Category: Business

Hulu learns content is still king

~ Jim Eltringham ~ Leave a comment

The decision by Viacom to pull its content from Hulu – while still keeping that content online – shows exactly why Hulu is the #2 site for online video.

As Tech Crunch reported, a key factor was the share of the ad revenue – Viacom makes more money by selling ads for video content on its own websites because it doesn’t have to split that money.  At the same time, Viacom can still make clips of its shows sharable and embeddable.

It brings to light a significant problem for Hulu: what value do they really add as a third party service?

Hulu was born because founding parents Fox and NBC were rightly worried about their content being ripped off and posted on YouTube – and because they realized that online video was an entertainment medium that they needed to embrace in some way.  The Simpsons, SNL, Heroes, Family Guy, and other shows from those networks made it on the site, along with content from their cable and feature film properties.  Other media companies, like ABC/Disney and Viacom, signed on as well.

The reason Hulu has always played second fiddle to YouTube is in a distinct difference in their business model.  While Hulu has always been about the content, YouTube has served as the infrastructure for the advent of web video.  In the days before YouTube, putting video online meant thinking about managing huge files and possible paying exorbitant hosting fees.  YouTube’s value to the content provider was allowing people who otherwise could not have done so to share video – whether that meant a cat falling off a bed or an independent short film.

Hulu’s value proposition to its content provider partners appears to be the ability to give them space on a high-traffic website.  But like YouTube and any other online video site, traffic comes because of content.  In reality, high traffic numbers are content providers’ value to Hulu, rather than the other way around.

This doesn’t mean the end of Hulu, of course – after all, the site was started by content providers.  But it may mean that, eventually, NBC/Universal and Fox find that they are the only ones left on the playground.

The cost of doing anything

~ Jim Eltringham ~ Leave a comment

Starting this week, my daily commute costs 20 cents extra.  The “temporary” DC Metro fare hike lasts only until June 27 – just in time for the start of Metro’s next fiscal year, when they will likely institute a more permanent and steeper fare hike to cover their operating deficit.

Today, the Post Office – like Metro, facing an institutionalized budget shortfall – is recommending reductions in service and may look to increase postage rates.

From the consumer standpoint, Metro riders and people who still use the mail are being asked to pay more for less service.   And while these organizations are probably rife with waste and fraud, the simple fact is that the 44 cents earned from the sale of a stamp or the $1.90 in revenue from a basic, one-way fare doesn’t do as far as it used to.  Inflation affects everyone.

Which brings us to Jim Bunning’s assault on common decency, humanity, America, and of course extending unemployment benefits with money the federal government, quite simply, does not have.

Running up deficits and debt in order to fund stimulus projects or propping up financial institutions – or even to “help” those who are out of work – is an attractive short-term strategy, but a long-term repercussion of financial instability is inflation.

In other words, this program to help the unemployed actually raises prices – like the cost of Metro fare to get to a job interview, or the price of a postage stamp to send a thank you note after a job interview, or the price of food for breakfast to make sure you’re sharp at your job interview.  It’s like feeding the hungry with food that induces vomiting.

So, is Jim Bunning really being all that unreasonable for drawing a line in the sand and asking for spending restraint?  Or is doing more than any other Senator to help the unemployed?

The loss of an American icon – literally

~ Jim Eltringham ~ Leave a comment

MTV will make a small but significant change in its logo.  The M, the T, and of course the V will remain, but the channel will no longer include the words “music television” underneath.   Those of us nostalgic for the early glory days – when one could actually catch the video for Glory Days on MTV – may complain about the death of music television, but will we really miss it?

When MTV first launched, shows like Yo MTV Raps and Headbanger’s Ball acted like radio on television – giving audiences a way to expand their music horizons and generating crossover appeal.  As videos evolved, they became more involved and independent of the music they presented – short films set to music.  There was always a reason to tune into MTV and watch hours of music programming: either you might find something new to listen to, or eventually you’re going to see your favorite funny or interesting mini-movie featuring some cool music.

