Global Innovation Outlook

The Big Switcheroo

For the past three months, throughout the nine deep dives on media content, the Global Innovation Outlook team has seeded the discussions with a handful of different concepts. They are simple, high-level constructs, used to get the conversation going and keep it focused. Some of the discussion points have been easily embraced. Everybody found it easy to talk about user-generated content, for example. And piracy often generated heated, if not productive, conversation.

But one concept that deep divers struggled with was nicknamed “Let go to Grow.” It’s the theory that by letting go of traditional control over your business, you can build other, more profitable businesses around that which you give up. The phrase was popularized by Linda Sanford, an IBM senior vice president, who published a book on the topic. And there are a number of examples of companies giving away a valuable service or product (Google’s search, for example, or IBM’s own embrace of open source software) in exchange for a revenue model built around that service or product.

But most of the media executives at our dives, while familiar with the concept, just couldn’t see it happening in their business. Or at the very least, they had trouble conceiving of the business model that was going to arise after they let go of the very things they had been monetizing with great success for the better part of a century. So we desperately tried to get the groups to think around these corners. And one of the examples that Kris Lichter, IBM’s Director of corporate innovation projects and the man running the GIO, repeatedly used was a purely hypothetical example of George Lucas allowing fans to rewrite the ending to the Star Wars movies.

Well, the hypothetical is now reality. Last week Lucasfilm, the production company that manages the rights to the Star Wars movies, announced it would make 250 clips from the series available to the public online at starwars.com. The idea is to let the rest of the world mash up the clips, and remix them as they like. That this is coming from the man nicknamed “Lucas the Litigator” for his zealousness in protecting his intellectual property, makes it all the more astonishing. But starwars.com expects a huge boost in traffic, the Star Wars community will almost certainly grown, and a movie franchise that has no more movies to offer will sustain the business for decades to come. Makes you wonder what else might be possible in the world of media and entertainment.

Jarring Transition Alert! – Jarring Transition Alert! – Jarring Transition Alert!

Speaking of letting go, it’s about time for me to let go of the media and content topic area on this blog. Though there is still much to learn in this incredibly rich topic area, the GIO team is now transitioning its focus to the next topic area: Africa.

For the last couple of months, even as the media and content deep dives were wrapping up, we’ve been hard at work developing meeting agendas and discussion areas for our ten forthcoming deep dives on Africa. We will be focusing much of the discussion on how investing, lending, and business development can spur positive economic growth within Africa. This is no charity mission, mind you. Rather, the GIO wants to encourage innovation that can both create and sustain business opportunities, the ultimate goal of which is to create positive socio-economic change and bring Africa more fully into the global economy.

It’s going to be fascinating. We kick off with a double-dive in Nairobi next week, followed by dives in Dakar, Paris, Lisbon, Atlanta, Beijing, and a wrap up session in Cape Town in September. You won’t want to miss this, so stay tuned to this blog, and follow along as we dive deep into the world’s second-most populous continent.

The Death of DRM?

Today marked another milestone in the now inexorable march toward the death of digital rights management as we know it. Amazon.com announced that it would launch its music download service without any DRM protection, meaning the songs can be played on any device and shared with anyone. The announcement follows the full-court press now being applied by Apple (the largest seller of digital music) and EMI (the third-largest record company), both of whom have come out in opposition of DRM.

But in the media and content deep dives we’ve had, record company executives are still focused on protecting their intellectual property. And who can blame them? They invest a lot of money to discover, develop, and promote the artists that ultimately make the music. We’ve had some spirited debate about piracy in nearly all of our deep dives in this topic area, and there are always two sides: those that feel the record companies deserve to be paid for their product, and those that feel that music is made to be shared.

But is it possible the problem isn’t that DRM protections exist, but rather that the ones that do exist are too complicated, arbitrary, and proprietary for the average consumer to care. Here’s a quick quiz: How many times can you burn an iTunes playlist? What devices are Napster downloads compatible with? Which MP3 players are Rhapsody songs compatible with?

The only reason you would know the answers to these questions is if you had bumped up against one of these DRM restrictions in the past. And even then you may not know anything more than that you had reached your limit. The digital download market is too fragile right now to have such complicated and wildly varying rules. Especially when there is a cheap alternative that is readily available in the market: piracy.

That’s why many deep dive participants voiced their desire to see a standardized, universal DRM solution for all types of digital content, not just music. It’s what we’ve come to start calling a “Content Bill of Rights,” a set of easily understood rules that applies to a particular piece of content, rather than the distribution service or the device it gets played on. Maybe it would be like this:  if I buy a copy of Spider-Man III, I want to own it for the rest of my life. I want to be able to play it on any device, or download it as many times as I like. And if another portable medium replaces DVDs in the future, I don’t have to buy another copy of the movie, because I already did that. All we have to figure out is a fair price for that.

If these rules could be made simple, fair and universal, with input from the content producers, distributors, and consumers (and the last one is the key), then could it be possible that people would be willing to pay for digital content, rather than steal it? We’re going to endeavor to find out.

