Summary:  OK, OK, for those of you who self-identify as members of the digerati, you can file this posting under “Restatement of the Self-Evident.”  However, the always-reliable Pew Internet & American Life Project just released its findings on how Americans get news. http://www.pewinternet.org/Reports/2010/Online-News.aspx.

Most interesting to us are the “social networks” results—meaning the number of people who receive or share news via social networks.  This was barely an “industry” just two years ago.  Equally interesting is the percent of people who access such news via their mobile phones.  And, of course, we were sort of surprised that TV stills ranks as the #1 source.

The Details.

Paraphrasing the results of the study:

  • News from the Internet: Roughly six in ten get their news from online and offline sources combined.
  • #3 with a Bullet: The internet now ranks third behind the TV (local then national) as a news source.
  • Social Networks as News Networks: Three quarters of those who get their news online receive it via email or social media posts and a little more than half forward (or otherwise share) the news in the same fashion.  Moreover, 37% of Internet users have “contributed” to the news—including posts, comments, etc.
  • Portable: 33% of cell phone owners now access news on their cell phones.
  • Personalized: 28% of internet users have customized their home page to include news from sources and on topics that particularly interest them.
  • Clutter Cutters—Brands Matter: Most online users rely on a handful of sources.

So What?

What these results tell us at Global Capital is that the Web now reaches many, many people through multiple platforms and not just through “traditional” news websites accessed by a PC.  That seems to be dropping in popularity in favor of mobile phones and through the user “generated” networks represented by Facebook, Twitter, MySpace, Xing, you name it.

Thus, news travels fast and, in particular, through a network that becomes sort of iteratively self-selecting.  In other words, someone hears about a news event across several platforms, depending upon where they are in their day (and in some cases through multiple platforms at the same time) and then sends it out in one or more of several ways:  to all their friends;  to those who follow them on Twitter;  and to those who are friends on sites such as Facebook.

The platform almost doesn’t matter;  it just matters that it provides them the news (either directly from specified sources or through their social network connections) and that it then lets them forward it and in more than one-third of the cases, comment on it, as well.  Can you say the “Internet?”

One thing seems certain:  Substantial evidence of progress to the goal of:

Any content, anytime, any platform and with any interaction.

Draw your own conclusions, especially the business implications.  They are substantial.

James C. Roberts III is the Managing Partner of Global Capital Law Group and CEO of the strategic consulting firm, Global Capital Strategic Group.  He heads the international, mergers & acquisitions and transactional practices and the industry practices concentrating on digital, media, mobile and cleantech technologies.  He is currently involved in opening the Milan office.  Mr. Roberts speaks English and French and, with any luck, Italian in the distant future.  He received his JD from the University of Chicago Law School, his MA from Stanford University and his BS from the University of California—Berkeley.

The Global Capital firms counsel domestic and international clients on strategic and legal issues inherent in the deployment of intellectual & financial capital—a merger or acquisition, foreign market expansion, a strategic alliance, a digital content license, a mobile deal, foreign and domestic labor and employment policies, starting a new entity or raising capital. Clients range from global Fortune 100 corporations such as Deutsche Bank and News Corporation and its subsidiaries, MySpace.com and Fox Interactive Media, to start-ups.  Industries represented include digital media, Internet, software, medical and biotechnology, nanotechnology, consulting firms, environmental technology, advertising, museums and other cultural institutions and manufacturing.

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Summary:  The Tribune Company just launched Tribune 365 (www.trb365.com) that claims to provide integrated marketing campaigns—that is, ads across multiple platforms available within the Tribune media—newspapers (e.g., The Chicago Tribune and The Los Angeles Times), other print outlets and television stations.  In fact—and probably more important—it represents integrated ad sales:  one team to sell ad inventory across all of their platforms (and, with hope, others, as well).  We think this is a brilliant step—and long, long overdue.

The Details.

It is pretty straightforward—and both astonishing and understandable (OK, OK, so it’s a contradiction:  Call it a paradox)—that a major, and heavily indebted, media company has finally figured out one of their biggest assets:  multiple platforms.  The Tribune Company’s initiative is called Tribune 365 (www.trb365.com).

Selling ads across these platforms to an advertiser in what the ad industry calls “integrated ad campaigns” becomes a lot more attractive.  More to the point, they overcame one of the biggest obstacles, which is the silo-like ad sales structures of newspaper ad teams selling their ads, TV station ad sales teams selling their inventory, and so on.  Media reports point to a recent campaign for Target, with ads in newspapers, on Tribune TV stations and Tribune websites.

So What?

“Integrated ad campaigns” are not that new but what is new is that they are now available where they count:  where the inventory resides.  This makes it likely that we will see them with more frequency.  Moreover, think about it for a bit:  What the Tribune is doing is a classic case of the model that like very much, which is “audience integration.”  That’s what diversified media companies do best.  They bring audiences to advertisers.  The more diversified they are then the more audiences they can aggregate.

