March 29, 2007
We talked about it in New York. We danced around it in Mumbai. And its dark cloud has hovered above every conversation we’ve had about media and content over the past three weeks. I’m talking, of course, about piracy. And next week we’ll be heading into what is arguably the world’s epicenter for IP infringement: Shanghai, China.
Surrounding Shanghai are wholesale distribution centers that sell thousands of tons of goods to hundreds of thousands of distributors every day. And a large percentage of those goods are, well, less-than authentic. Some experts estimate that a full one-third of China’s GDP comes from pirated and counterfeited goods. More than 90 percent of software used in China is pirated, and the same goes for video games. But it’s not just about software and games anymore.
Budweiser beer, Tide detergent, Kotex feminine care products, Marlboro cigarettes. These are just a few of the American brands that have been co-opted by counterfeiters in China. Yamaha estimates that more than 80 percent of the motorcycles in China with Yamaha emblazoned along the side are phonies. The problem is pervasive, and there are few signs that it is getting any better.
With an epidemic this bad, any self-respecting multi-national would want to take action. So, what are the options? Well, they can reduce their prices to make pirated products less appealing. This also happens to make their own margins less appealing. Or they can send armies of lawyers into action. Expensive, and not that effective. Then there is the strategy of tightening up product cycles to constantly outpace the counterfeiters. Great if you make software. Not so good if you make motorcycles.
It is a vexing problem. And one that threatens many different brands and businesses. And no industry is more concerned with this than the entertainment business. Perhaps that’s why the New York deep dive was dominated by talk about the Digital Millennium Copyright Act and digital rights management.
It can all seem so hopeless sometimes. But there was one idea that came out of New York that seemed to have potential. Admittedly, it is still unclear how it would work. But the basic theory was that if you could embed a piece of code into a piece of digital content – a movie, a song, a game – and that code could report back to the copyright holder the usage of that content, like how many times it was played and on what devices, then maybe a pricing model could be developed that would appropriately measure the value of that content. The code wouldn’t prevent you from sharing the content, it would just report the usage patterns back to the rights holder.
Then the idea went a step further, when someone suggested that using this theory, you could then know how many people had viewed the content, and assign value accordingly. The exclusivity of that content would factor into its value. You would pay more to be the first to see a movie, or hear a song. Or you might want to know many people had read the same stock tip as you, and would pay more for a tip that was less well known.
These ideas are not rocket science. But the business models that might emerge from them could change things dramatically. Still, they are just germs of ideas. And that’s what we like to see from the GIO. In the meantime, there are some people that are hoping China’s piracy days are but a phase in the maturation of a nation. Some point out that the U.S. was a big offender of copyright law during its younger days. And that countries don’t really get serious about IP protection until they have something of their own to protect.
That may be. But if companies sit around waiting to find out if that will change, they run the risk of having culture shift under their feet, and never commanding the same prices and margins again. We’ll just have to see how the folks in Shanghai feel about all this.
March 26, 2007
The Power of the Pyramid
As the GIO team prepares to head to Korea and China this weekend, we’re spending a lot of time discussing one of the themes that came up in the Mumbai deep dive on media and content. The idea was that by disseminating affordable technology – broadband, mobile phones, PCs -- to the hundreds of millions of Indian villagers dotting the countryside, many of whom are impoverished, that microeconomic opportunity could arise.
At first blush, it is classic “bottom-of-the-pyramid” type of thinking. Made popular by University of Michigan professor C.K. Prahalad, the theory states that there is a huge economic opportunity targeting the 4 billion people in the world that make less than $2 a day. Call it the long-tail of socio-economics. Click here to listen to Prahalad's thoughts on the democratization of commerce.
But it has been my experience that whenever a bottom-of-the-pyramid discussion arises, there is always a sufficient amount of skepticism in the room, a palpable fear that exploitation of the poor is not far behind. I suspect that this tension will be an important theme going forward, especially during the deep dive in Shanghai next Thursday, and the subsequent focus area of the GIO, Africa, which kicks off this summer.