Finding new music you like can be done on internet radio stations like Pandora.  And if you really want to see music videos, YouTube or a plethora of other sites can serve that purpose.  Music television has been erased not only from MTV’s logo, but from television.  It’s a wise programming move – an extended block of music videos just isn’t useful programming anymore, unless it’s overnight or early morning.  You can’t get money for nothing.

All that being said, there are some of us who latched onto our favorite bands, in part, because of interesting and innovative videos… like these:

This week’s buzz about Google

~ Jim Eltringham ~ Leave a comment

I joined Google Buzz this week.  It was easy – I didn’t have to do anything except log in to GMail.  Google had transformed my private email – including my contact list (which it automatically populates based on my email traffic) into a social networking experience, a hybrid of Facebook and Twitter.  After several privacy complaints, Google made opting out of certain features a bit easier.  It’s still a little creepy.

Tellingly, Buzz allows you to integrate your Twitter feed but not for Facebook profile – another sign of the coming Armageddon between Google and Facebook, which Google will likely get to right after their fight with Apple and possibly after their fight with Microsoft.

How big is Google?  There were three separate stories about Google which made headlines this week.  That’s not three articles – but three separate issues which made news independent of each other.  First was the aforementioned Google Buzz; second was Google’s plan to become an internet service provider; and now comes news that Google is butting heads with the Department of Justice over intellectual property rights of authors as part of their ongoing effort  to become a latter-day, digital Library of Alexandria.

That these are all separate issues leads to them becoming one issue.  Google is seeking to define how you get to the internet, how you communicate with others, and what information/content you receive.  If this scenario continues on the same logical course, Google would become to the internet what AT&T was to the telephone networks before it was broken up by a federal antitrust suit in 1984.

Is Google at risk of an anti-trust lawsuit?  Possibly, but they have certainly done their best to make inroads with the government that would prevent that from happening.  The relationship between Google and the current administration is well-documented.

And if you believe the balance of power in Washington will tip back to Republicans in 2010 or 2012, Google is ready for that to – they are sponsoring TechRepublican’s Digital Boot Camp at CPAC this year.

Sunday Funnies: Learning economics doesn’t have to suck

~ Jim Eltringham ~ Leave a comment

The President’s proposed spending freeze has touched off a debate between Keynesian liberals and free marketers over the role – and capabilities – of government spending.  Perhaps you have seen talking heads bickering about these theories, but the best way to articulate this century-old dichotomy of economic theory is, of course, a rap battle:

What does it say about the state of journalism that this actually outlines economic theories better

Google: booking it out of China?

~ Jim Eltringham ~ Leave a comment

The big technology news today is that Google is threatening to leave China, leading to a wave of speculation on what that may mean for both the gatekeeper of internet information and the Chinese economy.

On the surface, Google has said this is about human rights and cyber attacks – which are likely, at least, factors in their decision. But this isn’t the first time Google’s China operation has been in the news in the last few weeks.  Recall that Google’s efforts to make all books available online has run afoul of copyright holders in China (as it has here in the States) and even spawned a lawsuit.  Negotiations on what Google would pay the authors of the works it scanned and made available to search users were subsequently put on hold.

While Google’s exit strategy is a good way to draw attention to human rights, in the end it may be a way to beat the Library Cops.

(Disclosure: I have worked in a minor role on projects involving Google’s book settlement in the past, although I do not now.)

When the Superbowl isn’t the Superbowl

~ Jim Eltringham ~ 1 Comment

A few years back, the late Mark McCormack – a key figure in the sports marketing industry and, by some accounts, the basis for the character Jerry Maguire – wrote an excellent business book, Never Wrestle With a Pig.  It outlines various rules for succeeding in a professional career, one of which is to prepare for what McCormack calls “your Superbowl” – a key event which puts your talents on display.  For a campaign, that’s Election Day, for a conservative organization looking to make a splash, it might be CPAC.  In the big brand advertising world, the “Superbowl” was, well, the Superbowl for decades.