Aggregation recognizes that audiences get their content from multiple sources.  While there may be some overlap (someone who reads “The Trib” and watches a Tribune TV station), there are many people who use one medium and not another.  If those media happen to be owned by one media company, why not place ads across all of them?  That’s audience aggregation.

It’s not always so simple.  We have often seen civil war break out in media companies among the ad sales teams.  The sales team responsible for TV ad sales rebels when the website sales team for the TV station calls on the same clients for their inventory.  It can get ugly.

And it is understandable, because you are dealing with the livelihood of salespeople.  Someone who has cultivated the ad agency (or internal ad buyer) of a large advertiser for years relies upon the sales commission to pay the mortgage .  Why should he or she let a competitor—even someone in the same corporate family—put the saleperson in financial jeopardy?

And (we hope) that’s what the Tribune Company has figured out.  We hope that the integrated sales team means that commissions are not limited to one medium because that is the only way that you can (and should) change the ad sales culture.  After all, ad revenues amount to the lifeblood of most media companies.  And selling ad inventory makes that lifeblood pump.  And earning those commissions is what enables the sale of that inventory.

Twitter on TV

July 2009

Summary:        Now we have a new form of convergence:  social networking and (cable) TV.  Not a bad move.  Verizon announced two new “products” in its “social TV” initiative.  One is a set of widgets that enable viewers to connect with other viewers through various social networks—while watching TV.  The second enables viewers to watch user-generated content from certain websites.  One more step in convergence.  Of course, it is a bit like the Zeno’s Paradox of digital convergence.  You could also say:  It’s about time.

Through its FIOS TV service Verizon is taking a few bold steps towards digital convergence.  First, Verizon will create an application store with widgets developed together with some notable social networks—Twitter, Facebook, Veoh and a few others.  So, a FIOS subscriber can follow tweets they select from a list—including the programming they are watching.  They can log into Facebook (but not yet Twitter) to update their profile as to what they are watching at that moment.  An SDK will be launched soon.

The second new product permits a subset of subscribers to start searching and viewing UGC from certain video sites, including Veoh and Blip.TV.

So What?

Well, it is another step closer to digital convergence.  Using TV programs to tweet is an obvious stimulus to that convergence, when you consider how often TV shows are the subject of tweets.  Tweeting about these programs is of course nothing new and these widgets do not (yet) enable tweeting through the TV.  What it does permit is to enable a viewer to see whose twitting what and when.

So that’s why it’s like Zeno’s Paradox.  Remember:  Walk halfway across the room, the half the remaining distance, then half the remaining distance—and so forth.  This is a little like that:  closer, closer, closer, but not quite there.

But the move is just the first and we can expect more.  The application store will propel developers to pay attention to crossing the chasm between the TV, the PC and the mobile phone.  Think about it:  Twitter is (largely) phone-based and Facebook is (largely) PC-based-platform.  This appeals to the developers.  FIOS competitors will figure out their own way to merge social networks with TV programming.

OK, now the gears are churning.  Think of characters using Twitter in the programs—and they are matched by Twitters available to FIOS users.  And so forth.

Stay tuned.

Summary:  CW will launch an ad campaign that encourages viewers to communicate with each other through social networking—texting, Twitter, Facebook and the like.  Now, at least someone recognizes the value of multiple platforms.

Among the more interesting approaches to respond to advertisers’ demands on networks, CW will launch an ad campaign that acknowledges and embraces the viewers’ use of other platforms.  Called “TV to talk about,” the tagline will change with each ad to things like “TV to text about,” “blog about,” “chat about” and “tweet about.”  The New York Times published an interesting article on this point at:

http://www.nytimes.com/2009/05/21/business/media/21adco.html?emc=eta1

CW is probably better positioned than other networks because its programming attracts younger audiences who already interact across digital programs.  What was interesting (according to the NYT article) was that CW had to send researchers to the homes of viewers to find out that viewers do this.  Now that’s funny.  What are they reading?

So here’s an idea:  Let viewers opt in to a scroller that shows the most popular Tweets (or other feeds of comments of other viewers) during the show.  Of course, the scroller will be sponsored by an advertiser. . . .

Summary:  European newspapers are figuring out how to survive–even using an old concept.

We have posted quite a few blogs on newspapers (see others at digitaldumonde.wordpress.com where a different version of this entry is posted).  No, Chicken Little, the sky is not falling in the newspaper world, though it does look a bit cloudy.  Look around you.  Try Europe, for starters.

Premium Services, Not Premium News Access.

One approach is to provide premium services.  In Norway, you can pay a hefty price ($90) to join a weight-loss club that is part of a newspaper website.  Your profile on the site can be updated but only for another fee.

Now, paying to upgrade your profile may be a bit much (unless the weigh-loss membership has not been successful) because of the nearly ubiquitous networking sites, but the point is to offer other services for a fee.

