Category: Business

Viacom, YouTube, and what it means for innovation

~ Jim Eltringham ~ Leave a comment

YouTube’s victory in Viacom’s piracy lawsuit will be, in the long term, a good thing for online innovation.

Almost a decade ago, Napster was dismantled because its users shared songs.  The technology it was based on was neutral – and could have been used to share legal sound files just as easily as illegal files.  But the technology became the target of content creators – musicians – concerned about people using the technology for piracy.

Blaming Napster because people used it to do something illegal is like blaming a hotel because someone turned a room into a meth lab.  The same analogy can be used for YouTube’s situation: they built the rails for video sharing.  People could use that to share a bootleg copy of Shrek 8, thus cheating Mike Myers out of his cut of the domestic gross or DVD sales.  They could also use it to share a video of a cat falling off the bed, or to create a video blog, or to jump start a comedy career, or to reveal a Congressman roughing up a college kid, or a Senator uttering something that sounds like a racial slur and changing the course of the 2008 Presidential election.

To be clear, YouTube should be held accountable for helping police piracy when concerns are brought to their attention, just as a hotel owner should cooperate with warrant-bearing law enforcement officials investigating meth distribution that seems to be coming from their hotel.  The people dealing meth should be punished.  If the hotel stonewalls and knowingly protects said meth dealers, they should be punished.  But otherwise, the hotel owner is just someone providing a product for private use, and can’t be held liable for its mis-use.

There are, of course, legitimate questions about how important Google feels it is to do right by the people it makes money off of – and the dicey question of how much knowledge a site can have of the activity before it makes a move.  But the result of the Google/Viacom case has less to do with a clash of the corporate titans than with shielding future start ups from liability (and excessive damages) for honest efforts to build online social networks.  If start up sites are held liable for their members’ illegal activities, it could crush innovation and entrepreneurship.  Under the Napster rules, some poor schmuck who isn’t as big as Google could lose his shirt for building a website in his basement because of the actions of the users.  The YouTube rules are simply more fair.

BP slogs, Exxon blogs

~ Jim Eltringham ~ Leave a comment

This week, Exxon Mobil launched Perspectives, a blog about “issues, policies, technologies, and trends” surrounding energy development.  Yes, that includes oil, and yes, they kick off by talking about the mess in the Gulf of Mexico.

No, Lionel Osbourne is not a featured blogger.

BP has received the lion’s share of the public scorn since the spill, but other companies remain vulnerable to regulations and increased taxes.  It isn’t an immediate challenge, but Exxon Mobil didn’t wait for the problem to come to them.

It would have been easier, in the short term, for Exxon Mobil to act like the accomplice of the kid who gets punished for a grade school food fight – sit on their hands, let BP continue to be yelled at by authority figures, and keep quiet hoping none of the outrage falls on you.  The problem with that strategy is that, eventually, the story will not be about BP’s specific failings but the failings – and potential failings – of the industry as a whole.

Of course the blog is biased and slanted, but Exxon Mobil makes no effort to hide its involvement.  Perspectives is clearly branded as the official Exxon Mobil company line – take it for what its worth.  And doing that now will help Exxon Mobil’s credibility (at least somewhat) in future discussions about what their obligations should be.  Plus they’ll likely to have some thoughts on what BP’s obligations are too.

Fantastic.

All politics are personal

~ Jim Eltringham ~ Leave a comment

TechRepublican points to this pretty cool video about the continued significance of social networking:

The importance of online engagement is nothing new to businesses and politicians – at least, it shouldn’t be.  Still, even those who appreciate the power of this communication don’t seem to grasp the underlying principles.

One set of stats stood out from this video: while only 14% of people polled trust advertisements, 78% trust recommendations from friends.  Those aren’t necessarily Facebook friends, either; the more technology becomes integrated in our lives, the more it exposes our human nature.  We trust people we know more than those we don’t know.  Political strategists from the nineteenth century understood the need for voters to hear from local party leaders, and no substitute has ever worked.

Speaking at an event in Richmond, Va. last weekend, Obama campaign manager David Plouffe summed up what that means for the campaigns of the future:

Plouffe said the campaign was built using the Internet to engage voters in volunteering, contributing money and “sharing the message” amongst themselves. Connecting these people — not only to the campaign but to each other — helped them build trust with prospective voters they engaged both online and face-to-face.

“There is a lack of trust — in government, in business leaders, in academic leaders, even in faith leaders,” Plouffe said. But, he said, “People trust each other.”

Forget about local – all politics are personal, and always has been.

The terrorism Jump to Conclusions mat

~ Jim Eltringham ~ Leave a comment

For the last year, the story has been the same – voters are upset with and distrustful of government, meaning we should be on guard for violent outbursts from the right.  It’s going to happen at one of these tea parties, we’ve been told.  Glenn Beck and his ilk are spurring violence, and not-so-secretly happy about the idea of angry mobs spurring armed revolution.  Democrats must live in fear, because Republicans are willing to stop at nothing to stop them!