Getting There Is Half The Fun

I suppose it’s fitting that the final deep dive on Media and Content was in some ways the most confounding one to date. The GIO team has gotten pretty used to walking away from each deep dive without a sense of closure. The GIO is actually designed that way. We don’t endeavor to solve all the problems facing the media industry, we just want to get the conversation started among a group of people that can.

But this dive felt particularly open-ended, unfinished, unsettling. And it wasn’t until the very end that it all made sense to me. When Ginni Rometty, senior vice president of IBM’s Global Business Services, stood to make her final remarks to the group, she somehow found the common thread between all the players in the room. “What I heard today is that we are all involved in changing paradigms,” said Rometty. “We’ve spent a lot of time trying to figure out what the destination of all this change will be, but maybe we should think more about the journey than the destination. It is possible that the next step is to think about how you do things, and how you can do things differently, rather than what you end up doing.”

It was dead on. Every person in that room had “I am experiencing rapid and merciless change” written all over their faces. Among the participants in the dive were representatives from Sony Pictures, Disney, Ogilvy North America, the Academy of Motion Picture Arts and Sciences, Reuters, Stanford and Syracuse Universities, Wal-Mart, Time Inc., Linden Lab, a Silicon Valley V.C. called Mayfield Fund, a U.K. startup called Grapeshot, and an Indian gaming company called Games2win. And they all shared the same feeling that everything was up in the air, and no one was sure where it was all going to land.

This sentiment was evidenced by a lengthy discussion amongst the group on the instability of the business ecosystem around media and content. One deep diver noted that if you want to invest in a business, you typically want to put some money in, grow the business over some period of time, then get that money back (plus profit.) But how can you invest in an industry in which things change too rapidly for anything to take root?

He went on to characterize the current state of the industry as increasingly brief periods of stability. But others in the group suggested his characterization didn’t go far enough. “This isn’t short periods of stability, it’s one long period of instability,” said Gene Yoon, vice president of business affairs at Linden Lab, the maker of Second Life. “All of those strategists that planned your business five or ten years out, that skill is no longer needed. You have to be willing to constantly transform your business. You have to be fearless. You have to be willing to start a business that you know won’t exist in a couple years.”

There was some groaning about this new reality for a bit, before John Snyder, a serial entrepreneur and founder of a startup called Grapeshot said, "Who wants stability? This is the best time for entrepreneurs!"

This notion of the constantly changing business model was summed up beautifully by Alok Kejriwal, founder and CEO of Games2win. “In five years, I don’t think I’ll be the Chief Executive Officer of my company anymore,” said Kejriwal. “I’ll think I’ll be something more like Chief Opportunity Officer. Because there are so many paths to go down, the hardest job will be deciding which one to choose.”

There was also a spirited discussion on the future of advertising. Allen Morgan, managing director at the Mayfield Fund, speculated that targeted advertising through the Internet and other means could have a dramatic impact of overall advertising spending. He quoted retail mogul John Wanamaker’s famous line "Half the money I spend on advertising is wasted; the trouble is I don't know which half." Then went on to say, “if we figure out which half, aggregate brand spending is going to get cut in half.”

Many in the room were looking to Carla Hendra, co-chief executive officer at Ogilvy North America, for answers. “Building a brand is about telling a story, and storytelling is not going to go away,” said Hendra. “But the way we tell the story and how we deliver that story will change. We will see some dramatic shifts in marketing spend, but you are not going to see half the spend cut out.”

The other point that came up regarding targeted advertising was this: in a world in which marketing gets increasingly targeted and accurate, based on the behaviors and preferences of individual consumers, is there any room left for serendipity? In other words, sometimes people don’t know what they don’t know. This goes for content producers and advertisers. But one of the deep dive participants who had done research on the topic suggested that the right mix is 50 percent targeted content, 50 percent serendipitous content. Give chance a chance, is the takeaway there.

We did some brainstorming on potential business ideas as well, and I’ll throw those out over the course of the coming weeks. Feel free to poke holes in any of the ideas, or work to make them stronger and more refined. But remember, as Byron Reeves, director of the Center for Study of Language and Information at Stanford University told the group, “It is easier to be perceived as intelligent if you critique rather than advocate.” It’s much harder to see the potential of an idea, and build on it. That’s the challenge I put to all of you. And remember to enjoy the ride.

Listening Without Fear

There comes a time in the life of any idea when that idea must be tested. Sometime after the “aha” moment, but long before the “eureka” moment, an idea must be poked, prodded, and probed. And no matter how emotionally attached to the idea you may be, you must be prepared to open it up to a jury, and listen, without fear, to whatever verdict is rendered.

For the GIO, the two Media and Content deep dives in Los Angeles this week will serve that purpose. For the past two months, while traveling from New York to Mumbai to Seoul to Shanghai to Helsinki to London, the GIO team has nursed a handful of innovative and promising ideas along the way and solicited input at every stop. Today we put a few of those ideas to the test.

It was a tough jury, to say the least. The participants in today’s dive included two students (one from Syracuse University and another a Ph.D. candidate at MIT’s Media Lab), two academics from USC’s Marshall School of Business and Columbia University, a tough-minded venture capitalist from Lightspeed Venture Partners, an unapologetic blogger and chief evangelist at Six Apart, the head of market development from Facebook, and executives from Canadian wireless giant Telus Communications, Motorola, Autodesk, Sony Electronics, and Reuters.

