Tuesday, 27 April 2010

Technology is a means not an end (slideshare deck)

Technology isn’t changing consumer behaviour, it is just amplifying different bits of it: technology changes, people don’t. We are still super-social creatures (that’s how we developed language, learned to hunt, out competed rival species) – our evolution has favoured sociability over most other traits, so we still gain most self-esteem from interaction with other people (in the same way as we have evolved to prefer sweet foods, as sugar is the purest form of energy in a food-scarce world.

So we form tribes around shared interests, we change behaviour by copying others, & we rely on other opinions to guide our own. All that has changed is that none of this used to be the domain of mass media. Once the cost of producing media fall away to zero as has happened in the last 15 years, those shared interests and other opinions are no longer limited by geography – they are instant, global and free – and so virtually infinite

This is important for understanding media, as it means that there social networks are not just a trend away from content-centric sites, they are a natural evolution into something that is intrinsically more interesting to human beings – each other. Facebook differs from any media property of the 20th century because people don’t go there first and foremost to consume content – they go there because their friends are there. The fact that content is involved is just something to talk about. Content that spreads through networks does so because of how it connects people, not because of any aesthetic value intrinsic to it as content. Example: if someone tells you a funny joke, you are much more likely to remember who told you the joke than the joke itself – jokes are a form of social currency, where the actual content is less important than the values it conveys on the person who told the joke. If it was funny, you think of them as funny. The subconscious decision-making process that goes on when sending something on to friends is ‘what does this say about me – does it make me look witty, attractive, intelligent?’

So that doesn't help brands think about technology, but I think that it is far more important to think about what is actually changing and how it affects human behaviour. That means we can develop comms products that inspire people to participate, becuase they are grounded in human behaviour. And the technology used is a means, rather than an end.

(No planners were injured in the making of this deck, although several were heavily borrowed from:

Mark Earls
David Cushman
Gareth Kay
Katy Lindemann
Faris Yakob
and probably some more - apologies if I've missed people
If you like my spin on it, then go and check out more of their stuff

Some surprising outdoor advertising

I wrote about Mflow last week as it launched in public beta, with a few thousand participants. It is a great concept (which I'm intending to buy some music from soon... will report back) but I was really surprised to see what looked like an ad for them at Oxford Circus - it seems to be such a spreadable product (or will be once you can bring your social graph in) that this is far too early for mass media advertising. Well, if you can't currently import your social graph then surely this is a complete waste of money? Iron out the tech stuff while it is in beta, then scale?
and on the subject of spreadable ideas relying on advertising, the same train contained this slightly desperate plea to use one of the original idea viruses... Hotmail. MSFT are actually investing in paid media that promotes.... a spam filter. How are the mighty fallen

Monday, 26 April 2010

The end of web destinations - Facebook Open Graph slideshare deck

It doesn't seem too much of an overstatement to suggest that Facebook's Open Graph protocols have created a new OS for the internet: one that is based more on how people interact with each other than on how they relate to entertainment content. There are obviously huge issues around several of the announcements from f8 last week, centering on three subjects

Privacy (Marshall Kirkpatrick on ReadWriteWeb)
Advertising value (The Ad Contrarian on Facebook's Nielsen partnership)
(and linked to that...)
Whether Facebook can match the attention that they are gathering with a similar level of profit (Henry Blodget in Business Insider)

All three are well worth a read if you are interested in Open Graph. And if you work with brands and the internet, you are interested in Open Graph aren't you? Personally I think that Facebook has created a product with incredible potential, that will increase its revenue (although not yet up to Google level; they need another killer app for that, which i think they'll find next year) and make people's experience on the internet better. Privacy is increasingly something people are willing to trade for better. Ethically I think we're getting a bit hysterical about things, mainly because Facebook have a slightly dubious record in privacy isues, but also because they are starting to close in on Google, who are genuinely ethical in a way that few bigh corporations can be. Let's face it, they are a business who have improved what they do in order to be more profitable.
Anyway, I've been thinking a bit about how Open Graph changes things. To be honest, the stuff in the deck was all possible with Facebook Connect if it was used in full, but very few brands were doing that. I'm not a developer so I don't know how difficult it was to implement, but by all accounts Open Graph is a whole lot easier. I'm going to follow this up once there are more distributed nodes in the graph (ie more people liking more content and more sites implementing personalised social features) and look more at the content side of the protocol.

For now this is all about how the APIs are starting to become an alternative to the web destinations of old. In order to take full advantage of all the combined benefits of the networks available to a brand, we need to start thinking about whether people have a temporary high interest in the brand, or a permanent loose interest.
Then about how we move them around according to their needs and attention. And if we are going to require them to move around, how we are going to inspire them to participate. Ironically considering Facebook's change in terminology, we need to think about how we make them a fan (in the real sense of the word- not just saying they like something on a social network).

