Adapting to Massive Media Change Seminar UCLA Extension: Summary

An excellent cross section of industry professionals attended the annual one day Seminar on Adapting to Massive Media Change held at UCLA on 5 December 2008.

Keynotes, and other related materials, are available from my Executive Briefing Web Page.

Special thanks to our three outstanding guest speakers:

• A Producer with MTV Networks, and an experienced film and video maker." (name withheld )
  
• Hannah Bubis, Director of Business Development, The Search Agency. The Search Agency was recently named as one of the ten “Rising Stars” on Deloitte's 2008 Technology Fast 500.
• Dominique Shelton, Partner, Wildman, Harrold, Allen & Dixon LLP

The class began with my view of the 10 major global trends in the media and entertainment sector:

1. The Internet is becoming the dominant platform for media, entertainment, and communications worldwide.
2. Wireless broadband is becoming a dominant distribution platform for the Internet, especially in the developing world.
3. Convergence of industries and devices continues and consumption habits are changing. Gaming is a large factor. Blu-Ray will hang on as the last physical format.
4. Everything is becoming available on-demand.
5. YouTube, Internet video, social media and social networks are becoming important platforms for distribution, promotion and communication and are competing with search as ad platforms.
6. Digital production, and digital distribution are increasingly important economic and business factors in the TV and movie industry.
7. Advertising and branding are being transformed as budgets shift to contextual, hyper-targeted internet platforms and brand integration.
8. The Music business has been transformed.
9. Hollywood / Media Power is shifting and consolidating as the audience fragments and conglomerates grow.
10. Digital Piracy, Cybercrime, organized crime, and the “Darknet” remain ominous clouds over the new media horizon.
    
    A recent case in point:

August 2008, Internet Business Law Services (www.ibls.com) : The U.S. Department of Justice filed charges against 11 individuals who allegedly obtained identity information over wireless networks from nine major U.S. retailers, resulting in the theft and sale of more than 40 million credit and debit card numbers. The hackers apparently garnered tens of millions of dollars from a broad-based scheme that involved citizens of the United States, Estonia, Ukraine, China and Belarus. Attorney General Michael Mukasey said, "so far as we know, this is the single largest and most complex identity theft case ever charged in this country, which they then allegedly sold to others or used themselves. And in total, they caused widespread losses by banks, retailers, and consumers."

I delivered a lecture on the music business presenting a Cartesian grid model of digital music services with on a continuum on the x-axis from user in complete control as in an audio CD, to the programmer in control as in terrestrial radio, and a continuum on the Y-axis from Paid to free. Along the continuum have bloomed a variety of “interactive” music services including the likes of Pandora, Last.fm, Ruckus, Slacker, playlist.com and iMeem. These personalizable, interactive services confound the traditional boundaries between performance royalties paid by traditional radio and mechanical royalties paid for downloads and physical media. The Copyright Royalty Board sets the statutory rates for Internet Radio.

MTV’s digital evolution was discussed and how it evolved into one of the coolest brands in the world, became tired and less relevant and has reinvented itself through aggressive youth market research and by diversifying away from music videos.

Launched in 1981 as a VJ guided music video channel, it has grown into a global media empire and the crown jewel of Viacom’s media properties (NYSE:VIA). According to Viacom’s website, MTV Networks includes over 342 million households viewing 150 channels in 17 languages around the world and 300 interactive properties. Sometime in the late 90s and early 2000s MTV began to break its own first principle; “don’t let your marketing show”. The antithesis of cool is commercial and corporate.

We talked about the youth culture research MTV does and how the network evolved away from Music videos into original programming and sponsored, brand integration. From programmed for the audience to being more controlled by the audience as in the late great TOTAL REQUEST LIVE. We then discussed the evolution of MTV online including the ill-fated milestone 2004 re-design, and the launch of the “Overdrive” site, which worked well with the equally ill-fated Windows Media Center Edition. MTVs partnership with Microsoft and its Zune digital audio player has also met with demise in the face of the iPod/iTunes juggernaut. Despite MTVs best efforts, those initial “portal” sites fell flat. MTV’s online strategy has rapidly evolved into a plethora of blogs, podcasts and videocentric websites. Of particular note is the “Twilight Effect”. MTV deftly capitalized on access to the set of Summit Entertainment’s TWILIGHT and created an online sensation as well as a new line of business for MTV in movie blogs. MTV Networks is an example of media adaptation at its best.