So before we start to head down this road in earnest, I think it best to clear up a few possible misconceptions. The first is that this is all about “tapping into a market.” Most cynics would question whether the poverty-stricken are really in need of high-speed Internet connections. After all, when you’re struggling to put food on the table, is Internet access really that high on your list of priorities?
Fair enough. But consider this: in Southern India, a wireless technology that can transmit 5 million bits per second over a 60-mile span for a fraction of the cost of Wi-fi is bringing telemedicine to villages that previously had to travel several hours just to see a doctor. Eric Brewer, a professor at UC, Berkeley, has been trialing the technology, called Wildnet (Wi-Fi over long distance), in villages throughout India and other parts of the world. Using the technology, Aravind Eye Hospital, in Theni, has been able to treat 1,400 patients a month at five remote centers for costs as little as 13 cents a visit. An article on this topic appears in the April 9 issue of Forbes, but is not available online. Here is a link to Brewer’s research group at Berkeley, called TIER (technology and infrastructure for emerging regions.)
That’s the kind of transformative effect that technology can have on developing areas. As we think about this topic, it’s important to remember that it’s not about taking existing technology and applying it to impoverished people. That doesn’t make a lot of sense. It’s more about considering what new technologies might make sense to address the problems of the poor, disconnected, and often forgotten people of the world. As Prahalad says, it's not just about creating "microconsumers," but also creating "microproducers." That requires real innovation.
It is also worth keeping in mind that when we discuss the issues surround “media and content,” it’s not just about entertainment, news, music and books. It’s about all kinds of content, like telemedicine, weather reports that affect farming habits, and educational programming, etc. The challenge is twofold: determining what kind of content impoverished people need the most (and this would vary from region to region); and how best to deliver it. Or as they say in the writing business: form follows content.
March 22, 2007
White Hair, Black Hair
In the collaborative spirit of the GIO, I’ll be opening up the GIO blog to my fellow deep dive participants and other thought leaders throughout the course of the year. Today, I have the pleasure of passing the mic to one of our Mumbai deep dive participants, Alok Kejriwal. Alok is the founder and CEO of Games2win India, an online gaming site. He is a classic serial entrepreneur: in the past five years, he has started up four different companies that deal in the online marketing, mobile marketing, and mobile gaming businesses. One of his companies, mobile2win.com, is now the subject of a Stanford Business School case study.
At 38 years old, Alok brought a decidedly counter-cultural voice to the Mumbai deep dive, and challenged some of his peers to think more creatively, more like a young person. It is an attitude that he brings to the GIO blog as well, as you can see with his post entitled White Hair, Black Hair:
"Boy, when I settled in a few minutes late at the GIO deep dive in Mumbai, the first thing I did was count the number of white-haired folks sitting around the U-shaped table vs. the number of black-haired folks. There was more white hair than black . And as I imagined, the discussion clearly crossed swords between white hair vs. black hair!
Take content for example. The more experienced folks believed that what was ‘good’ and ‘quality’ would need to go cross platform. But the question the younger group threw out there was, hey, who decides on what is good or not? Today it is the consumer – not the broadcaster. As the session rolled on, it was interesting to note how the folks from media backgrounds, owners of large media companies, were so concerned about ‘protecting’ their content and working out ways to make it accessible across the many devices that are springing up. However, not once was the ‘content’ itself questioned.
I think the mature folks have lost touch with the younger media savvy generation and how differently youth thinks today. Also, the big disconnect I noticed was how the white haired folks thought of the Internet as a stand-alone medium. They must live it, drink it, eat it and consume it to realize that the net is all pervasive and will seep into all devices, all entertainment genres and all recreation habits, whether you like it or not. Hey, who knows, someday the net may let you change your hair color too!!" -- Alok Kejriwal
Thanks to Alok for his poignant insights on the GIO and the future of media and content. Stay tuned for lots more guest bloggers to come!