It's very early days for Open Graph, so I'd really welcome your thoughts on this deck in the comments or on Twitter

Thursday, 15 April 2010

ITV, Facebook Connect and the social election

As previously mentioned, I don't know a whole lot about politics, so after writing rather to much about it in the last couple of weeks I was far more interested in how ITV covered the first leaders' debate.

The Facebook Connect commenting box was a great idea when CNN ran it for the Obama inauguration in Jan 09, but Twitter has become a lot more important since then. While there was a steady stream of live conversation from the 'everyone' feed, everyone I know who was joining in live was doing it on Twitter. Obviously that's not the same for everyone, but surely there should be both options?

Twitter sentiment analysis sort of got hidden behind the video player, which was a shame as the volume of tweets (estimated at 2000 per minute according to a comment on Question Time) meant that
sheer scale should have ironed out the imperfections in automatic sentiment analysis and averaged out a realistic result.

So live opinion results that were running live at the bottom of the screen were actually from pop-up surveys on the player page - not really taking into account the amount of discussion that was taking place away from the ITV site. Judging from the dramatic fluctuation in results I'd guess sample sizes were low (although there were several sets of results in rotation the 'Who do you think has won this debate' showed Nick Clegg winning with anywhere from 43% - 81% of the vote over a rotation)

These debates are a huge opportunity for the broadcasters to aggregate and analyse the conversations taking place around their sites, and to showcase their own use of social tools to add value to their programming. If I can stay awake through the next couple then I'd like to see how the other stations fare in comparison to ITV.

And my verdict on the debate? To nick a line from @wearenorth, 'Worst. Kraftwerk. Gig. Ever."

Twitter Promoted Tweets. Not Twitter Advertising

So Twitter has finally released the first signs of a business model into the wild. Twitter is (still) a guarantee of colum inches, so there has been a lot written about it in the last few days, and from what I can see quite a lot of it misses the point, because it talks about Twitter advertising.
(image courtesy of The Tech Update)
Now there are always going to be a few purist, extremist and nostalgic folk who object to Twitter having a business model. As a huge fan of the service I for one will ignore and unfollow them as I want Twitter to survive and flourish as a commercial entity. However, from what I can see of how Promoted Tweets will work they are named for a reason. If you think of them as advertising you will miss a lot of the point.

Much of the challenge for brands in the realtime web is about ensuring that the positive floats above the negative. Hence disciplines like Search Engine Relationship Management, which pushes positive news above negative in the SERP by leveraging the power of the brand's website to link to the positive. In the Twitter environment this hasn't been possible, so brands will tend to post more than they probably should do in order to appear top of stream as often as possible. What Promoted Tweets allows us to do (subject to resonance) is hold that position at the top of the stream (well, initially at the top of the search results stream). So far, so much like Google. But the key difference is WHAT brands are promoting. Surely the tweets that a brand will gain most from promoting are those that it hasn't written? The positive opinions of regular customers. Thinking about how to write copy for Twitter ads seems to miss the point that, according to Dick Costolo, 'Promoted tweets are not ads'. To me that means exactly that - they are tweets that the brand has chose to promote. Essentially retweets, but only of content that is likely to engage people, and therefore remain at the top of results through resonance algorithms.

Where the promoted/advertised line starts to blur is when Promoted Tweets move from the search page into the stream. Because what Costollo also says is that 'promoted tweets are just tweets'. Now up till now all the income that Twitter has received is from Google and Microsoft, to incorporate the full stream into real time search results - Google having changed their algorithm to incorporate realtime data. So as real time is promoted up the Google results page, and promoted tweets are just tweets, will they also be hovering at the top of the data that Google are buying?

Tuesday, 13 April 2010

MFlow - incentivised music discovery

Whinging about the music industry..... so I said that I'd stop that and concentrate on the positives. Before I do though the Guardian have gone into a bit more detail on exactly what artists get paid by Spotify, which is important, because Spotify wouldn't be streaming music if the record companies weren't getting paid, so somewhere along the line there's a lot of money not going the way of artists.

anyway, positives....
So MFlow is a social music discovery site. And a social music trading site. But one that the record industry approves of. As you can see from the screengrab it looks a lot like Spotify. Essentially the way it works is that you follow people if you share their taste, and they 'flow' tunes to you to listen to. And you can reflow stuff on to your followers. Or of course create your own flows. This all sounds very Twitterly familiar, but the smart stuff is in the trading bit. MFlow is all built into an interface similar to iTunes that allows one click purchase. 20% of the purchase price is passed on to whoever recommended the tune to you. Likewise you make 20% of the price of anything that your followers buy based on your recommendation. The follower/following dynamic is a little bit hit and miss so far, as you can't import your social graph from anywhere else so you have to do a bit of digging. MFlow is still in private beta though, and Facebook, Twitter and LastFM import functionality are coming soon.