Hannah Bubis dove right into the nitty gritty of Search Marketing, first making the important distinction between organic search and paid search. The former is driven by search engine optimization or SEO and determines what comes up, in what order on the search engine results page. The latter is where budgets are rising almost as fast as complexity. Otherwise known as “pay-per-click”, this form of advertising circumvents traditional media buying by creating algorithmically run hybrid auctions whereby advertisers bid on prime placement. Yet no matter what the high bid, relevancy as measured by click-through rates, comprises a significant factor in determining placement. Hannah described how The Search Agency works with clients on there online strategy and to navigate the complexities of this new world. She emphasized that the greatest benefits of pay-per-click are measurability and that the advertiser only pays for actual clicks and not impressions. Hannah touched on the advanced methods of contextual, hyper-targeted advertising whereby click-streams are captured and analyzed in order to put the right message in the right place at the right time. Some of the class noted that there is a backlash to hyper-targeting when consumers get the creepy feeling that they are being cyberstalked!

I contend that inevitably more overall dollars from the finite ad budget pie will find their way into Hannah’s domain. Many questions remain, especially how pay-per-click combines best with video / IPTV viewing.

Dominique Shelton provided an expert briefing on some key aspects of the Digital Millennium Copyright Act (DMCA) focusing on the four safe harbors. This corpus of law is what keeps many Internet companies in business by indemnifying them from a wide variety of Copyright in infringement and other crimes.

1. Transitory communications
   ISPs are carriers and can’t be liable for the unexamined bits traversing their pipes.
2. Caching
   At some point almost everything you have access to online must be stored or at least temporarily “downloaded”.
3. Storing information at the request of users
   This covers UGC sites like Youtube. The users put the infringing content up not deep-pocketed Google.
4. Information Location Tools (aka Search)
   Without this one Google could not make its billions by pointing users to copyrighted content.

Safe Harbor comes with caveats pointed out by Ms. Shelton. First, you have to respond quickly to takedown notices via a registered agent, and second, you are still responsible to the Communications Decency Act.

Dominique regaled us with some case law including the “Perfect Ten Trilogy” that has tested various aspects of Safe Harbor including:

• If you show copyrighted images in a search is that infringement? No.
• If you are Visa and enable billing for the purchase of unauthorized copyrighted material are you guilty? No.

We were also lucky to get one of the best explanations Fair Use I have ever heard.

Many questions will remain unanswered for years to come regarding grey areas such as interactive music services and the extent of UGC liability, such as in the cases of Warner Music Group Vs. Seeqpod, and Viacom Vs. Youtube. Many of these situations may be better left to creative business agreements than to the courts. Sphere: Related Content

Class #10, Guest Speaker, Jon Fitzgerald, Right Angle Studios

Only 2 classes left! This is therefore your last chance to turn in any late homework. Please refer to the syllabus if you have any questions about the 5 assignments:

1. I think everyone has a checkmark next to contributing a news story
2. Media Diary
3. Mystery Shopper
4. Book Report
5. Pitch or Research Paper

Anyone who is presenting a pitch will be giving it in class Sept 3. You will be limited to 10 minutes max. Be sure to include the basic elements:

1. The market, who needs it, the market size
2. The business model. How does this make money? If its not-for-profit then how does it solve the problem or meet the goal of the org.
3. The competition, why is your idea better?
4. Optionally you can elaborate on the team and how you will execute your plan. How much money / resources will it take? Will you do it by strategic partnerships? Bootstrapping?
5. For our purposes we can skip the financial analysis
6. Try to tell the “story” of your idea with emotion and concrete examples.

Class #10 featured Mark Heninger’s lecture on DRM: What it is, how it works, some of the different standards (Microsoft and Apple), and some different types; passive and active. We discussed some of the reasons for DRM pro and con. One reason is to simply keep track of who’s watching/listening to a piece of content.

Guest Speaker Jon Fitzgerald of Right Angle Studios told the class his story from Film Major, the Mail Room at a major agency to a “Desk”, to indy filmmaker to founding the Slamdance film fest and going on to direct major fests around the world include AFI and Abu Dabai. Jon became head of programming for iFilm, one of the first attempts at an online “channel” (Both iFilm and Atom.com now owned by Viacom, the latter under MTV Networks) Jon’s current company Right Angle Studios, has a slate of projects in development and one in production: THE BACK NINE. We learned about how difficult it is to get distribution for one of the 5,000 independent features made annually (not including the several thousand out of Bollywood). And how many are “coming of age” themes. Jon had some great insight into a career in film and the future of the industry and we are grateful to him for sharing his experiences so generously. Sphere: Related Content

Summary of Building Blocks Conference, San Jose CA.

