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May 29, 2007

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.

May 29, 2007 in Africa, Media and Content | Permalink | Comments (3) | TrackBack

May 17, 2007

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.

May 17, 2007 in Media and Content | Permalink | Comments (3) | TrackBack

May 10, 2007

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.

May 10, 2007 in Media and Content | Permalink | Comments (3) | TrackBack

May 08, 2007

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.

May 8, 2007 in Media and Content | Permalink | Comments (7) | TrackBack