The Seesaw of Internet Freedom and Regulation

Author Jeff Jarvis is torn. In his most recent book, Public Parts: How Sharing in the Digital Age Improves the Way We Work and Live, Jarvis argues against internet regulation.  At the same time, he advocates government enforcement of net neutrality, itself a form of regulation.  It’s not only Jarvis who struggles with what level of regulation, if any, is needed and for what purpose.

Secretary of State Hillary Clinton delivered a speech in 2010 defending internet freedom.  She called for “a single internet where all of humanity has equal access to knowledge and ideas.” The following year she delivered another speech which simultaneously condemned censorship and attacked WikiLeaks for its release of government data.

On his blog, Jarvis looks at the tension between freedom and regulation, the need for open exchange and the right to privacy and protection. In a recent post, “We Are the Lobbyists,” Jarvis further explores the consequence of these frictions:

The proposed SOPA-PIPA bill is designed to fight online trafficking of copyrighted intellectual property. The proposed bill, and resulting protest, brought many issues to the fore including the dramatically changing natures of media business models, the evolution in the value of content, the undermining of institutions’ previous unchallenged power.

It also created an environment where millions of consumers became lobbyists, using the net to defend internet freedom. The internet provided a platform in which users could make an impact without using “influence peddlers” or political commercials.  The movement only “needed citizens who give a shit. Democracy.” It is up to the internet public to protect the “tool of publicness.”

See Jeff Jarvis speak about the balance of internet privacy and publicness at the BRITE ’12 Conference (March 5-6, NYC).

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BY KIM SHIFRIN

 

Research: Balancing the Returns of Offering Free Information

Offering free samples is a time-tested marketing technique. In the online information goods category, however, practices concerning completely free offerings vs. free samples along with paid access are still being developed and debated.

Columbia marketing professors Oded Koenigsberg and Don Lehmann, along with University of Zurich professors Florian Stahl and Daniel Halbheer, examined how to optimize free sampling and paid access for “single-use, single-edition content” (e.g. a novel or an article). They created a model that allows a firm to calculate the optimal sampling level based on:

• The price of the full content;
• Advertising revenues from the free samples and paid versions; and,
• The affect on consumer valuation, and therefore demand, caused by the size, quantity, and quality of free samples

The model considered, in particular, how a consumer’s expected quality of a product is updated by the delivered experience of a sample of the product.

The researchers then compared their model against empirical datasets from German media web sites. They found that, in cases where the quality of the sample exceeds the consumer’s expected quality, some firms were not offering large enough samples to entice readers to commit to purchase the full paid content, and thus they did not realize all the revenue they could generate.

If you are managing such an enterprise, you may want to download the paper (.pdf) to see what implications this model has for your own company.

BY MATTHEW QUINT

Is Web Video on the Crux of Seriously Challenging Cable?

When you’re at home and thinking about watching your favorite TV shows and movies, is your TV remote the only device you grab? For an increasing number of people, computers, internet set-top boxes, and even video game consoles are becoming major players in bringing video entertainment into our lives. Is cable receding into the distance?  Well, not yet, but a raft of news over the last month shows signs that we are at a turning point for “web TV.”

September began with the announcement of an upgraded AppleTV box, which was followed by announcements from other makers of web-based set-top boxes: GoogleTV, Roku and boxee. For an upfront cost between $59 (Roku) and $199 (boxee), US consumers will now have a range of options to hook-up these devices to a flat screen TV and watch content directly from the web. These devices, along with direct, computer-to-TV connections, offer viewers a wider set of cheap, and even free, ways to watch video a la carte and on demand.

The Rise of Netflix through Streaming

Last week brought the demise of a “traditional” video entertainment company when Blockbuster filed for bankruptcy. In stark contrast to Blockbuster’s fall is the rise of its primary competitor, Netflix, whose growth has largely been driven by product and service innovation.  Netflix burst onto the scene by introducing the delivery of rental DVDs via the postal service. More crucial to the discussion here, it also made an early decision to develop the technology, and pay for the licensing rights, to add streaming web video to its business model.  One crucial element to the potential success of the Web TV set-top boxes is the fact that Netflix’s service is offered on each one of them.

In fact, Netflix’s streaming video decision drove the industry forward, with cable providers (e.g. Comcast Fancast) and media companies (e.g. Hulu (owned by News Corp., NBC & Disney) and HBO Go) providing similar “on demand” streaming offerings through the web now as well, using both advertising and subscription models.

If investors are any indication of where the future of video distribution is going, they have put their hat in the ring with Netflix and its model. Netflix stock is now trading at levels 7-8 times higher than it was at the start of 2008, one full year into its “Watch Instantly” service.  Compare this with the major, publicly-traded US cable companies—Time Warner, Comcast, and Cablevision—which have all been treading water (or worse) since the beginning of 2008.

Implications for the Future

A lot remains to be played out in the deals and decisions made by content providers and service providers (new and “traditional”)—not to mention the impacts that may come out of the net neutrality debate. But it is no surprise that US consumers are pleased with finally having variable, a la carte pricing options and the ability to customize the content on their TVs.

As more and more people relax on their couch for “42-inch Web TV,” future opportunities for advertisers looking to build their brand around video content will grow. How will the online world of analytics, diversity, and flexibility leverage itself to offer additional consumer segmentation, targeting, and ad placement alternatives? As web video services grow, how will they provide increasingly innovative interactive ad opportunities? What can companies inside and outside the media category do to utilize the potential of these services to curate content and create more branded content opportunities?