Making digital media more convenient for advertisers so they can allocate more money to it from traditional media budgets. That’s my vote for the central theme of The Digital Hollywood Building Blocks conference in San Jose held last week from August 5-7. 4 tracks of 56 panels featured over 250 speakers with 25 sponsors and exhibitors. Attendance was brisk the first two days with plenty of interesting executives, entrepreneurs and technologists to network with at every opportunity. I participated in one of the last panels: “Contextual Media, Search, Ad Serving Networks and Advertising Applications in Broadband and Mobile”. A topic broad enough to warrant a conference of its own, yet it made for an interesting session with Dr. David Saad, CEO of Clupedia moderating.

From the non-stop talkstreams about clickstreams and lifestreams I did manage to glean some personal relevancy to my vocational context.

Firstly, it is becoming clear that the single most important revenue source for Internet and mobile media, behind burning through investor cash, is selling advertising. Ad Networks inventory it, and advertising technology companies seek to wedge their way into the sale for a slice of the buy. All this while audiences get better at avoiding advertising messages of all kinds, especially 30 second commercial spots by ad-skipping, or by simply turning their attention to another screen. David Tice, VP at Knowledge Networks SRI highlighted research demonstrated that only 30% of viewers stick around to attend to pre-rolls.

Not to say that downloading and subscriptions services are nill, they are just nowhere near the business model solution that will lift the digital media industry and rescue traditional media from declining sales and rampant piracy. Rhapsody, Napster and the like remain publicly optimistic. I personally believe that bundling media services with other utilities will prevail.

Much of the talk, especially on the Television 2.0 track, attempted to address what to do about video advertising. Pre-roll, mid-roll, and post roll are generally considered problematic. Overlays and “attached” ads, less intrusive. Some studies say that as much as 92% of Americans watch less TV due to competition form other media including so-called “over-the-top” programming, AKA Video over the Internet. Other studies say that TV viewing is still up, but what about attention and engagement?

TV still commands the lions share of advertising dollars, over $65 billion overall in the USA. Larry Gerbrandt of Media Valuation Partners points out, using Nielsen data, that Youtube comprises only 1% of all video-viewing minutes, mobile a fraction of a percent, TV over 98%. Larry pointed out that although Internet video viewing is still a sliver, ubiquitous broadband availability would be the game changer. Other thought that the game has already changed, the advertising dollars are just lagging behind.

Larry, with Seth Shapiro of New Amsterdam Media and James C. Roberts of the Global Capital Group, presented the MVP session on media valuation, which was especially informative delving into the hard-core fundamentals of what makes content worth what. Turns out it is much harder prove the intrinsic value of media content than I thought. You have to prove revenues, you have to have a “locomotive” that can drive audience, you have to have clear intellectual property rights which, as pointed out by Mr. Roberts, is often difficult to discern, especially in the EU. If the program has legs, if it comes with adequate indemnifications also all come into play.

Cynthia Francis, CEO of Reality Digital (A hosted service platform
for storing, sharing, managing and monetizing user-generated content
including video, photos, games, text and more) pointed out that in spite of the fact that TV still dominates the Advertising landscape, niche video driven networks are working citing the examples of cardomain.com, hook.tv, newbaby.com. She assets that we are at an “inflection point” similar to when brand websites became necessary, is upon us whereby consumers are no longer willing to be “told” what to like or want. They want to be “engaged differently”. In that same session General Partner in Caanan Partners, a VC firm, failed to clarify what social media strategies would attract new investment.

There is no end to the ingenuity being applied to replace, bolster, or otherwise modify the TV commercial for targeted, contextual, less intrusive, Internet delivery. On the “Bridging TV and Broadband” Panel, Daniel Leon, Head of Strategic Partnerships for Hiro Media emphasized the roll of “Legal” P2P. Hiro inserts a “positive DRM”, “mid-roll” advert into a video for advertiser support P2P delivery. Akin to what Spiral Frog and a few others are trying in the music space. A small piece of a very large puzzle which I doubt will thrive on its own but only as part of a much larger solution for flummoxed advertisers.

Although retrospectively obvious, a common thread that ran implicitly throughout, was that all forms of advertising affect all others. Amid constant cravings for more, better and different metrics, is the almost impossible to isolate multi-variant reality of the complex interplay between all media. Media and advertising converge on a persons psyche as a whole, and whether I finally click on the Gieco banner or watch their video, or call their customer service center in Bangalore, could just as well be attributed to another annoying 30 second Lizard TV spot as to the immediacy of the carefully measured, behaviorally targeted, lower-third overlay on a 15 second pre-roll. My co-panelist Kevin Lee, Executive Chairman of the fabulously successful Didit, explained that offline advertising very often drives people to search for particular terms or phrases. Remember the lawsuit, Geico Vs Google, complaining that Google could not piggyback paid search on the back of a trademark?