I think this is a very smart system for a few reasons. Firstly rather than penalising fans for being fans, it makes discovery and payment part of one process - sharing music is incentivised. Secondly there is a weird thrill to see your first payment come through - it might only be £0.20 per song, but that is essentially someone handing over hard cash to YOU for YOUR great taste. And thirdly it socialises what what (bizarrely) a very solitary pastime. Music itself (creation of, listening to, talking about, organising life around) is extremely social, but the actual physical act of buying it (or downloading it, or borrowing your mate's hard drive full of it, or whatever) is highly solitary since the demise of the music shop. Services like Spotify (lowering the barriers to access to music) and LastFM (the best social discovery system that has been invented to date) get you only as far as hearing music, not buying it. MFlow makes buying music social.

I'd love to know how the payments are structured on the other side though - are musicians going to see any of the potential revenue? Or is their work only going to be licensed in future keep the unnovation-hungry record companies alive for another year?

I think Mflow launches next week some time, but if you want to try it before give me a shout

Thursday, 8 April 2010

Ideas that can be advertised

I've written about moving from advertising ideas to ideas that can be advertised a fair bit recently, but Gareth Kay sums up exactly what that means and why it is important in this 5 minute call to arms for the communications industry. There are some great quotes, drawing on Andrew Ehrenberg and Mark Earls:

We should be Bower Birds not peacock tails

Ideas that do... that do things with and for people, not at and to them

Ideas that aren't advertising ideas, but ideas that can be advertised

We think we have to change minds in order to change behaviour, when in fact the opposite is true..

Anyway... you should watch it

(HT to Jon Howard)

Record Companies, Bands and the concept of value

(Image used with thanks)
I've never really believed that telling people not to do things was a good way to stop them doing them. The War On Drugs for example has been pretty comprehensively won. By drugs. We are not a logical economically minded species, so changing how we behave changes how we think, not vice versa. And the simplest and most effective way to change how people behave is to make it worth their while - to give them something of value in return.

The idea of enforced behaviour change is in the news at the moment as the Digital Economy Bill has among its aims the toughening of copyright law online. In fact, this is seen as such a significant issue for the British economy that the government is willing to sacrifice on our behalf such seemingly useful things as Wifi (which will be too great a risk for any business to operate), fast broadband (which ISPs will be disincentivised from investing in as their focus will be on steaming open our digital mail), and internet access as a human right (as anyone who doesn't have a decent understanding of home network security can be disconnected from the internet in punishment for what their children or neighbours do). The opposition agrees that although there are parts of the bill that are even worse, they will let the copyright law stand because of its importance to the UK creative industry.

So let's ignore for a minute the fact that large parts of the UK creative industry, particularly those involved with music, don't agree, and have a look at the value transaction in a music purchase.

Record companies developed their business model through the scarcity of resources required to create and market recorded music: recording studios, musicians, pressing plants, distribution, access to radio stations to promote. These scarcities have changed beyond recognition since 1999. With a few $$s investment in software, any computer made in the last 5 years is a fully equipped recording studio (no extra software needed if it’s a Mac). No music now needs to be recorded onto anything. Myspace and a bit of talent can break a band far better than any radio promotion (not hyperbole – the Arctic Monkeys are the fastest selling week 1 debut in history). The scarcity problems that the record industry fixed no longer exist. Clay Shirky talks about this disappearance of scarcity problems in answer to Murdoch's claim that "Web users will have to pay for what they watch and use" by pointing out that this is only half of the equation:

“Web users will have to pay for what they watch and use, or else we will have to stop making content in the costly and complex way we have grown accustomed to making it. And we don’t know how to do that.”

In the record industry things are slightly different: most people know how to stop creating in the costly and complex ways of the past, but they still want to charge the same amount of money for the product. Which, like the newpaper industry is freely available elsewhere. But while we are left with a near perfect distribution model, there is still a healthy supply and demand. It's just that the intermediaries, the industrial organisations who previously matched supply with demand, are no longer necessary. Supply and demand in recorded music still have two important discriminators: on the side of the vendor, talent to produce music better than the alternatives, and on the side of the purchaser, convenience to consume that music in the way they want.
(Image by Flickr user Mick Yates - used with thanks)
Talent has always been a scarcity: in fact that is why recorded music was developed - because it was more convenient than using actual musicians. That is a compromise, as having actual musicians play for you is a better experience. But the convenience makes it a worthwhile compromise. However as the creation and distribution of recorded music has become next to frictionless, more people are exposed to more music and demand grows for the scarce experience of live music (witness the growth of festivals - pre-Napster the UK had 2 or 3 major festivals each summer: now we have 2 or 3 major ones each weekend of summer). Now this is crucial in the search for music value, as the musicians who are distributing the most recorded music will be in highest demand for the extremely scarce/valuable live music market. So recorded music is essentially advertising the bit that makes money for performers (with the potential to charge for it if it adds to convenience).