The first idea we decided to test was one that we’ve blogged about often throughout this focus area. It is the idea that through an easy-to-use, affordable mobile platform, rural parts of the world, particularly those that are impoverished and undereducated, would be able to improve their socioeconomic condition. We presumed that the cost of cell phones and services is just one stumbling block to adoption that would eventually be addressed. And we posited to the group that an iconic language, that could be used universally, would skirt some of the literacy issues that hold rural inhabitants from embracing the Internet.

Suffice to say we received some pushback. Many in the group seemed daunted by the prospect of developing a universal language, and chose instead to try to solve specific problems that rural people were dealing with, like how to get market prices for mangos in Mumbai. “It’s hard to think about expanding the use of mobile phones without defining the context of the problem that is trying to be solved,” said Jeremy Liew, a partner at Lightspeed Venture Partners. “Let me go figure out what the pain points are first, then I can figure out what types of information are needed.”

Of course, sometimes a simple, accessible, powerful platform can uncover pain points that were not previously apparent. For example, no one could have predicted the many uses for the Internet before it was unleashed and placed into the hands of millions of users. Perhaps the same would be true of this mobile platform. (It’s worth noting that there were several deep divers that were very excited about the possibility of this idea and had evident passion for pursuing it.)

The next big idea we sprung on the group was the concept of digital persona. This is an idea that presupposes that there is a segment of the population that wants to control its own personal data, license it out to trusted marketers and content providers, and update it as their needs change. Some people took to calling it a “digital locker,” others know it as a digital marketing profile, or digital identity.

There was some pushback on this idea too. During our dinner the night before, one deep diver stated unequivocally that people don’t know what they want, and so cannot be trusted to create and maintain their own marketing profiles. In fact, they won’t even want to. To which another diver responded, “Maybe that’s true, but people do know what they don’t want, so maybe that’s a good place to start.”

The idea seemed to have some legs though. Matt Jacobson, head of market development at Facebook, said that he was willing to pay for a service like that as long as he could get something out of it, a challenge he characterized as ensuring that the “juice is worth the squeeze.” We then turned our attention to determining what kind of an organization would be trusted to store this valuable digital identity information. There was some hand-wringing over this tough question for a bit, until chief evangelist at Six Apart, Anil Dash, reminded us all that “we have already abdicated our identities to the Department of Motor Vehicles, the least qualified organization in the world.”

The group also tackled the delicate issue of building a brand in a world in which negative information about a company or a brand can spread like wildfire, and viral anti-marketing is just as prevalent as viral marketing, how can a company go about shaping and controlling its brand? It’s an idea that first came up in New York (which seems like a hundred years ago) and the group was just as engaged this time around.

Jacobson was pretty clear about the best way to deal with viral anti-marketing: embrace the fear. Back in the fall of 2006, Facebook redesigned the site, adding a feature called News Feed, which allowed users to track the activities of their friends. Almost a quarter of Facebook’s 4 million users at the time joined an online rebellion against the new feature. So what did Facebook do? They listened. “We gave our users a chance to complain about things, and that elevated the conversation,” said Jacobson. “It was a very humbling experience, but we gave people the ability to turn the News Feed feature off. One of the lessons we learned was that listening without fear is the mantra.”

By embracing the criticism, and reacting to it, Facebook not only avoided its first major brand crisis, but it has managed to increase its user base to 19 million active members since then. Other deep divers dealt with viral anti-marketing in other ways. Anil Dash, chief evangelist at blog software company Six Apart, engaged one of the company’s worst public critics by placing him on the customer advisory board. “People feel an extraordinary amount of engagement now,” said Dash. “And it has made us so much better at our job.”

Now that’s listening without fear. And after listening to this very learned group's comments on our ideas, there is a belief that the idea have survived, perhaps stronger for having been through the fire. There was a lot more in this dive, too much for one blog post, so stay tuned on other great insights from this dive and look for another post on tomorrow’s dive, which is sure to be just as compelling.

Influence Peddling

It's always nice to see your ideas validated by the market. For two months now, the GIO team has been hearing deep dive participants in the media and content focus area talk about the value of measuring the influence of content. The idea is that even though the market seems increasingly unwilling to pay for content, there could be interesting business models that emerge if you could only determine that content's affect on the public. And now one of the first of those business models is becoming a reality, thanks to Reuters, the global news agency and GIO partner.

In the "Moving the Market" section of the Wall Street Journal today, you'll find an unassuming little story about Reuters' nascent effort in the algorithmic trading market. Algorithmic trading has been around for a while. It is the practice of using computers to act on stock trades based on predetermined factors in the market. For example, when a stock reaches a certain level, the computer automatically generates a buy or sell order, depending on what the trader has programmed.