March 20, 2007
The Real Ajoy
Sometimes, the best insights from the GIO don’t come from the collaborative discussions we have sitting around the table. Sometimes, they come out of the many casual conversations the GIO team has with deep dive participants during breaks, lunch, or the welcome dinner the night before. Sometimes these insights are so subtle, so fleeting, you catch them only out of the corner of your eye, and they don’t really make sense to you until the next day, or on the plane ride home. And sometimes, they hit you square between the eyes.
Today I want to share one of those moments that I had in Mumbai. During one of our fifteen minute coffee breaks (or tea breaks, as it were), I had the pleasure of talking with Ajoy Krishnamurti, the CEO of Sankalp Retail Value Stores. As CEO, Ajoy is in charge of Sankalp’s recently franchised My Dollarstore chain of stores, in which everything is priced at or below 99 rupees (or about two dollars). Sankalp franchises its 42 stores throughout India from California-based My Dollarstore Inc., and sells mostly American-made products, like Pop-Tarts and Hershey’s Chocolate Syrup. They also offer the full American retail experience: red, white, and blue decorations; wide aisles; posters of the Statue of Liberty.
The formula has been wildly successful. India’s My Dollarstore saw 4.5 million customers last year, after just opening up in 2004. And Sankalp has plans to open as many as 400 of the outlets over the next three years.
How did they do it? TV advertising? Direct mail? Special events? “We don’t do any advertising,” said Ajoy, a man whose honesty is apparent the first time you speak with him. “We can’t afford it.”
So the whole business has been built on word of mouth, or so called “viral marketing.” So far most of the words that have been passed along about Ajoy’s dollar stores have been good, obviously. But it’s not always good. And I asked him if that bothered him, and what he could do about it. “Let them say what they want,” he said, without hesitation.
When I asked whether he has ever had a problem with negative messages getting out into the market, he told me a story. He said it bothered him that customers would sometimes assume that because the goods in his stores were inexpensive, that they were also somehow defective. Because he knew that wasn’t the case, he thought about how to change that perception.
To address the problem, Ajoy is offering a full refund in his store for anything that is not of high quality. A money-back guarantee is not common in India. He is also staffing up the stores to answer customer questions about unfamiliar American products.
What Ajoy understands, and many do not, is that “messaging” and traditional marketing, are not always the most effective way of selling goods and services. Word of mouth is far more powerful. But he doesn’t try to seed the conversation. He just lets it happen. And he knows he can’t control it.
So when he had a problem with the message that was getting passed along about his product, he didn’t take out an ad in the newspaper, or launch an elaborate marketing campaign. He simply changed the service. He made the offering more compelling, and trusted the market to sort it out. He enhanced the product, not the message.
This may be nothing new to all you MBAs out there. But to me, coming from a message-saturated American market, it was a pretty powerful lesson. It spoke to the authenticity issue that the New York deep divers repeatedly brought up: consumers are too savvy these days for promises. They want something real and honest.
It will be interesting to see if Ajoy can keep the success of his My Dollarstores up when Wal-Mart, Tesco, and Carrefour come to India, as they are all planning to do. But my guess is that with his local knowledge of the Indian consumer and his authentic attitude, Ajoy’s going to do just fine.
March 16, 2007
Mumbai’s Big Idea
Boy did I ever miss the mark. For two days leading up to our media and content deep dive in Mumbai, I’d read everything I could about Bollywood, scoured the local newspapers for entertainment news, and prepared myself for the glitz and glamour this city is known for its movie business. I boned up on all the big stars by reading their bios on the Internet Movie Database. I kicked myself for not building enough time into the trip to tour the movie studios. And so when the day of the big discussion finally came, and we had assembled India’s thought leaders in the media and entertainment industry, what did they want to talk about?
Literacy, of course.
Actually, illiteracy, to be more precise. What started as a soaring discussion, full of optimism about the potential for India to be a major global force in the content creation business, quickly turned inward, and focused more on using technology and content to bridge the gaping wealth chasm between India’s Haves (its urban populations) and its Have-nots (the residents of India’s approximately 600,000 rural villages.)
Perhaps it was because all the people in the room knew that before India could beam its considerable collection of creative content around the globe, it was going to have to figure out how to get it to its own people first. And that is a major challenge.