Convenience means portability between devices, and it means always available, and crucially it means participatory and recombinant. Those same computers that record music for free also remix it. So that's another element of value: status ("I created this").
Of course, what that all means is that DRM is the antithesis of value in recorded music. Well let's face it, we knew that anyway, but it is worth bearing in mind as music moves to the cloud (convenient). As Techcrunch pointed out this week, many online music retailers are embedding personal identification in the file so that there is the potential to block cloud uploads of anything that was not purchased online (ripped CDs for instance).

So obviously free music downloads harm record companies, and record companies don't want to be harmed. But no-one cares about the intermediary so much of the BPI PR focuses on the artists themselves. This is all based on the premise that if record labels aren't making as much money then that is bad for the industry. The Guardian have been tracking this closely, and this article lists a range of companies profiting from music even while album sales are falling. While they include Spotify, We7, Nokia, Shazam and Apple, they also miss the more obvious ones: Live Nation, Ticketmaster and O2. What all these have in common is that they are not traditional players in the music market. What they don't all have in common is passing their profits on to musicians. Spotify is useful case study: aside from the slick interface the real stroke of genius that allowed Spotify to scale quickly was to avoid the endless legal wranglings with record labels over payments (at least in Europe - they are still bogged down in the US). This allowed them to quickly access most of the music that you might want to play on the service. And they accomplished this by making sure that those payments went to the record labels rather than the artists, by effectively paying in Spotify stock. This is a cap table for Spotify (from this piece on Techcrunch, which also investigates what price the labels paid for their stock)

Shareholders in Spotify on 10/7 2009
Bolag Andel
Rosello (Lorentzon) 28,6%Instructus (Ek) 23,3%
Northzone Ventures 11,9%
Enzymix Systems (F. Hagnö) 5,8%
Sony BMG 5,8%
Universal Music 4,8%
Warner Music 3,8%
Wellington IV Tech 3,8%
Creandum II LP 3,5%Swiftic (Strigéus) 2,6%
Creandum II KB 2,4%
EMI 1,9%
Merlin 1,0%
SBH Capital (B. Hagnö) 0,8%

Helienne Lindwall in The Guardian suggests that the labels paid roughly 1/1000th of the price that other investors in the service paid. This would certainly have made negotiations on the price per stream simple - they would be kept artificially low to minimise the amount that had to be paid out to artists. Spotify has been removed from the Guardian's Fair Trade Music Business list
So there are grey areas even in the proposed saviours of the traditional music business. And 'value' is very different for fans and artists than it is for the intermediaries. And back to my original point, why won't artificial scarcity (of the kind supported by the Digital Economy Bill) work? Well, apart from it being counter to the way the internet works?
The internet (in its earliest guise as ARPANET) was developed as a peer to peer system. One of its early benefits was the potential to maintain government communications in the event of a nuclear attack on the USA. This is because P2P systems route around blockages (an inexact analogy might be to say that they treat blockages as wounds, which they are able to heal). Although consumer access is nowadays based on a server/client relationship mediated by ISPs, the internet remains a global P2P system.

Other than that it won't work because telling people to change their behaviour doesn't work. It's currently not working in France, where total free downloading is up by 3% since the introduction of strict HADOPI laws last year(chart from Arstechnica, stats from M@rsouin, CREM, Universite de Rennes).

and because potential of the internet combined with the creativity of musicians and developers means that there is plenty of value for anyone who has good ideas and talent. So after this little rant I'm going to quit whinging about the record industry, and celebrate great marketing ideas from those creative folks.

Tuesday, 6 April 2010

Electioneering and the Digital Economy Bill

I don't know a huge amount about economics, politics, etc. Most of what goes on in Parliament passes me by, and I have tended to expect that it is well looked after by people who do know plenty about these things. After having watched parts of the Digital Economy Bill debate this afternoon I now know this to be wrong. So when the debate was about the internet, something that I do know lots about, MPs from all parties seemed utterly confused and ended up supporting a piece of legislation so flawed that it will mean the end of Britain's place as a cultural innovator. Essentially it is a digital economy bill in the same way as the fire brigade is a fire brigade - it is named after what it prevents.

So this has made me question what other legislation there might also be that MPs are actually completely ignorant about. I don't know, as I only know about the internet. But seeing as there is an election coming up, I think we should find out, as I'm currently voting for the bloke in the picture

(hopefully anyone reading this has also been, and will continue to be, campaigning against the Digital Economy Bill, but anyone that isn't aware of it try JP Rangaswami's explanation as an introduction)