Tech Mediums

Yahoo is using viral marketing to push its search engine past Google.

Before I go there, I gotta admit, while I’m a free market kind of guy, I also don’t some companies that absolutely dominate a space (errr…unless I own stock in them at a good buy-in price). 

So when I see Google killing the competition in search, I want to see someone else to temper them (I don’t own stock in Google).

So Yahoo’s latest idea is to have other companies build search engines using Yahoo’s search technology, thereby saving these companies the cash necessary to build from scratch (Yahoo estimate: $300 million).  In return, Yahoo will sell ads on through those search engines.

I think it’s brilliant (barring a few possibly filled holes).  You have other developers customizing, and more importantly, marketing your technology, while you generate money through that method.  What it does is instantly make Yahoo bigger without the time, people and money to do it otherwise.

Classic viral marketing, in another form.

 The possible whole are the kinds of financial deals Yahoo would work the companies.  The NYTimes mentions Me.dium as an example of a partner-company that Yahoo has signed up (financial terms are uncertain).  Me.dium is a search engine (not yet fully released) that allows users to see what other websites their friends are going too.  The theory is that people place more weight on what their friends say than through other means.  This is true, for good or bad (if my friends are looking at ill-informed sites, then those are the ones that will probably pop up first in the search).

Don’t know if this has been talked about a lot before, so here it goes.  There are flaws in the logic so hit me back if there’s a better way to think about this…koe@TechMediums.com.  

What if traditional media companies were able to use predictive models to lower their inherent risk profile?

 The Risk Profile

So, think of media companies (like Disney, EA, Bad Boy) as a series of formal start-up ventures, where the business model requires the constant formation of start-ups (e.g.., new artists, games, movies) to make money. 

However, unlike normal start-ups, each media start-up utilizes common administrative systems like legal, accounting, marketing, etc., and, for the most part, they are more efficient, since this is what they do day-in and day-out.

Some of these businesses already have a library of content (franchises like Madden, or Disney’s Classics) that they milk to lower the risk profile – making the business model more like software - build it once and charge “rents” and/or offer updated versions for a fee.

But unless you have people who consistently pick out winning “ventures” (Diddy, Clive Davis and DJ Drama come to mind), then you’re at a much higher risk.

 Predictive Models

So what if predictive models (PM) could be used to lower the risk profile by refining the kinds of potential audiences, venues, alternative media, (like video games for film or music), price points, additional merchandise that could be sold to fans? 

Predictive models use a series of data (like whether someone buys a product on sale, what day, what kinds of products, etc.) to anticipate future behavior, like other products they would buy or what day they’d buy in on.  It’s a way to drastically improve the click-through rates of customers.  Obviously, the most widely known models are the ones used by Netflix and Amazon.  Insurance companies have been doing this for years, though, in determining likelihood of getting into accidents or dieing.

  Application to Media?

So how can it be applied to media?

Example questions that can be answered:

·        Music -

o       What extras, if any, should be given away with the CDs?

o       Should CDs even be made?

o       Would demand increase by offering the music for free (then charge for concerts and merchandise) or charge for music, lower price for concerts or no change?

o       What kind of merchandise should be sold?

·        Movies –

o       Should advertising be 100% online? 

o       What other product tie-ins could be developed?

o       What products should be licensed?

·        TV -

o       Which shows or episodes should be broadcast on internet only?

o       What other product tie-ins could be developed?

o       What products should be licensed?

Notice that none of these deal with content.  Entertainment is such a different animal.  You can do all the right research - type of movie to produce, the actors and directors to hire, etc, - and still fall flat because the actor didn’t put in his/her best performance, etc., etc. 

Nonetheless, constant research, polling – on and offline, are critical to gaining as much detail as possible.

 While many of these questions have already been answered, to varying degrees of success, PM (like the one developed by Proclivity Systems) seeks to maximize the effectiveness of the marketing, product development, licensing, etc., and lower the risk profile of the business (not necessarily eliminate it).

As reported by the Onion, America’s Finest News Source, consumers can buy back their own home videos from Steve Jobs’ Apple iTunes for only $1.99.   Apple will not edit the videos, save for the Apple logo in the lower right hand corner of the video, which is done so Apple can help prevent piracy of its content.    “Ladies and gentlemen, the future of home-video viewing is now,” Apple CEO Steve Jobs said at  a media event Tuesday morning. “As soon as you record that precious footage of your daughter’s first steps, you’ll be able to buy it right back from iTunes and download it directly to your computer and video iPod.” As typical of Apple, the technology that captures the video directly from the creator’s camera is top secret.  When asked about the technology behind the video capture, Jobs only mentioned that they have proprietary technology that is referred to as NUTs (nano ware, underwear and Tupperware combined). 