In what is a telling sign of the evolving media landscape, big brands like Pepsi and GM are sitting out the Superbowl this year.  Even as ad prices tick downward slightly, Pepsi chose to invest $20 million in a social media campaign instead.

In many ways, corporate advertising is becoming more like a political campaign.  Successful political operations use broad-based communication – like TV and radio ads – to raise name recognition, but as election day nears they focus on contact with individual voters with targeted messages (those solidly in a candidate’s camp are reminded to get to the polls on election day, while those identified as being on the fence are coaxed onto one side or the other).

Pepsi is the second-best selling soft drink in America.  That’s a great spot to be in – it means selling an awful lot of soda.  But it also means that there are plenty of people who, no matter what, aren’t going to buy your product.  Pepsi could get in front of millions upon millions of pairs of eyeballs with a Super Bowl ad, but would those eyeballs be attached to tongues which desire Pepsi?  Or would their entertaining commercials be laughed at and talked about by people who, at halftime, would still reach for a Coke?

Pepsi first claimed to be the choice of a new generation in commercials which approximately one generation ago, but more recent branding has labeled Pepsi as “forever young.” Their advertising strategy has evolved, too (though they surely hope the comparison of Will.i.am to Bob Dylan isn’t congruent to the comparison of their new strategy to their old one).

Sine we’re all wondering, there’s still no word yet on how all this affects Bud Bowl…

Taxing creatively to subsidize creativity

~ Jim Eltringham ~ 1 Comment

A government report in France has proposed taxing internet advertising to subsidize creativity:

France could start taxing Internet advertising revenues from online giants such as Google, using the funds to support creative industries that have been hit by the digital revolution, a newspaper reported on Thursday… The levy, which would also apply to other operators such as MSN and Yahoo, would put an end to “enrichment without any limit or compensation,” newspaper Liberation quoted Guillaume Cerutti, one of the authors of the report, as saying.

The reasoning, apparently, is that internet giants provide a bridge between users and free content – reaping  rewards through advertising dollars while content creators are left out in the cold.  While those content creators should have the right to control access to their products, this scheme doesn’t come close to doing that; it does, however, limit internet platforms that more creative artists might use to gain exposure.

Google has it’s problems, but no one can debate that their business model is creative.  Google monetizes free stuff – from search to email and calendar applications to information tracking – by collecting information at every step of the way and using it to fuel a highly targeted and personalized advertising platform.

The ill-conceived subsidy outlined in the report, on the other hand, taxes that money to funnel money to the music industry.  In other words, the report lays out a system that rewards content generators who aren’t creative enough to figure out a way to monetize their product.

The Decade of YouTube

~ Jim Eltringham ~ Leave a comment

The last week of 2009 is a time to reflect not only on the last year, but the last decade as well.  The internet may not have been invented in the 2000s, but it certainly became more integral to our daily lives.  Among the internet innovations that have transformed not only the web but how we communicate, YouTube stands out.

The social web revolution of the last half of the decade made the internet more accessible.  Instead of acting as a one-way flow of information, everyday people could have their own corner of the web and interact with their friends digitally with ease.  But Mashable makes the case that, above Facebook, MySpace, Twitter, and other services, YouTube is the top social media innovation of the decade because it not only offers users a way to display content they have created, but also offers other users a way to easily share content that they like.

But the 2000s became the Decade of YouTube not because of technology, but because of cultural political impact.  In 2006, YouTube had a profound impact on politics, famously changing the course of the Virginia U.S. Senate race (and, likely, the course of the 2008 Presidential nomination). In 2008, Barack Obama announced his candidacy for the Presidency in a YouTube video.

But more important than that, activists have used YouTube to make their case on a number of issues through short videos that have been passed from one person to another.  Activists have taken down ACORN with a YouTube video.  Both sides of the health care debate have made their cases with short online videos.