First, let’s talk about who was in the room. The group consisted of representatives from some of India’s brightest stars, and not just from the media and entertainment business. There were creators of content (Big FM Radio, newspaper publisher Malayala Manorama, TV and movie producer Zee Telefilms, and music and movie producer Saregama India). There were advertising companies (WPP, FCB-Ulka). There were content distributors (cellular and satellite giants Reliance Communications, Tata Sky, and Bharti Airtel). There were companies that use media as a vehicle to get their message across (oil giant Hindustan Petroleum and retail chain Sankalp Retail Value Stores). And there was an academic representative from the Indian Institute of Technology.
Not surprisingly, there were dozens of opinions flying around the room, and not all of them in accord. But there were two things that all in the room seemed to agree on: 1.) India has a very bright future ahead in the media and content space (note: this was in sharp contrast with our deep dive in New York one week prior, in which the mood was much more dour and pessimistic) and 2.)India is not without its problems, namely the vexing challenge of delivering content (not just entertainment) and connectivity to the hundreds of millions of rural residents.
The discussion that resulted was right up the GIO’s alley. The idea was that by connecting India, likely through the use of mobile technology, a social unity of sorts could result. As IBM’s own Kris Lichter put it, mobility at the right price can create microeconomic opportunity that would connect India’s villages to the world community.
There was the usual, and warranted, debate over the price of access to this technology. But there was also a lot of concern with cultural barriers to adopting technology. For example, what would the value of Internet access be to a farmer that could read or write?
But what if that farmer had a phone that was entirely voice activated, and could check weather forecasts, order fertilizer, and see commodity prices without ever typing a word into a keypad? Or, perhaps even more compelling, what if there were a visual language that developed, through the use of mobile devices, that was universal and could bridge the technology divide, not just in India, but in Central Asia and throughout Africa as well.
This idea of overriding illiteracy through the use of a visual medium, of overcoming language barriers through the use of simple and intuitive icons, and the potential for India and China to talk to each other without the need for translation, had the room buzzing. And I guarantee that every person in that room is sitting at home tonight thinking about the power of that kind of solution.
The GIO team left Mumbai without laying eyes on a single Bollywood celebrity. But we left town with something far more exhilarating: a big idea.
March 14, 2007
And you thought Hollywood had problems. As the GIO team prepares for tomorrow’s deep dive in Mumbai (a.k.a. Bollywood), the The Times of India published a full-page story today on the “corporatization” of the Hindi film industry. If you’re unfamiliar with Bollywood, check out yesterday’s blog entry.
Bollywood has many things in common with its Southern Californian cousin. But one thing it does not share with Hollywood is the economic refinement of the American model. Bollywood has, until recently, enjoyed rapid and unchecked popularity throughout much of the world. It has done this without the need to conduct audience research or launch extensive advertising campaigns, many of the things that American movie studios have done for decades to ensure the profitability of their films.
But Bollywood is starting to grow up, and that means it’s time to get serious about the business of making movies. Some sources estimate that 80 percent of Bollywood’s movies lose money (a figure that is disputed by many who claim the industry often fudges the books.)
There is a new infusion of corporate financing in to Hindi film industry. Not long ago, banks and other financial institutions were banned from funding the movie business here. But since the ban was lifted, the money has started to flow, and the expectations are being stepped up. Actors are expected to be punctual. Production costs are expected to be held to a minimum. Movie plots are expected to be original (in the past, many plots have been “borrowed” wholesale from American films.) And comprehensive marketing plans are expected to be in place before a movie comes to market. That includes in-film advertising and product placements.
There’s some talk over here about this new “Corporate
Bollywood” impeding the creative process. But most people see this as a natural
maturation of the business. And a good way for the industry to expand globally.
In other news, we had a fantastic Indian dinner last night with deep dive participants in the Grand Hyatt Mumbai. Flowers, candles, and local fare (even some of the famous Mumbai street food!) The conversation was lively and topical, all of which bodes well for today’s deep dive.
March 13, 2007
Hooray for Bollywood!