Pretty straightforward, right? But Reuters has a new take on algorithmic trading. Leveraging it relentless coverage of the world financial markets, Reuters has developed an algorithmic trading platform that trades stocks based on the whether a company is receiving positive or negative treatment in the press. In milliseconds, the software can scan the Reuters universe of news content, determine the overall sentiment of that news towards a particular company or industry, and place trades accordingly. The company will charge between $200,000 to $1 million for the software, which will initially only scan Reuters stories, but ultimately will expand to include other news sources as well.

It is a classic example of what many in the media and content track of the GIO have been talking about. Monetizing the impact of content is an important next step in the development of the media industry. And this won't be the last business model to develop as a result.

The Voice of Youth

Now that the Global Innovation Outlook has seven deep dives on media and content under its belt (New York (2), Mumbai, Seoul, Shanghai, Helsinki, and London), it’s time to look back and take stock of what we’ve learned. We’ve got two more dives left on this focus area, the wrap-up dives in Los Angeles in early May, and we want to be sure we use that time as productively as possible.

So over the next couple of weeks, the GIO team will be condensing, consolidating, and collating the insights from the previous two months. Stay tuned for those morsels. Meanwhile, now is a good time to hear from some of our many deep dive participants, and get their thoughts on the topic of media and content.

One of the comments on my last post was that I seem to have an old media bias. Fair enough. Today we hear from the next generation. Eric Hansen is a 23-year old senior at Syracuse University. He attended our student deep dive in New York back in early March, and contributed his thoughts early and often. You old media types might be tempted to dismiss the following blog contribution as the ramblings of yet another disaffected youth. But ignore this message at your peril. This is the voice of the future:

From Eric Hansen:

In this age, there is something inherently wrong with an entertainment experience when one's favorite weekly television program is interrupted mid-punchline by a local news alert reporting that a seasonal fire has just broken — 50 miles away. In this age, there is something inherently wrong with an entertainment experience when $10 rents you an uncomfortable, unsanitary seat while you watch a screen dominated first by several successive ads and then the feature peppered with comments from inconsiderate patrons. In this age, there is something inherently wrong with an entertainment experience that short-shrifts musicians for doing something they can now do themselves, gouges consumers, and siphons innovative energies from the free-flow of information to engineering an unsatisfying drizzle.

But I fault nobody for sticking to what has worked well in the past. In fact, I believe it is more a lack of understanding than maliciousness. What I offer next is a condensed-soup version of how some rudiments from The Long Tail (Chris Anderson) and the Experience Economy (Pine and Gilmore) can foster understanding of our beloved media/entertainment industries.

Right now the value of revolutionizing the experience of watching television and movies is being ignored, judging by the way such content is being offered. The show "Grey's Anatomy," for example, is so popular that some college students factor new episodes into their class schedules. The experience of watching the latest episode with your friends and talking about what happened to Dr. McDreamy the next day is something you can't get by TiVo-ing the show for consumption days later. On the other hand, you have Studio 60: At approximately $1 million an episode it has immaculate production values but its slightly older, affluent audience can wait until the weekend to catch up on Matt and Danny's adventures -- so it's no surprise that it was one of the most TiVo-ed programs before its recent local-affiliate-induced hiatus. (The show didn't drive enough eyeballs to the nightly news.)

But for each show you will find viewers who relish the experience of watching it the second it's available, and, the second they get around to the living-room couch. For each show you will find viewers with the cash to pay $2 for commercial-free downloads and viewers (on the Ramen-noodle meal plan) who will watch the free version online; "free" resulting from either a legitimate view on the network's Web site, a YouTube-like copy found via alluc.org, or the BitTorrent download. Unfortunately for the industry, however, every viewer who counts is not being counted. Their individual needs are not being satisfied by the official offering, leading to unnecessary fragmentation.

The industry has forgotten how strong people's emotional connections are with their favorite bands and characters in shows and movies. The experience of consuming most content is not so much the sound system's quality or the screen's size, the simple act of listening or viewing the content is more important. That's why so much of The Daily Show and other content is watched in the horrible resolution YouTube offers. The pixelation and tinny audio don't make the jokes less funny, but the fact that it was delivered exactly when and where it was desired enabled the full potential of that experience opportunity. But look no further than the IMAX experience for an un-downloadable harmony between the viewing act and the content.

The theories of The Long Tail and The Experience Economy share the notion that additional economic value is created by expanding the gamut of individual needs that can be served, in this case with the creative/customizable offering of the same product. The innovation necessary to make this a reality for the media and content industries cannot be fully unleashed until our favorite shows, songs and movies are made available for free and fee; ad-free and ad-nauseum; on time and on demand; on any type of set top or hand held; and a la carte or buffet. Every second this is not the case, more control slips away as the masses are pressured to conform to the models designed exactly for masses. The question is not what will be the new model for media entertainment, it is what are the new models? The future television platform will be one that allows for multiple models, managing media from any source and has as its default the simplest interface imaginable in addition to ones customized for that viewer -- from the coach potato to the viral video junkie.

The Death of Old Media Has Been Greatly Exaggerated

Sitting in the salon at the 109-year old Claridge’s hotel in London’s Mayfair district, in a room full of deep dive participants debating the declining health of old media, I couldn’t help thinking about Mark Twain, while residing in London, informing an American newsman that reports of his death had been greatly exaggerated. More than 100 years later, I’m here to send a similar missive to the world: old media is alive and well.