US papers tried this approach but in a different manner:  They charged a premium for access to certain news.  (One site, about which we have written, http://www.globalpost.com, charges a premium for additional news AND access to the editorial meeting, of a sort, and access to the journalists themselves).  Think about other services.

The Old Horse of Repurposing Content

Axel Springer, a large player in the publishing space, revived an old concept, which makes perfect sense:  Write once, distribute many times.  Write the article and post it on multiple sites.  This is the old concept of “repurposing” content for different platforms and different audiences.

Data as a New Source of Revenue

Newspapers make money not be delivering news but by delivering audiences to advertisers.  Few things are better than granular data about audience interests.  The more platforms on which your news is available, the more granular those data.  Advertisers like that.  They will pay for that.

Perhaps losing weight through a club run by a newspapers does not sit well with your idea of reading weighty editorial pronouncements.  But something else might.  Newspapers thinking this way create what their advertisers want:  connections with their potential audiences.

And some of them may lose weight, too.

Oh, and if you want to think about the ramifications for licenses then go to globalgeneralcounsel.wordpress.com.

The William Morris Agency just cut a deal with YouTube that will enable YT to display professionally-produced videos–presumably with the famous actors in the WM stables.  We like this idea:  In fact, it’s about time.  Here’s why:

1.  Low production quality is the standard on YT; it will be good to see something worth seeing.

2.  Almost paradoxically, that which is of good (production) quality is the copyrighted material from the studios–i.e., professionaly-produced.

3.  The problem with the material mentioned in #2 above is that most of it is pirated–or at least no one is getting paid for it.

4.  This (and their other deals with the studios) may actually make some money.

5.  Besides, YT is a good platform–now it can get better.

6.  Oh yes, I forgot:  YT now has credible competition in this space. Hulu.com.

The online ad model is taking a pounding because some of the major names in the biz are not hitting their numbers and CPMs–and other metrics with which to make money are plummeting.

Here’s the prediction:  It will dip for a while and then climb–fast.  And here’s why:

1.  The current dip comes from these sources and, if you ponder them for a bit, you will see that they reinforce each other:

Source One:  The contaminated economy in general.

Source Two:  The te3rrible ad-spend market, related to the lousy track record of large media companies in hitting their numbers.  (And in particular, companies with a big Internet or mobile play)

Source Three:  Advertisers still “don’t get the web.” (OK, let’s expand our brains and start saying something like:  “Advertisers don’t get the digital platforms.”)

So, you have the ad people unwilling to stick out their necks:  What they really want to do is preserve their jobs while all around them are losing their heads.

2.  The upside?

2.1 (love this numbering system, huh?):  The reach per dollar spent is pretty enormous in the digital markets.

2.2 The demographics are changing–of the ad buyers and ad placement people:  They are “digital natives.”

2.3  The production costs are nearly nil.

2.4 You can change ads on the fly and according to market response.

2.5  And the main reason:  The granularity of the demographics and the data.  It is soooo good (and getting better every day) that people do not know what to do with it.

3. Advertisers really are finally getting the opportunity to run campaigns across three (some would say four) screens/platforms.  That’s powerful.

2009 is one of those transition years–the shift of more money to new media platforms.  Ad agencies will look like geniuses because “now they get it.” But, …

It does not follow that this is advice for new investments.  A lot of people are not sanguine about start-ups and the ad-driven model.  IN other words, the fortunes have been made there.  Now it is the spread of the model to the established economy.  Advertising needs scale or depth–breadth of audience or depth in a niche audience (which, when you think about it, is really the same thing).  Venture capitalists are not looking very closely at startups with the ad-driven model.  So even if you think you are the next Google, please be prepared for a lot of rejection.

Please be prepared for a lot more going on in the new media ad world?  Digital platform ad world?

And where will that take us with the digital transformation occurring in February????

So this is not strictly about transactions and strategy–unless some clever VC is out there realizing that we international road warriors who do not have unlimited expense accounts are a huge business opportunity.

In spite of spending most of my professional career the last zillion years on digital convergence, I keep coming up against its limits–reminding me that no matter what we say, it is not ready for prime time.

I am changing jurisdictions in Europe for the next three weeks, much of it for vacation but, hey, work will call.  This move means that:

1.  I have to re-forward all of my US phones to another line in that new jurisdiction–and get our IT department to doublecheck it all back in the US.

2.  I have to get a DIFFERENT SIM card for this jurisdiction.

3.  I have to pay for Internet access either by the minute or by taking out a loan for “all you can eat” (and we know how tough it is to get a loan these days).

4.  No matter what I do, my firm will pay a gazillion dollars for the calls to/from Europe and the text messages.

OK, OK.  It’s still Europe and therefore still pretty.

And while I am grousing:  Just when will we get vacation parity?