Although a common term of art for ad biz folks, I first learned the term “Brandlift” in the Video advertising panel. As you might expect there are plenty of market researchers keeping busy measuring this, although I would be very skeptical on their ability to attribute brand affinity and intent-to-purchase to any one campaign or methodology. In any case almost every panel mentioned “Metrics” more than once as the way to get more ad dollars into their Internet or mobile media business. I learned that the industry is awash in metrics. What is lacking is the holistic analysis and interpretation of the data, and the ability of advertisers to make strategic shifts. Many speakers agreed that it is just a matter of time until, as one panelist noted, there is the “Monsterization” of TV advertising. Referring to the way Monster.com almost overnight undermined the job classified business. The now shrinking $65 billion TV advertising industry will dramatically begin to reallocate those dollars. Many believe that the future will be much more akin to the Direct Response advertising business whereby “pull”, opt-in, requests, search and the like become the norm.

There was much talk of contextual advertising based on profile data are so called “Datastream” marketing. Behavioral Targeting is also a controversial technology, which follows a user to every site they visit and makes inferences based on those actions. Privacy concerns were recognized but it was generally thought that they would not stop the imminent and allegedly anonymous, use of such data.

Broadband and The Social Media Platform Track highlighted the importance of MySpace, Bebo, Hi5 and others. Brett Wilson, CEO of Tubemogul hyped his sites ability to allow creators to “syndicate” to multiple tube sites concurrently while aggregating viewing data form multiple tubesites for advertisers, this making it easier for content creators, and by implication their sponsors and advertisers, to measure their reach. New and promising uses of the social media nets are popping up. For example now Facebook allows companies and organizations to have pages as well as Bebo, which has been successful with commanding hefty sums for sponsored episodics on its site, namely Kate Modern and Sam King. These programs achieve a high degree of “turbo” brand integration, which was the subject of another panel.

Brand Integration is supercharging the art of product placement. Funny thing, both Radio and TV advertising began that way. The Colgate Comedy Hour complete with skits featuring the product, Hotpoint sponsoring Ozzie and Harriet in their perfect modern suburban household, the Texaco Comedy Hour, The Hallmark Hall of Fame etc. In addition to the above examples, there were several others. The examples Bebo examples above are joined by a myriad of other attempts to elevate advertising to the level of content. i.e. advertainment. Jordan Mauriello, is Founder and Creative Director of moreYellow , an agency that specializes in “Integrated Brand Engineering”. He showed off his www.facesofoolong.com site built for Konami Mobile which is an advergame that gets prospects involved in the brand via an amusing game. Sphere: Related Content

Class #5 Summer 08

The news items discussed included the rapid growth of Broadband around the world especially via wireless access, which will grow to 2.1 billion by 2015. Wired access will allegedly be around 499 million by that same year. An article from Melanie in THR.com, Broadband adoption on torrid pace reported on this market research. It was also pointed out in class that there is a resurgence of interest in Vinyl records because of the superior sound quality to MP3.

Thanks all of the discussion about diaries and mystery shopping assignments. It becomes clear that media and entertainment consumption behavior is becoming increasingly complex and diverse. Some people eliminate regular programmed TV completely. Many rely on DVRs for almost all their viewing. Many are use multiple screens concurrently.

Bundled Vs. Un-bundled services was a theme for the night. Our mystery shoppers generally concluded that if you shop smartly you can get a better deal by purchasing your services and content ala carte. It is clear the up-selling and cross-selling bundles of content and services is a key for success in the media space.

The lecture topic was Media Megacorps and the overview of the business topology of the industry from a US Centric perspective. I also brought up the issues of media consolidation and concentration of ownership via the Bill Moyers Speech on youtube. By observing what the majors do we can begin to compare strategies are discern what works and what may work for our own needs. It was good to get some first hand info form classmates working in the trenches.

I am off to the Digital Hollywood Building Blocks Conference in San Jose and will be reporting and checking in from there.

As we reach the halfway point in the course, make sure you are on track with book reports and final presentations. We would like to begin presentations by class #9 so we are not rushed. Also please email Mark and I any comments on the class. What you want to see more/less of. Sphere: Related Content

Recent Readings and Observations

One of the books in the Bibliography is THE CULT OF THE AMATEUR by Andrew Keen. It posits that an unintended consequence of Internet Media is the undermining of professional journalism and a general dumbing-down of public opinion. Since the Internet is the great equalizer whereby any blogger can sound be heard and command a pseudo credibility, professional journalists are devalued. You can’t appreciate their research, fact checking, adherence to Journalistic standards. Every sound bite and web page and podcast can have equivalent distribution. Another proponent of this point of view is Chris Hedges. This recent article underscores the anti-intellectual effect of the Internet and the demise of professional news journalism; Bad Days for Newsrooms—and Democracy . I tend to agree. It is perilous to have so few controlling so much of our news, and to have so many reading and contemplating so little. What do you think?