Okay, that may be a bit of exaggeration as well. But among the many solid themes coming out of the London deep dive on media and content was the idea that content, though shared and distributed in myriad new ways, has not substantially changed in hundreds of years.

“At a base level, it’s all storytelling,” said David Wells, deputy world news editor at the Financial Times. “The actual content has never changed. People tell stories. What are they going to be doing 80 years from now? They’ll be telling stories. I don’t find all of this new media to be a threat. I see it as an opportunity.”

There was a fair amount of agreement on this point, which was interesting considering the wide variety of participants in the dive. Along with Financial Times, the dive had representatives from Virgin Media, Ogilvy Group UK, Scottish Media Group, Sony Corp., venture capital companies Sofinnova and Target Partners, the European Commission, Ofcom, Oxford University, Manchester University, Vodafone, and a promising little startup that piqued everyone’s interest called Grapeshot.

Once the group concluded that the basis of content would remain more or less the same, the big question was how to make it into a business that pays, as younger generations grow increasingly comfortable with the idea that all content is free. This brought up a now familiar theme to the GIO: context. Grapeshot director John Snyder has been building technologies that put context around otherwise valueless content, and had a lot of thoughts on the subject. By mining the “DNA” of content, and marrying that DNA to a user’s cookie, Grapeshot can mine patterns of content that make targeted advertising a reality.

“The money is there if you can connect ads with people’s intent,” said Snyder. “Most places are unaware of the intent of their readers. Personalization has to reflect intent and context.” The company is also working on technology that can measure the influence of a piece of content over its lifetime, the “trajectory and velocity of a story,” as Snyder says, and map it globally.

The idea of building context around content is clearly the biggest idea that has emerged consistently in this GIO focus area, and it is one we’ll want to pursue in greater detail when we meet in Los Angeles the first week of May. 

Other themes from the London dive: There was some concern among some of the participants about the consequences of an infinitely fragmented media and content universe, in which micro-communities consumed only content that reinforced their beliefs, thereby leading to a more fragmented society. One participant lamented that while we are breaking down geographic barriers through the use of the Internet, we are simultaneously erecting new barriers of ideology. But in this world of wildly proliferating content markets, noted one deep diver, trusted aggregators of content would be needed. They may even serve as distribution channels for the many, specific views of these disparate communities.

And besides, it’s too late to turn back. “You can’t un-invent choice,” said Alex Blowers, the director of Ofcom, the U.K. regulatory body in charge of the communications industry. “We will not get fewer channels, and you can’t replicate the golden age of scarcity.”

Upwardly Mobile

Most Americans are just looking for a cell phone that completes more calls than it drops. But in the media and content deep dive in Helsinki, Finland, today, we asked participants what else they are looking for from their mobile devices, since they already have the coverage problem licked. Here’s a partial list of their requests:

I want it to be the key to my car and home.
I want it to track my family members and tell me where they are.
I want it to be my wallet.
I want to watch the news on it.
I want it to translate different languages.
I want it to be a universal remote control.
I want it to monitor my heart rate and blood pressure and transmit the data to my doctor.
I want it to access my virtual worlds.
I want it to jam all personal communications of other people near me.
I want it to just be a phone.

This litany of requests will give you some idea of just how wirelessly advanced the Finnish are. While much of the rest of the world struggles to extend wireless coverage and improve data speeds, the Finnish are thinking about heart monitoring and real-time language translation. They’re so far ahead, they’re pining for the good old days, when a phone was just phone.

Helsinki is similar to Seoul in its level of wireless sophistication. This is, after all, the home of Nokia, one of the true pioneers in the wireless market. And we were not disappointed in the innovative thinking of all the participants when it came to the mobile market. It helped that we had folks from Nokia, leading Nordic telecom Telenor, and the leading Finnish gaming company Sulake. But our deep dive included more than just Finnish. We had representatives from all over Northern Europe, including German media conglomerate Bertelsmann AG, Norwegian venture capital company Viking Venture, a German hacker organization called Chaos Computer Club, and the Copenhagen Business School.

One of the most compelling ideas that our colleagues kicked around during the day was a mobile twist on the contextual content thread we have been exploring throughout the GIO. If you recall, we have been tossing around the idea that as it gets harder and harder to monetize content in traditional ways, content producers should be looking at providing more context around content, some of which could be monetized. For example, if an individual could notify content producers, including advertisers, of the kind of content they want and when -- a sort of digital persona or marketing profile -- the distribution and consumption of that content would be far more efficient and valuable.

The Helsinki deep dive took that concept a step further, and talked about mobile devices that could broadcast content (or other kinds of) preferences that you could take with you wherever you go. This personal broadcasting could also help individuals identify like-minded people in any location, creating spontaneous communities in real time. One diver called it “blue spooning,” a play on the word Bluetooth, the wireless communications technology. Whatever you call it, it adds another layer to the argument that context takes otherwise valueless content and makes it valuable.