Today the GIO team arrived in Mumbai, India to conduct the third deep dive session on the subject of the creation and consumption of media content. You may be asking, “Why is the GIO team holding a deep dive meeting in the city formerly known as Bombay?”
Well, it’s not for the weather, that’s for sure. It is currently
92 degrees with 50 percent humidity. No, it has more to do with the fact that
the Indian movie industry, known as Bollywood, is based in Mumbai and cranks out
more than 1,000 movies a year. Let me say that again: one thousand movies a
year. We’re talking full-length, feature films – almost all with elaborate song
and dance numbers – averaging about three hours each in length. That’s twice as
many movies as
And the influence of Bollywood reaches far beyond the
The city of
Bollywood is currently dealing with many of the same issues
We’ll be getting into all of these issues and more Thursday when we sit down with executives from movie studios, radio and television networks, and the non-profit groups that study and regulate them. So stay tuned for the Indian perspective on the future of media and content. It’s sure to be a hot discussion.
March 09, 2007
Sometimes, when you’re dealing with issues as broad and complex as the media and content landscape, there is a tendency to want to break the issues up into little pieces, and deal with each of them separately. It’s easier to get your head around it that way. With media, for example, it’s tempting to think of advertising, user-generated content, piracy, and mobility as four distinct topics that need to be addressed.
But that is almost always a mistake. Because when it comes to sweeping subjects like the creation and consumption of content, everything, and I mean everything, is interrelated.
For example, we spent a considerable amount of time in Tuesday’s deep dive in New York bemoaning the sorry state of piracy in the world, and worrying about what we could do to stem the bleeding of copyrighted material. We also fussed over the advertising market, and the difficulty that companies are encountering in their efforts to get their message heard.
But few people put the problems together. When you do, an intriguing solution emerges. Like one deep dive participant, who suggested that entertainment companies could give digital music and movies away for free, but attach brief advertisements to each digital file that play for a few seconds before the actual content plays. You say people will never go for it? They will if artists, songs, or movies are actually sponsored by a particular brand. Justin Timberlake, sponsored by Banana Republic. Or Jay-Z, brought to you by the Cadillac Escalade. The ad is part of the file. It’s all one package. You can’t get one without the other.
For you purists out there, it’s really nothing we haven’t seen before. Remember the Colgate Comedy Hour? Mutual of Omaha’s Wild Kingdom? We put up with advertising interrupting our TV, our sports arenas, our newspapers, and just about everything else in this world. Why not music and movies?
Another area that had many scratching their heads in our deep dives was what to do about user-generated content. There was a lot of talk about user-generated content being a fad, or something a company could monetize. In addition, there was tremendous uncertainty about how mobility would affect the creating and consumption of content. But according to this piece in the Wall Street Journal, some companies are already starting to make money off of user-generated content. And they’re doing it by looking at multiple trends in the content landscape, and tying them together.
Cell phone providers in the U.K. and Asia are allowing customers to post user-generated content to a gallery. Other users can then download the material to their phones for a small fee. And this combination of two of the biggest trends affecting the media and content space has actually managed to solve another big problem: how to compensate users for contributing revenue-generating content. European cellphone provider 3, a division of Hutchison Whampoa, pays contributors 10 percent of the revenue generated from their clips. They pay it right into a PayPal account.
Will it work? Who knows. But it’s interesting to think of
what can happen when you apply creative problem solving to the entirety of an
industry, not just one part. And that’s what the GIO is all about.
March 07, 2007
The Kids Are Alright
Now that was different. Yesterday we spent all day batting around ideas with executives from powerful, profit-driven corporations concerned about how their brands are being perceived. We talked about how advertising is changing, and we wrung our hands over the challenge of convincing consumers to pay for media and entertainment content. Today, the next generation took a turn at the table.
It was a fascinating experiment. We took the same concept of
an open, collaborative conversation about the changing world of media and
content, and applied it to college students, at both the graduate and
undergraduate level, threw in a few executives from companies like Harley-Davidson,
Sony, and Xerox, and watched what happened.