So here’s a thought: just this weekend, New York faced a bomb threat.  The suspect is in custody, but there’s no indication on motive yet.  In fact, in stories buried under a sensational headline about South Park’s recent controversy, Rep. Peter King actually makes exactly that point:

Though King said the “hostile remarks” raised after the South Park incident were worth investigating, other potential targets – such as nearby financial institutions – needed to be looked at as well.

Financial institutions?  Well, let’s think about that.  Plenty of lawmakers have been taking shots at Wall Street, lumping the entire financial services industry in with the fraudulent and dishonest players.  The President himself has made a bit of a political comeback thanks to rhetoric based on widespread popular distrust of these financial institutions.

So if you have a “Jump to Conclusions” mat about the recent failed terror attack in New York, doesn’t one of all those “conclusions written on it… that you could… jump to!…” have to be that the Times Square bomber could have been operating based on what he has been hearing from Washington?  It’s perfectly logical if you buy the argument that harsh rhetoric from media mouthpieces incites acts of violence.

But like the jump to conclusions mat itself, it is a terrible, terrible idea.

Big Oil’s worst nightmare is, ironically, big oil

~ Jim Eltringham ~ 1 Comment

Questions may fly about who will pay how much to clean up the latest catastrophe in the Gulf of Mexico, but the answers affect more than British Petroleum’s cash reserves.  The accident which claimed the lives of rig workers and threatens the coastal environment’s short term health comes just months after President Obama made a big show of opening up new areas to offshore energy exploration.  From a business angle, at risk is the future of offshore oil drilling for BP and any other company that relies on the United States government for exploration rights.  In the coming weeks, the drumbeat to cap the wells and bring the oil derricks back to terra firma will only grow louder, unless BP and their colleagues take the right actions now.

The Action

Eventually, there will probably be a rational explanation of why BP wasn’t entirely responsible for all the economic damage, but as the current debate over financial reform legislation demonstrates, rational explanations will do little to convince populist politicians. In addition to directly funding clean-up efforts, BP would be wise to work through local governments to administer small business development programs to help industries affected by the spill get back on their feet – and possibly even exceed their previous production.

Working through local and state governments is especially key.  Criticisms of BP are most likely to come from those voices, but if they are satisfied with relief efforts, they could be powerful allies.

Incidentally, BP should not act alone in this.  Energy companies have been asking to drill for resources in the waters off the U.S. shoreline for a long time, and the most compelling argument against them has come to realization.  While BP’s visibility and leadership is vital, other companies have a dog in this fight, too.

Messages and Messengers

There are two important themes BP and the industry must advance.  First, they must highlight what they are doing to rebuild – the programs they put in place as well as the results.  The second (which involves the whole industry, is to re-affirm the value of offshore drilling.  In both cases, the people delivering the messages matter as much as the messages themselves.

Toyota’s handling of the safety issues which plagued them earlier this year offers some good advice to follow.  Toyota recognized that not only was the perception of their cars damaged, but leaked emails and memos damaged the credibility of their top executives.  Americans don’t trust CEOs, so  Toyota turned to the two groups that could offer credible, positive messages: the engineers and assembly line workers who make the cars, and consumers.

This is where online communication – and especially online video – will be important.  A video channel featuring commentary from government officials and environmental workers will offer a transparent and compelling chronicle of the relief efforts. And oil industry workers – from those on the rigs to those in the refineries – offer an important insight as well.  For them, offshore drilling is as much about putting food on the table as it is about lowering gas prices, and they are now the best spokespersons for the industry.

The reality is that we live in a time where often, government picks winners and losers in the business world – a proposition that puts BP and their colleagues at risk.  Further, since they are hoping to tap reserves in areas controlled by the federal government, The oil industry will not soon shed their image as a huge, greedy, quasi-government entity.  Americans are traditionally suspect of power.  The best thing they could do is admit some level of responsibility, work to rebuild, and – most important – invite the American people and media in to see the details.

Santa Clara County is your new Mom!

~ Jim Eltringham ~ Leave a comment

I know: it doesn’t seem fair.

All the kids in the other counties get a toy with their Happy Meal.  But you live in Santa Clara County, and Santa Clara County says you aren’t allowed to have toys with your fast food.

This is important.  After all, some foods aren’t good for you if eaten in excess, and someone has to be there to tell you to stop.  Who else is going to to that?  Your parents?  With kid’s meal toys out of the picture, there’s nothing that draws kids into these fast food restaurants.  Well, other than the fact that the food tastes really good to a kid.

Those other counties may seem “way cooler” now, but wait a few years and you’ll see that Santa Clara County really did know what was best for you all along.

(Unless you run a fast food franchise close to one of Santa Clara’s county borders and are looking to get any business on a Saturday afternoon.  Then you’re screwed.)

Facebook reporting

~ Jim Eltringham ~ Leave a comment

New York Times tech blogger Nick Bilton tweeted an “off-the-record” quote from an unnamed Facebook official today.  The groundbreaking revelation: CEO Mark Zuckerberg scoffs at privacy.

