientation of media execs at the Crain conference across town in New York.

At the On Media conference you could almost feel a shift in the air. Everyone was questioning everything: What valuations are, whether the venture capital model really works, whether VCs ask too much for their money, whether ad targeting and re-targeting will fall prey to privacy concerns; even the demise of ad networks that bought lots of inventory who are now sunk by using arbitraging schemes of buying ad space in bulk from the likes of Yahoo, and are now unable to sell it at a profit. At the same time, a bunch of widget-makers like RockYou and Meebo, and ad networks, and early stage investors talked about great growth and huge opportunities. There’s some real disruption here, and it’s fundamental. Social media expert Larry Weber likened big media's practices of demanding control to mafiosi, and hinted that unpaid media would bust the system apart.

The shifts, I'd say, are more fundamental, even than the old saw about horse and buggy or train companies not understanding they were in the transportation industry. The new media industry may not be like the old media industry. Sure there is still advertising and aggregating audiences. Great stuff -- content, we now say -- gets watched and read and listened to. You can talk about audiences, and demographics, and screens and technologies. Fred Seibert, ex of MTV and other traditional media, now of Next New Networks, kept driving the point home in the most recent episode of Naked Media (soon to be live at NakedMedia.org) how much he could draw on lessons of the past to inform his practices today. Yes, but. And it’s a big but, because today’s media require not only a different set of technical skills, but also a different mindset, one where literally everyone with any networked device has the tools to do something they can call media. A world where media consumers want to talk back not by yelling at the TV or writing a Letter an Editor may not publish, but by getting a response from the media creators and purveyors. Where fans will take and make something their own, and a media company can be created from a search algorithm.

The mindset and skills of today require a type of openness to innovation and audience participation (and I even recoil a bit at that phrase, because it’s almost as if there is no longer an audience that’s separate from the producers) that’s quite alien to many folks who’ve made media for decades. When the economy gets better, that will help us see how fundamental the shift has been.

More on Media Money

A few consistent themes over two days at the AlwaysOn, OnMedia conference yesterday and today from venture capitalists, bankers and other investors:
  1. If you invest, you’ll have to invest for the longer term -- people aren’t kicking in as easily with subsequent rounds. (Echoes earlier remarks by David Rose and others.)
  2. There’s so little surety in the market, that people aren’t wiling to say what a deal is worth, how many deals they’ll do, and have very little visibility into the future. “If Microsoft can’t predict next quarter results, how can we?” one banker told me. When I asked a panel to give any specific numbers -- from valuations to expected dollars to number of deals, anything they were wiling to share for what they saw in ‘09-- they instead said that the nature of the deals had changed.
  3. The previous assumptions and equations for measuring a deal’s worth are way out of whack. Steve Fletcher, Managing Director, GCA Savvian, said that while debt was previously measured at seven percent (the interest rate on a loan), it was now as high as 22 percent, and that equity risk, previously measured at 5-7 percent, was now “a much bigger number.”
  4. Money people have a more free time now. Jay MacDonald a partner at media bankers DeSilva & Phillips joked when there weren’t questions coming to his panel on media M&A: “Come on, we have time. Bring in some lunch.”
  5. Deal prices are down, investors are in a better position to demand better terms (Series B rounds at Series A pricing, for example.)
  6. At the same time, those looking to sell companies aren’t yet willing to sell at the lower valuations. “Six months ago you were ‘worth x’ and today you’re worth .5x. It’s tough to get your arms around .5x. It’s going to take a while for companies to rationalize that, says Tom Patterson, CEO, Wize.
  7. Early round investors “have to be prepared to invest every year for fives years,” says Bob Greene, Partner, Contour Venture Partners. (The angels, to make their original investment pay off, will keep investing in a business that can grow.) see point one, above.
  8. Businesses that are doing well in this environment are ones helping generate sales -- sales leads, targeting, and the like, “business models able to deliver highly qualified leads in a marketplace where people want to be very efficient with their spends,” MacDonald said.
Still, some things haven’t changed: Investors want a good team; they’re more interested in the team than the idea; entrepreneurs have to be flexible and willing to change the business model; don’t overnegotiate with early round investors (they need to feel you trust them and they can trust you). You can see more on media entrepreneurship , here.

Newspaper Industry Solutions: Everybody Has One

It seems like everybody’s weighing in now on newspaper revenue models: Here’s a pitch to save The Scotsman, by merging with its Scottish competitor; here’s New York Times executive editor Bill Keller (via PaidContent) on what he’s thinking about charging for subscriptions. Here’s Silicon Alley Insider with an analysis that actually breaks the numbers down. And here’s Allison Fine, picking me and others up, rebutting an Op Ed (in the Times) saying newspapers needed to follow the foundation model.