One thing’s for sure, ot offers people an easy way to distribute content using the latest technology to a massive amount of people and not make a dime off it…and you’ll have to pay Apple like everyone else.  It’s better than WeMix.com, Global Grind, YouTube, Veoh, StreetCred.com, Funny or Die, iMeem, iFilm, Google video, MySpace, Blip.tv, Metacafe, Yahoo! Video, PodShow, GrindTV, et.al.

Before we get into piracy, a word from McLovin (of SuperBad) on the topic.

Matt Mason, in his book “Pirate’s Dilemma: How Youth Culture is Reinventing Capitalism” discusses a fascinating look into what is very possible a mega trend…piracy in other forms – not just music but everything, how technology is making piracy easier and how, on some level, it should be embraced.

As far as the first two points, sure, there have been bootleg BMWs, watches, software, but Matt’s talking about a world where it’s becoming much easier.

An example, is the 3D printer, which has been talked about for a while (heard about this at about the same time I heard that someone built a PC accessory that could replicate smells over the internet).

As far as it being embraced, I remember an old professor of mine, Pete Fader, a marketing professor at Wharton who’s known for his patented rants, arguing that file sharing was actually good for copyright holders (primarily record labels and their artists). It created buzz. Matt also talks about this in that the demographic who would get pirated material is not the demographic who would actually buy the material. Fader argued that the labels were wrong when saying that they lost $X amount in revenues due to pirated materials. “That’s ridiculous!” Fader said. Just because you can’t get something for free, doesn’t mean you’ll buy it otherwise.

While thinking that copyright laws should be updated, Matt likes the idea of piracy (mentioning that he can’t wait for his book to be pirated).

I actually agree, in concept. I like the idea that new business models need to emerge. That’s why I like open markets. It forces companies, and thus, products, to evolve.

But if I spend a lot of money to make intellectual property, I deserve the right to protect it, regardless of borders.

That notwithstanding, I also think some forms of IP can be seen as marketing materials for a greater thing. Classic example is music. Because of the amount of music put out yearly and the lack of distinguishing characteristics of some tracks to others, music seems more like a commodity. As such, it could be effectively used to market the artist. Artists can let viral marketing take over, bootlegged or not. In fact, in this scenario, you want people to pirate it because it costs you nothing…free marketing to create demand.

The model that I favor is a controlled “open” IP.

Software companies have been doing things like this for a LONG time. Adobe let people get Reader (reads pdf documents) for free to help create demand for Acrobat (to make pdf), for which it charges.

This model might be able to be used consistently for all IP and is a direct link to revenue– that’s why I like it.

Here’s Matt’s video. Enjoy!

Thanks to ProHipHop.com for the video.

David Lazarus over at the LA Times wrote a piece on the failed buyout of Yahoo by Microsoft. 

The piece was fascinating because David polled high schoolers at Loyola High School (Los Angeles) on the deal.  Specifically, the students said that Microsoft (and Google) was, indeed, cooler than Yahoo. 

Hold on a sec!  Microsoft > Yahoo???

Why?

In a word…Xbox.  Yes, their platform, along with the Xbox-only mega game, Halo, is what propels a so-called “evil” corporation into a cool corporation.

Some of the students also mentioned that that there’s nothing wrong with being profitable…meaning, just because a multi-billion dollar corporation is profitable isn’t, in and of itself, wrong. 

That’s hot. 

  Also, they didn’t have problems with some advertising, but just didn’t want website properties to be overloaded with them.  Interesting. 

Anyway, the problem with Yahoo is that there’s not much resonating with these students.  They don’t use Yahoo for search…they use Google. 

I don’t really use Google.  In fact, I consistently prefer Yahoo because of the depth of content (Finance and Movies as examples).  I use Yahoo search because of the convenience.  I actively use Gmail, though, but I have an old Yahoo email account. 

My point, is that I wonder what other teenagers would say about Microsoft > Yahoo.

Anyway, check out the article.  It’s pretty interesting.