So what is the youth of today like? Sure, they’re deeply distrustful
But they are on a decidedly different page than the folks we
spoke with yesterday. They have no sympathy for the struggles of media
companies trying to protect their copyrighted material. They don’t use the word
“piracy.” They call it “sharing.” And that, more than anything, characterizes
the cultural bias this generation brings to the discussion on media and
Also, they are tired. They are tired of being marketed to. Tired of being lied to. And who can blame them? Branding surrounds them every moment of their lives. As a result they are far more discerning and aware of branding than anyone from older generations. So they get frustrated, but not necessarily of the fact they are being bombarded by brand. But more specifically, they are frustrated with being marketed to inaccurately, inefficiently.
As one young man jokingly put it, he would rather not ever
see another advertisement for feminine hygiene products. He doesn’t need them,
wouldn’t buy them, so why is he repeatedly subjected to this indignity? Maybe
it’s because the current advertising model is wildly unspecific. Many of the
students at the table seemed to feel that if all marketers could be as accurate
as Amazon.com or Netflix are with their book and DVD recommendations,
people wouldn’t mind being marketed to quite so much.
So, how do you fix a problem like this? Do you give people the opportunity to create their own marketing profile and choose to share it when they feel it is appropriate? Kind of like an electronic health record for marketing. It goes with you wherever you go. That’s one thought that emerged.
The other sentiment that emerged from the students was an
insatiable craving for authenticity. Young people have found the world to be so
full of messaging, whether it’s from companies trying to sell them something,
politicians on the road to the White House, or their own parents, that they
want desperately to find something real, something that’s not intent on
influencing them. They take refuge in communities of others like themselves. It
is there that they can share the same interests, recommend goods and services
to each other, and trust that no one will try to sell them something for profit
or personal gain. Ironically, many of these communities that kids flock to for
authentic community are online, in so-called “virtual” environments.
At the end of the day, there were probably more questions than answers, which is just the way we like it. But I think everyone walked away with a better understanding of the expectations of the coming workforce. And the bottom line is, these kids were alright.
March 06, 2007
What do you get when you throw two high-powered media executives, two advertising executives, one general manager from a massive consumer goods company, two venture capitalists, three academics, a handful of startups, some bloggers and a couple of consumer advocates in a room together and set them loose on each other?
Everything. All at once. With very few breaths in between.
Clearly we put together the right group of people to hash out issues around the creation and consumption of media and content. Because the moment host Teri Riddle opened up the floor to our deep dive participants, the conversation took off and didn't slow down until the final bell. There was passion, well-reasoned arguments, serious disagreements, and some very insightful and forward looking insights.
Over the course of the next couple of weeks, I'll try to get it all down in these pages in more detail, but today I’ll just try to give you a general sense of what happened. First, the quick overview:
Viral marketing is not new.
Viral anti-marketing is new.
Politics is commerce.
Politics is viral.
Word of mouth is marketing.
Every conversation is marketing.
Kids crave authenticity.
Authenticity is the key to marketing.
This is the digital age.
This is the digital Marxist age.
All content is just raw material.
Consumers own the brand.
Companies own their brand.
Senior management owns the brand.
We need fewer brands.
We need more brands.
Piracy is the problem.
Digital rights management is the problem.
iTunes is the problem.
All quality is not created equal.
Privacy is dead.
Online image management is the next big thing.
Hollywood is dead.
Long live Hollywood.
Content requires a supply chain of one.
We need standards.
We need rules.
We need tracking.
Snakes on a Plane is not a very good movie.
That’s really just a smattering of what really went on at the meeting. But overall, there was a tremendous concern from the media folks about how to solve the problem of piracy, and a general lack of sympathy from all other quarters. In fact, one participant even suggested that entertainment content be distributed for free as a public service, like public parks, paid for through taxes.
Tomorrow we’ll be meeting with a group of students (both
graduate and undergraduate) to discuss the same issues. My guess is that they
won’t be quite as concerned about protecting copyrights. But maybe they’ll
Check back tomorrow for more specifics on all of the above later this week.