Also, there was some spirited debate over whether user-generated content could arise on its own, or whether it needed to have some investment (in a framework or infrastructure) to enable it. And there was yet another desperate plea for some kind of framework to allow users that create content, be it a song, movie, or a suggestion to a corporate product development team, to be remunerated for their contributions.

The discussion was progressive, and by that I mean that it feels like we’re really getting somewhere with this context issue. Any and all thoughts are welcome.   

Content is King, Context is Queen

Last week, I tried to relate some of the most compelling ideas that came out of the Seoul deep dive on media and content. Of course, and as always, I lost a few things in translation. Fortunately, Paul Reynolds, a director at Auckland-based consultancy McGovern & Associates, who contributed some of the most forward-thinking insights to the deep dive (including this blog entry's title), articulated his own thoughts on his blog, McGovern Online. I’ll give you an excerpt, but I would encourage you to read the whole thing by clicking here:

Context - putting it all together.

 The connecting point to all this is context - and for me, that's where the future lies - not so much creating new content streams [though that is an inevitable part of the mix] but creating new contextual tools and spaces - which in turn give me the framework[s], to interact and rearrange my relationships between one kind of media and another, and, crucially, integrate these content relationships with the different social groups of friends, colleagues and family who share all this with me.

For example - if I've totally enjoyed a new movie in the family area - say Pans Labyrinth - I'd like to see a layer, either on the DVD, or more likely the web, that switches to a deeper set on linked sourses on the Spanish Civil War, or the History of Fayriae, etc. I also want to share this with the people I saw the movie with.

Similarly, if I'm in a study space, I want to be able to switch out of the space I'm in and see how current news or other media is treating what I have been studying. Or maybe, all I'm doing is responding to an IMS, or a skype call.

Or, if I'm in the noisy eating/chattering space of the living room, I want to be able to pull up all manner of local happenings reviews, restaurants etc, as well as mark some stuff for quieter times in the study area.

In short the changing context of my life is matched by an equally intelligent context machine which is able to scan the surface of an issue - flood it with group noise and opinion, or take a step back, quieted down, and be able to take the time to sit and think with some serious sources.

Paul goes on to describe what this “context machine” might look like. Fascinating stuff.

Also, you may be wondering why the piracy conversation I hyped up before the Shanghai deep dive seemed to peter out. I’m wondering the same thing. The only thing I can think of, and as yesterday’s Wall Street Journal article on U.S. action against Chinese piracy demonstrates, is that the issue is so dangerously political (not to mention difficult to solve), people just don’t want to touch it.

Here’s the lead sentence to the WSJ article: “The Bush administration is preparing to take its longstanding spat with China over pirated movies, music and books to the World Trade Organization, a move that could notch up trade tensions between the two countries.”

It is a battle that is being fought on many levels, and with varying degrees of success. And in many cases, industry and government are not working together to solve the problem, which obviously isn’t helping. Again from the WSJ article:

“Industry groups that aren't expected to support the case include the Business Software Alliance, whose members include Microsoft Corp. and Apple Inc., and the Pharmaceutical Research and Manufacturers of America, the drug industry's main trade group. Both sectors have made their own market-access and antipiracy advances and don't want to see that work disturbed, administration and industry officials said.”

Maybe looking for a silver bullet for the piracy problem is too much to ask for. But it doesn’t hurt to ask.

 

Culture Club

The first thing you notice when you arrive in Shanghai is the cranes. They are everywhere. Free-standing cranes. Mobile cranes. Cranes on top of buildings. And they are in constant motion, hauling I-beams, window panes, and scaffolding, literally transforming the already stunning skyline of Shanghai as you sleep, operating 24 hours a day, 7 days a week.

The cranes are a symbol of the jaw-dropping growth of this city and country. When the rest of the world hears about the wealth pouring into China from overseas, it’s hard to imagine how that money is manifesting itself. But here in Shanghai, it is stunningly clear. With its ultra-modern architecture and endless tilt of high-rises, you get the feeling here that you are staring straight into the future.

With that in mind, we couldn’t help wondering whether this fantastic city has the potential to become the future center of the media universe. And so, in true GIO fashion, we collected some of the top minds in the media and content arena, put them in a room together in downtown Shanghai, and asked them what they thought.

We had distinguished professors from some of China’s top universities, including Peking, Tsinghua, and Shanghai Jiao Tong. We had representatives from venture capital players like Lehman Bros., WI Harper, and Gobi Partners. And of course we had a liberal sampling of old and new media representatives, like gaming companies The9 Limited and Shanda, newspaper Nanfang Daily, and IBM partners Disney and Sony Pictures China.

There was general agreement around the table that if China were to emerge as a global force in media and content production, it should use that position to educate the world about Chinese culture and values. This was a pretty foreign concept to me. I always thought that Hollywood had exported American culture throughout the world incidentally, as a byproduct of the entertainment products they were selling.

But in China, at least among the folks in this deep dive, there was a strong belief that entertainment, and other types of content, should not be about entertainment alone. That there should be educational value attached to any type of content that is produced here. It is a view that some believe the younger generation here does not share.