The leak was ill-timed for Facebook.  As Wired’s coverage points out, the “official” nature of an off-the-record conversation means that it probably shouldn’t have been repeated:

“‘Off the record’ restricts the reporter from using the information the source is about to deliver,” reads NYU’s Journalism Handbook, in one definition of the phrase.  “If the reporter can confirm the information with another source who doesn’t insist on speaking off the record (whether that means he agreed to talking on the record, on background, or not for attribution), he can publish it.” “On background” usually means that information can be used, but can’t be attributed to a specific person.

In other words, the person making the quote might have thought the information was private, but the conversation was set up so that information was revealed.  Boy, wouldn’t that be instant karma.
In reality, the unnamed source apparently understood that he would be quoted – which is good.  In media relations as well as Facebook, nothing is really off-the-record.

Senators make privacy demands to Google

~ Jim Eltringham ~ 1 Comment

Oh, sorry, that’s Facebook, whose tentacles are constantly expanding throughout the web, but not in Washington.  Sen. Charles Schumer and colleagues have posted an open letter on Facebook’s wall demanding to know just how the social network’s privacy options work.

In the meantime, Google continues to track, store, and process user data from various points in order to build advertising profiles – a practice which raises concerns not only about privacy, but about reach.  In fact, Google’s signature service, search, has a much lower barrier to entry than Facebook’s; while Facebook makes you create an account and is thematically based on the idea of sharing personal information, Google’s search service is open to anyone trackable by IP address.

So why does Facebook get a nasty letter while Google gets a pass?

It may have something to do with the fact that Google spent $1.38 million on lobbying in the first quarter of 2010 alone.  More significant than the actual dollars spent is the intellectual investment: Google has clearly made it a priority to be a Washington, DC player on both sides of the aisle.  This level of involvement positions Google as a resource, preventing policymakers from seeing what is an obvious parallel.

Going green

~ Jim Eltringham ~ Leave a comment

Check this out:

This commercial, which appeared on Good Morning America today, sends two interesting messages about the environmental movement here on the 40th anniversary of Earth Day.

First, if you do not live green, a barrage of tiny fists will rain down justice upon you unless your socks and underwear are earth-friendly. Be afraid.

Second, ecological awareness can lead to economical success.  The New York Times reports that environmentalism is now a business practice for many big companies.  Some activists are nonplussed:

To many pioneers of the environmental movement, eco-consumerism, creeping for decades, is intensely frustrating and detracts from Earth Day’s original purpose.

“This ridiculous perverted marketing has cheapened the concept of what is really green,” said Denis Hayes, who was national coordinator of the first Earth Day and is returning to organize this year’s activities in Washington. “It is tragic.”

Those that frown on corporate participation miss an important aspect of American business: left to their own devices, companies are reflections of culture.  If Hanes is push eco-socks and 20th Century Fox is adjusting normal schedules to release the highest-grossing movie in history on Earth Day, it’s because environmentalism is recognized as an important social value.  What isn’t recognized as an important social value is government regulation, which is why environmental consciousness has not always translated into support for the environmental political movement.

What might a more middle-of-the-road environmental movement look like?  Organizations which promote ecologically sound personal activity and issue report cards on corporate green initiatives should be the centerpiece.  Individuals are already interested in becoming more environmentally friendly and can vote with their own behaviors and their own wallets if properly informed.

No one wants to be beaten up by a gang of toddlers in a shopping mall, right?

More PR lessons involving iPhones

~ Jim Eltringham ~ Leave a comment

This morning, TechCrunch innocently poked fun at a press release from an iPhone retailer announcing that iPhones make men more attractive according to a survey of 1500 women.  Neither the retailer nor their PR agency knew anything about the somewhat embarrassing release, which led to an email exchange with blogger Robin Wauters.   Wauters, predicatbly,  has made the whole thing public.  (As Wauters reveals, the retailer and the PR agency eventually determined that the release was sent by another consultant, which through some mix-up in communication thought it was cleared to send the release.)

That second post detailing the back-and-forth calls parallels the story of former U.S. Senator William Scott of Virginia, who was named “The Dumbest Congressman of Them All” by New Times Magazine in 1974.  New Times only lasted for a few years, and was best known for investigating conspiracies and left-leaning social commentary.  Polling data from the era is sketchy at best, but it’s a safe bet that if Sen. Scott had constituents that subscribed to New Times, they weren’t people who were going to vote for him.  Still, Sen. Scott held a press conference to denounce the magazine article – a move which only served to give the story legs and make sure more of his constituents knew someone had called him an idiot.

Sometimes, if you shut your mouth, the bad news just goes away.

TechCrunch is a great, widely read blog; but if the retailer and their PR consultants had said nothing, would this morning’s tongue-in-cheek post have resulted in fewer iPhone sales?  It’s doubtful.  Much more likely to hurt sales is the perception that the retailer is disorganized and has the fingerprints of professional public relations operatives all over their brand.

When negative information gets out there, the objective is to put out the fire.  Sometimes, if you throw a blanket over it, the blanket bursts into flames.