Also in this vein is the work of Professor Mark Bauerlein and his book THE DUMBEST GENERATION. He argues that “screen intelligence” is no replacement for traditional literacy. Pervasive use of social networks, superficial blogging (mia culpa!), short texting and the obsession over keeping constantly attached to your friends and peers, comes at the price of focused concentration and deeper thought. He sites a number of statistics supporting is assertion that the overall level of younger intellectual achievement is on the decline. A review of the book is published in the LA Times and of course you can find it on Amazon.

Rock 'em, sock 'em TV providers
On the digital media consumer front, the Chicago Tribune had a great piece comparing Comcast Digital CATV with AT&Ts U-Verse Broadband IP TV service. Comcast still came out the winner although U-Verse posed a formidable challenge. The article diplomatically concludes “With prices for HDTVs gradually coming down, Comcast is the better choice for homes with more than one HDTV” . My personal opinion is that eventually AT&T will be able to offer more feature and a better overall bundle with your telephone services. Comcast is better at organizing and aggregating programming but AT&T will hire and develop that expertise. The final battle will be pricing and customer service. The consumer wins. U-Verse is still years away from having the reach of Comcast.

Thanks to Michael Fitzgerald for this link about brain - computer interfaces. I was privy to some EMOTIV UI work being done by a local Interactive shop last year. Sphere: Related Content

Hello From U of I at Champaign Urbana: IL. Ventures

Today I am in Urbana / Champaign IL. at the Univ. of IL. at the offices of Illinois Ventures.
Illinois Ventures is a unique VC focused on R&D Spinouts from the University if Illinois system. They have a great portfolio of companies in biotech and information tech. I met with Sr. Director Rob Schultz and Program Director of One Llama Media, Amit Sudharsan on some new strategies for the ad supported digital music industry.

There are thousands of streaming music sites and music services. Most of the ads on these services are randomly placed with no apparent recognition of context or demographics. This is unlike terrestrial radio in which ads are carefully placed based on zipcode and format and priced via Arbitron ratings. Google has its audio ad service (Audioads!?) which includes an "Ad Creation Marketplace" so that you commission an audio or video ad via a bidding process and place audio ads into 1600 radio stations via an adwords-like systematic process. Google also has the equivalent "video" version of this service emerging. I assume the first platform for this will be YouTube, however they are also aiming at CATV and VOD. As advertisers shift more of their budgets to the Internet, ad serving technologies for targeting and accurate metrics will be increasingly important and present a increasing competitive challenge to traditional methods. Sphere: Related Content

Hello from Chicagoland, Northwestern University

Hello from the Intelligent Information Lab at Northwestern University’s Ford Design Center. It’s a beautiful building on a beautiful campus and I got to bike all around it and swim in the lake. The Chicago / Evanston beaches are nicer than many in LA. To my surprise the water was still colder than the Pacific but refreshing nonetheless!

My client here is a spin-out from the Info Lab, Beyond Broadcast Media. They specialize in automating the laborious process of supplementing media with highly relevant information. For example, you're watching your favorite Emmy award winning program, MAD MEN. The BBCast Media system has sifted through all the metadata associated with all of the episodes of Mad Men no mater how poor it may be. The system has structured the data into a “canonical” form and from that it goes on to create carefully structured queries that return incredibly contextually relevant results based upon pre-determined domains such as additional videos, fansites, news, blogs and shopping, I got a demo of their latest software tools for managing media related metadata. We also discussed how important metadata is to the user experience and to monetizing almost any form of media.

Earlier in the day I met with Associate Professor Michael Smith, Director of the Media Management Program at the Kellogg Graduate School of Management. We discussed how media companies need to adopt new strategies to survive including institutionalizing innovation, giving next generation workers more opportunities, making partnerships and placing a business focus beyond just numerical performance goals.

I also met with Justin Kerr, the Executive Director and Publisher of Site of Broad Shoulders (www.sobs.org). A great not-for-profit niche site dedicated to publishing Chicagoland Artists. They are about to launch an Internet radio service. They have an interesting work style whereby everyone gets together weekly to “produce” the site. While Justin talks content and editorial, Jake Eldridge, CEO, tweaks the software and the Content Management System. Sphere: Related Content