The testing ground for this future is already open.  Hulu has introduced an “Is this ad relevant to you?” check box into the pre-roll and in-show ads on their network.  Start-ups like Tremor Media, Innovid, and ZunaVision, are developing new interactive video ad capabilities for advertisers and content providers. Major brands like Axe, Charmin, and Dominos have already experimented with interactive ads for Dish Network and TiVo, and such offerings could be even more innovative when implemented through web TV.

What do you think the biggest impacts of this growing internet TV trend will be?

The [Woman] Is Your Customer

It’s long been a truism that marketers (and business in general) have overlooked the importance of women, both as individual customers, and as key influencers of family purchase decisions. That importance is continuing to grow, due to a number of social and economic trends.

This was the subject of discussion at NBC Universal’s “Power of the Purse” event I had the chance to attend yesterday, thanks to an invite from Maryam Banikarim, a member of our Brand Leaders Forum. The lineup included a panel of speakers from brands, marketing, academia, and media, as well as Speaker of the House Nancy Pelosi.

NBCU’s Lauren Zalaznick pointed out that the US gender gap in wages is the smallest ever during this recession (or “mancession,” due to its greater impact on male employment), and women will soon outnumber men in the workforce. Ten million more women than men voted in the 2008 elections (70 million vs 60 million). And, according to Zalaznick, 96% of women customers surveyed say that: if I like your product, I will “tell everyone.”

Mark Addicks, CMO of General Mills (and lone male panelist) represented a consumer-goods company that has long focused on women as its prime customers. Recognizing the growing voice of customers in digital networks, and the fragmentation of their media experiences, Addicks proclaimed, “We no longer do ‘marketing’… our job now is engagement.”

Kim Brink, from Cadillac, represented an industry that has long underestimated the importance of women in its purchase decisions. She said the auto industry is just now beginning to realize it needs to not only “market to” women, but to incorporate their perspectives from the beginning of the marketing process, in customer insight gathering and new product innovation.

Echoing the shift in consumer values discussed by John Gerzema at BRITE this year, Brink also raised an important challenge for marketing a luxury brand like Cadillac to women. During the current recession, she said, 60% of women feel guilty buying a luxury product in this economy (vs 40% of men). Allaying that guilt needs to be a major focus of some marketers.

The other major focus discussed was connecting with women (and all customers) in a digital age where media are ubiquitous and there is no longer a predictable sequence of brand message + brand message + brand message = customer purchase. MediaVest’s Donna Speciale, said that marketers increasingly need to be “hyperlocal,” finding the right message at the right place and moment. Tina Brown, founder of the Daily Beast, argued that curation and editors have never been more important in media than current environment (as my friend Steve Rosenbaum argues in his forthcoming book).

On the subject of female leaders, the panelists decried the continuing paltry representation of women at the highest level of corporations (comparing it to the “boys club” that the U.S. Congress was when Pelosi first arrived). But Barnard College President Debora Spar offered a note of encouragement in looking at the education of today’s young women. The impact of Title IX (on college sports) is still being observed, but recent research shows that sports participation in younger girls has a strong impact on their future leadership skills, and that adult women in leadership positions today are much more likely than others to have participated in sports in high school. Great tip for parents.

BY DAVID ROGERS

Photo: Nancy Pelosi and Jeff Zucker, by me.

This post originally posted by David on the DavidRogers.biz blog at: http://www.davidrogers.biz

What Media Want vs What Customers Want

It’s been a few weeks since I wrote my previous post challenging the notion that apps for the iPad and smartphones are somehow signaling the coming end of the open Web (“iPad Dreams and the Delusions of Big Media.”)

But this deluded idea has not gone away. In fact, more wishful journalists keep piling on, declaring the impending doom of the Web with unconvincing displays of regret (to cover the giggles of their schadenfreude).

One of the better such pieces was Michael Hirschorn’s “Closing the Digital Frontier” for The Atlantic.  He offers a thoughtful assessment of the utopian ideology of early Web pioneers, including Stewart Brand’s famously truncated statement that “information wants to be free” (… and expensive).

Yet I still don’t buy Hirschorn’s prediction that the growing power of Apple will make a “rush to apps” irresistible, despite the “lack of uptake” by consumers for paid content.

In an interview with Bob Garfield on On The Media, Hirschorn sets the issue up as a looming digital Cold War between Apple (pushing closed systems) and Google (promoting the open Web).

But the crucial flaw in Hirschorn’s argument was pointed out by the next guest on the show, DailyFinance media columnist Jeff Bercovici:

There are a lot of people who think that all of this talk about how apps are going to be the dominant mode of consumption on tablets and on smart phones are kidding themselves.

All the things that make apps so hugely attractive to media companies–the idea that they can really control the environment, that they can, you know, serve you this sort of richer advertising that’s harder to opt out of–all of those things are exactly the things that make it less attractive to a lot of media consumers.

And that’s the crux of it.  Shifting to closed systems is attractive to media companies, but not to their customers.

In the wide-open, hyper-competitive world of digital media (where an innovative startup will happily steal your audience in a minute), I would put my money on the customers winning.

BY DAVID ROGERS

This was originally posted by David on the DavidRogers.biz blog at: http://www.davidrogers.biz