In fact, the current political climate almost necessitates thinking in terms of short, catchy videos, and not just to defend against a “Macaca Moment.”  If you and your side can’t make your case with a funny or poignant two-to-four-minute video, you simply cannot win.  Sound bites were important for media coverage in 1999, but now campaigns must actively create sound bites – for the media, for their volunteers, for their donors, and for the voters they hope to win over.

Some might say this dumbs down the political process.  But focusing a message into a short video – or into a 140-character Twitter update – doesn’t need to leave out salient points.  It does require a fundamental understanding of an issue.  As Mark Twain said, “With a hundred words to do it with, the literary artisan could catch that airy thought and tie it down and reduce it to a cabbage, but the artist does it with twenty, and the result is a flower.”  Or more succinctly, brevity is the soul of wit.

There have been many ways the Internet has changed politics in the last decade, but YouTube’s impact goes beyond the internet.

The last week of 2009 is a time to reflect not only on the last year, but the last decade as well.  The internet may not have been invented in the 2000s, but it certainly became more integral to our daily lives.  Among the internet innovations that have transformed not only the web but how we communicate, YouTube stands out.

The social web revolution of the last half of the decade made the internet more accessible.  Instead of acting as a one-way flow of information, everyday people could have their own corner of the web and interact with their friends digitally with ease.  But Mashable makes the case that, above Facebook, MySpace, Twitter, and other services, YouTube is the top social media innovation of the decade because it not only offers users a way to display content they have created, but also offers other users a way to easily share content that they like.

But the 2000s are the Decade of YouTube not because of technology, but because of cultural impact.  In 2006, YouTube had a profound impact on politics, famously changing the course of the Virginia U.S. Senate race (and, likely, the course of the 2008 Presidential nomination). In 2008, Barack Obama announced his candidacy for the Presidency in a YouTube video.

But more important than that, activists have used YouTube to make their case on a number of issues through short videos that have been passed from one person to another.  Activists have taken down ACORN with a YouTube video.  Both sides of the health care debate have made their cases with short online videos.

In fact, the current political climate almost necessitates thinking in terms of short, catchy videos.  If you can’t make your case with a funny or poignant two-to-four-minutevideo, you simply cannot win.

It extends to entertainment, too – from Susan Boyle to Saturday Night Live, the availability of short video has served to help turn rank-and-file viewers into unwitting advertisers with the click of a forwarded email.

“Free is too expensive”

~ Jim Eltringham ~ Leave a comment

That’s yesterday’s line from Les Hinton, who oversees NewsCorp’s American operations such as Fox News and the Wall Street Journal, to newspapers.  They cannot, he explained to the World Newspaper Congress, simply give away the content they create.  “News costs,” said Hinton.  “Quality costs.”

His boss, Rupert Murdoch, has already promised that his online properties will being charging for content, and Hinton encourages others to do the same.  Some outlets have been able to do that – Roll Call, National Journal, and the Wall Street Journal charge readers for online access, and ESPN’s website has certain sections which require a subscription fee.  Google is obliging, making it easier for subscription sites to appear in news searches without giving away all of their content.

But as any armchair economist can tell you, as the price of a product increases the demand goes down.  So media entities which charge for their online content will naturally have fewer readers.  Hinton claims that “such a business model has to mean one of two things: Either there is no demand for the content or there are substitute suppliers of that content sufficient to drive the price almost to zero.”

And indeed, there are substitute suppliers of that content.  When the New York Post begins charging me to read about the New York Yankees, I will simply get my Yankees news from the Daily News – or River Avenue Blues, or MLB Trade Rumors.

Does that mean selling news is a bad business model?  Not necessarily.  By charging for news content, media outlets may wind up with an audience that is smaller in numbers but higher in quality.  For instance, a widely read blogger may find it worth his or her while to subscribe to news sites to stay informed and have the best blog content possible.

If the media outlet hits revenue goals which allow it to produce good content, and the blogger attracts enough readership to sell advertising, everyone hits the metrics they care about – and everybody wins.