And here, for the record, is my earlier piece rebutting that Op Ed. In a nutshell: there are many business models that can work: here’s a list of ones to mix and match. The piece links to earlier analyses from Jeff Jarvis and Dave Morgan.

At the On Media conference yesterday and today, heard a wire service exec talking about how their company had a banner year in '08, but their core membership (which means newspapers) was ailing. Hmmmm.

More Cellphone Trouble

And, as if by magic, the NY Times comes out with a piece today on how troubled the carriers are. It blames the troubles on saturation. I say the way out is changing the model from closed to open, and getting more scale, with revenues that are not directly tied to use of the networks.

Here's my previous bit: Cell Phone Networks Take Another Hit

Cell Phone Networks Take Another Hit

In this age of open, digital and shared media, those who opt for control -- especially if that control gives them what’s deemed an unfair share -- will be attacked from many sides. Witness the music industry’s overpriced CDs of albums they’d already sold in vinyl. (And compare it to the success of iTunes, which has been attacked for being controlled, but has also relented and removed DRM and also is now playing with pricing.)

Today, many companies are developing -- and consumers are loving -- options to go “off-deck” and circumvent cellphone carriers, either by installing applications on their phones or by accessing the mobile Web. The cellphone carrier networks, the Sprints, AT&Ts and Verizons of the world, are demanding what one wag here at the AlwaysOn conference called a “rapacious” share of anything that runs through their system. Not only do subscribers, locked into costly contracts, have to pay for every new piece of service, and difficult-to-understand fees, but the carriers also demand that anyone who wants to provide a service to their subscribers -- anything from weather to movie listings to paid video -- give the cellphone carriers a share that can be as much as 70 percent. Plus the fees are often dictated by the carriers. These moneys were easily demanded in a day when the only way to reach cellphone subscribers was through the network, and the interface on the phones that the carriers controlled. The carriers also controlled the information about the use of the networks; some would say that they are protecting their users’ privacy. Fair enough.

But with the mobile Web, and applications for smartphones like the iPhone and Google’s Android system, it’s becoming easier and easier for content companies and their consumers to circumvent the network. Medialets chairman and CEO Eric Litman told me today about how his company is embedding code in Apple’s iPhone apps that allow his firm to measure all kinds of data on the phones’ usage, a lot of typical Web measurements, for example, like pageviews, unique visits, time on site and so on. The trick, he said, was that the Apple folks had not demanded anything from the code, and had struck a deal with AT&T that required the carrier to let apps through unblocked. The book “Planet Google” by New York Times columnist Randall Stross points out how Verizon kind of sort of bent to Google, which was bidding on new cellphone spectrum, demanding that cellphones be allowed to work on any network instead of being locked. (It’s not clear Verizon fully kept its promise to do so, Sross says, but that’s another story). At a panel I appeared on with partners Scribe Media last fall at Streaming Media West, the argument was over whether subscription video on cellphones could survive when people could go get what they wanted for free.

In another panel, on what business can learn from Obama’s use of social media, Larry Weber of Racepoint Group, Digital Influence Group, said media companies were structured so much like mafiosi that their hold was “hard to break.” But, he said, the era of unpaid media was coming. Don’t know if I agree with the characterization. But it is hard to see how business models based on control -- rather than enticement and service -- will win.

What the Economy Means for Media Investment

Investors here at the AlwaysOn media conference have been confirming in private discussions and on stage what angel investor David Rose said recently: that their money is having to stretch farther, that others are reluctant to come into the rounds as early.

One venture capital investor also told me he’s seeing “A Series pricing” for B and C rounds, meaning that people investing even later in a company’s life cycle are able to, for their money, get a larger share of the equity. For example, instead of getting 15 percent of the company, they’re able to get a fifth of it, he said.

But in a sign of optimism, another, based in Silicon Valley, said that funds of money that were raised 1-2 years ago are still uninvested, so they will need soon to find something to invest in in the next few months.

Later, on a panel about later-stage venture capital investment, Alan Spoon, Managing General Partner of Polaris Venture Partners, said he was seeing more funds looking to others for liquidity, trying to shore up balance sheets and less interested in such calculations as ROI (return on investment -- which in the financial world is a more specific ratio than often gets thrown around in advertising) and IRR, another ratio that figures out the internal rate of return -- how much a company is supposed to be able to earn from the money it has.

The pressures on the markets are making hedge funds and mutual funds get out of the venture game, the panelists also said, and money is being lent and companies being valued at much lower valuations than before the bust.

Spend Less, Gain Market Share

"When you’re comparing yourself to companies that are spending ‘like drunks,’ you should take comfort, because market share will come to you merely by outlasting them."

-- Richard de Silva, General Partner, Highland Capital Partners, at the AlwaysOn OnMedia conference in New York