The Chinese people believe they have great stories to tell, and they are eager to express them to the rest of the world. But there are great challenges. The government still controls the media industry here, a fact that came up repeatedly in our discussion. One participant lamented that China has loads of creative talent, but that artists don’t feel comfortable pushing artistic boundaries for fear of censorship. And investors, both domestic and foreign, are skittish about investing in an industry that comes with so much regulatory baggage.

Also, the language barrier is high. One participant suggested that gaming could serve as a bridge, both for culture and language, and even become the platform that delivers the educational and cultural advancement the group was looking for. Another suggested that China should concern itself with applying its manufacturing prowess to the production of content (like movie production etc.) from other countries, and then worry about creating its own content later.

Piracy was also a major topic, and while everyone agreed that the problem was pervasive and damaging, there was little consensus on what to do about it. Some suggested that speed to market was the key, but some movies show up on the streets of Shanghai before they are even released in theaters. Another participant thought that moral education was the proper course of action. But most people feel that train left the station long ago.

There was one interesting thought that arose, however, about how piracy can be leveraged as an effective marketing tool. Big media companies sometimes struggle to distribute their product to the low end of the market, because of price, but also because they just don’t have the distribution network. This is where piracy actually fills a need. The question is whether or not it makes sense to seed the market sometimes through piracy, and then later offer that market a new value proposition with higher quality content they would be willing to pay more for. I can see eyes rolling all over America.

All in all, the Shanghai dive gave us an invaluable new perspective on the media and content space. It was a real education, and one small step in the exporting of Chinese culture to the rest of the world.

The Pursuit of Happiness

Maybe it was the strong green tea served at breakfast. Maybe it was inspiring view of downtown Seoul. Whatever it was, there was a lot of energy in the room at the Seoul deep dive on media and content. And the powerful mix of old and new media heavyweights gave the GIO team all that we could handle.

The Seoul deep dive brought together high-level executives, mostly CEOs, of companies from all up and down the Asia-Pacific rim. The attendees included: a representative from one of Australia’s largest online news publishers, Fairfax Digital; media consultants from Tokyo and Auckland; the young CEO of Korea’s top online gaming company, Neowiz; the former Korean minister of information and communication; and the CEOs of two of Korea’s top new media companies, Tatter and Company (blogging software) and Ohmynews, the citizen journalism site that has taken Korea by storm.

We began the meeting by asking participants about the impact of Korea’s considerable lead in wireless infrastructure and broadband penetration has been on its content. Does ubiquitous access change the types of content, both media and otherwise, that gets consumed? Most of the folks in the room were in agreement that though Korea had solved the infrastructure problems that still bedevil many other nations, it had yet to figure out the business models that would complement these formidable distribution channels. 

Ironically, it was the one man in the room that seemed to have solved that problem that had the most questions. Mr. Yeon-ho Oh, President and CEO of Ohmynews, kicked the conversation off with a decidedly philosophical tone. Ohmynews is part business success story part social phenomenon. The company uses an army of 50,000 citizen journalists to deliver breaking news and analysis on happenings around the world. It’s motto: Every Citizen is a Reporter.

Mr. Oh wondered whether all the information that is being provided throughout Korea, and the high-level of participation that the Internet affords (especially in the case of Ohmynews), is actually making people happier. “And secondly,” he continued, “What is the commercial value of all this participation? And how can a business like this become sustainable, and grow profits.”

The room was a little shocked by Mr. Oh’s line of questioning. I think most of the people in the room were hoping that he could tell them the very same things. But at the same time there seemed to be a sense of relief that no one, not even the wildly successful Ohmynews franchise, has all the answers.

Another interesting concept that emerged was the idea that content should be able to understand its context. In other words, right now different types of content come at consumers all the time, anywhere, any time. Wouldn’t it be interesting to be able to let content providers know what kind of content you’re in the mood for. Like an instant messenger status indicator for content. For example, there are times when I want fast and easy information. And then there are times when I want to read an in-depth article, watch a long movie, or not be bothered at all with information.

This ties into a thought that first came up in the New York student deep dive, whereby individuals could control their own marketing profiles and manage them throughout their lives, ensuring that they were only marketed to appropriately. One deep diver thought that perhaps public libraries could act as a trusted third party network that keeps our marketing profiles on record.

And there was one theme that reemerged in Korea that we’ve heard everywhere we’ve gone: authenticity. It came up in New York, Mumbai, and now in Korea. I suspect it will follow us everywhere we go. There is an understanding among all of the top thinkers in the media space that the world is craving authentic experiences. Consumers don’t want to be marketed to anymore. They want the truth, be it from an advertisement or a piece of content.

It got us thinking whether there might be a need for some kind of credibility rating that could be attached to any kind of content. It could be something simple, an eBay seller’s rating for news articles, advertisements, blog content…everything. It would tell viewers how many people had viewed the content, and what level of confidence they had in its authenticity.

Overall, it was a fascinating day. Our Korean hosts were kind and considerate. The conversation was lively and provocative. And the GIO team hit the road again for Shanghai early Wednesday morning. Stay tuned for the Chinese perspective on all of this!

Heart and Seoul

The GIO team landed in Seoul, South Korea last night, in preparation for our deep dive on media and content, and so far the trip has been, well, interesting. Upon arriving at the hotel, we were greeted by a phalanx of security guards, metal detectors, and a bank of reporters at the ready with cameras and microphones. At first I thought the GIO had really taken off, and the local media was eager for a few sound bytes. 

Alas, all the fuss was about the free-trade agreement that was being negotiated between the U.S. and South Korea. The free trade agreement, known as the KORUS FTA, is a pretty big deal. It’s the biggest trade agreement the U.S. has entered into since NAFTA. And there’s $20 billion of additional trade between the two countries at stake. Early Monday morning, negotiators at the hotel we’re staying at reached an 11th hour agreement on the deal.

Like all free trade agreements, this one is controversial. Before the two nations reached the agreement, there were a number of sticking points: auto tariffs, agricultural trade (especially of American beef and South Korean rice), and copyright protection. And there were numerous protests, including hunger strikes and candlelight vigils.

But what was so fascinating about this slightly harrying experience has been the media coverage of the events. Korea is a land of near ubiquitous Internet access. And it seemed that there was not a single person in all of Seoul that wasn’t getting instant updates on the progress of the negotiations (the deadline was extended several times, and talks alternately progressed and stalled throughout the week.) Unlike the United States, mobile phones here are much more than communications devices. They are delivery mechanisms. They are like little newspapers in your pocket. And one of the most popular news sources in the country is Ohmynews, a citizen journalist site that has 43,000 contributors.

It got us thinking about how a ubiquitous Internet environment actually impacts the nature of content, media and otherwise.  By now the rest of the world knows that Korea is years ahead of other developed nations in its use of wireless technology. So the question is, what kinds of content are appropriate for that medium, and how can the rest of the world learn from Korea’s example?

That’s among the topics that we’ll be mining at the deep dive tomorrow, which will feature representatives from media companies, academic institutions, and government organizations from Japan to Australia. And we’ll be keenly interested in learning what the rest of the world will look like when we finally catch up to Korea.

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.

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!

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.

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.

India Inc.

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.

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 Hollywood manages to produce every year.

And the influence of Bollywood reaches far beyond the confines of India. Nearly 4 billion cinema tickets are sold every year to Bollywood films, which are viewed in Pakistan, Afghanistan, Iran, and throughout the Arab world.

The city of Mumbai, with its teeming overpopulation of 16 million, is celebrity-obsessed. There are signs and billboards with celebrity visages covering every section of this throbbing metropolis. These glamorous advertisements stand in stark contrast to the widespread poverty that also afflicts this fascinating city.

Bollywood is currently dealing with many of the same issues that Hollywood is encountering. It’s getting harder and harder to make money from big productions. And piracy is a growing problem. I bought four new release movies on one DVD at a roadside bazaar for just 200 rupees, or about five bucks. Bollywood movies have been known to hit the black market before they have even been released in theaters.

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.

Coming Together

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.

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 of corporate America. Some might even say they’re downright cynical. But they’re also really, really smart. And by that I mean wow-these-kids-really-could-change-the-world smart.

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 content. 

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.

Blast Off!

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 surprise us. 

Check back tomorrow for more specifics on all of the above later this week.

Countdown to Innovation

Starting tomorrow in New York, IBM will once again set the table for innovation and collaboration with the Global Innovation Outlook 3.0. What is the Global Innovation Outlook, you ask? The GIO, as it is affectionately known, is essentially a global series of open and candid discussions –- called “deep dives” -- with business leaders, academics, politicians, non-profit groups, and other influential types that have the knowledge and ability to affect change through innovation. I know, it’s a mouthful. But it’s a pretty big deal.

The GIO tackles some very tricky subjects; global issues that have a great need for innovative advancement. Issues that affect both business and society: healthcare; the environment; transportation. For a thorough backgrounder on the GIO, click here.  

By way of introduction, my name is Dan Briody, and I’ll be capturing the conversations from the deep dives all year long on this blog and through various other printed and online mediums. There are about ten of us that put the GIO together, and as the clock ticks down the final minutes and hours before the first deep dive, we’re all anticipating an enlightening year. It is a massive operation, this GIO. This year alone we’ll be collecting insights in 17 different countries on six continents. And the topics we’ll be covering are intensely interesting: Media and Content; Africa; and Security and Society.

Tomorrow’s deep dive on Media and Content will include some of the brightest minds in the world. Representatives from media and entertainment giants (Disney, HBO, Sony), marketing and advertising firms (Ogilvy & Mather, Mr. Youth), academic institutions (Syracuse University, University of Pennsylvania), VCs (Union Square Ventures, iN3 Partners) and non-governmental organizations (International Academy of Television Arts & Sciences, Public Knowledge) will gather to discuss, debate, and with any luck, emerge with some ideas for innovative approaches to everything from user-generated content to the blurring of the lines between advertising and entertainment.

The best part of the GIO? It’s wide open. You may not all be able to participate in the actual deep dive meetings, but you can read all about the insights that are emerging on this blog, and even contribute your own thoughts to keep the conversation. There will also be printed publications that come out periodically and will be available here.

It’s time to get this project started. Come back often and join the discussion.