All posts by David Graves

Post #6 – Newspapers may be down, but they don’t have to be out.

Newspapers got in trouble because they didn’t protect their turf. No, I’m not talking about news. I’m talking about want ads, job listings, real estate ads and automative – areas that generated the majority of the profits at newspapers.

They didn’t do such a great a job protecting their news either. It shouldn’t have taken them so long to understand that the Internet was a continuous medium, not a once-a-day one. But that’s not really the heart of the problem, which was the decline of all those things that financed the news.

The good news is that it’s not too late for existing papers with a strong brand presence in their markets. The bad news is that it’s very late in the game, immediate action is necessary and the outcome is not certain.

The surviving newspapers still have an incredibly powerful local brand. It doesn’t matter whether people even still subscribe. They know the name. Newspapers need to use this residual brand power to get themselves back in the commerce game.

There are many ways they could leverage their local presence and brand. One that comes easily to mind is a local merchants and services marketplace. If the Boston Globe (my local paper) advertised that any merchant could have a free account and storefront, who wouldn’t take them up on it? The power of the brand is such that every store, every service business and anyone with anything to sell is going to take advantage. Who would dare take the chance of not being there, particularly when the price was zero?

Obviously the payoff comes in two ways. One is to sell upgrades from the free service and the other is to offer 100% local search as the ONLY way to access this extensive local database. And of course sell search ads around the search.

This is just one example. Newspapers need to look at all the markets they lost and see how their brand and local presence can get them back in the game.

Post #5 – Aareo: Is it time for Broadcasters to stop broadcasting?

Aareo’s success in the courts has rattled broadcasters, who have vowed to fight on. The question is, should they bother? According to the FCC last year, less than 10% of broadcast viewers do it over-the-air. The rest do their viewing over cable, for which the cable companies are paying broadcasters something less than $2 billion in retransmission fees.

To step back a second, Aareo is a start-up from Barry Diller’s IAC that uses many tiny antennas to offer people local broadcast stations streamed over the Internet. But viewers can also get those stations for free by buying cheap digital antennas and, for older TVs, converter boxes. As noted, relatively few have done so.

The networks think Aareo could undermine their ability to negotiate retransmission fees. The cable companies believe the combination of Aareo and Netflix/Hulu could increase their cancellations by cord cutters.

Perhaps the networks should rethink their strategy. If they moved their programming exclusively to cable, most notably the local news, that content wouldn’t be available to Aareo or via over-the-air channels. It would become even more valuable to the cable companies. Broadcasters would lose less then 10% of their audience, some of whom would likely switch their cable back on. The cable MSOs should be eager to convince the broadcasters to become less broad. For NBC, it’s an in-house decision.

At some point, they all might even be tempted to give up the expense of maintaining transmitters and turn their licenses in to the FCC.

Post #4 – TV Advertising, continued

Following up on my previous post, the concept of cable MSOs as the “Double Click” of television deserves a more in depth explanation.

A growing number of TV programs are consumed as one-to-one streams. All Internet video viewing such as YouTube, Netflix and Hulu are individual streams. On demand television viewing and DVR playback are programs streamed to one device. All of these streams are being played back from a hard drive somewhere.

It’s very easy to pause these streams – you can do it with your remote control or a key on your computer. The originator of the streams can pause them as well – in order to insert a commercial for example.

So what’s the point of all this interrupting and inserting? Extreme target-ability. Cable companies know the address where every stream ends up. Other databases know who lives in the house. If you really want it to get scary, consider that the Xbox Kinnect system, or something like it, can probably figure out which family member is watching.

But we don’t need to go to 1984 to get a system that would massively improve the targeting of television while protecting privacy. And there are lots of compelling ways such a system could incentivize viewers to voluntarily share information, much the way Web sites do.

The value of an individual commercial slot would grow enormously. Now, instead of a place to put one commercial, it would be a place where dozens of ads could run in different households and geographies. It’s an answer to how to reduce the number of commercials necessary to support quality programming.

The difference between Internet delivered television and cable delivered programming would be erased – essentially the same system could serve both. Live programming, like sports, could be delivered as a targeted stream just like any other content.

In fact, I expect that the percentage of programming viewed as a stream will steadily increase until it eclipses appointment TV. Then cable companies will be retiring cable networks, further expanding the bandwidth available for streaming.

Post #3 – TV Advertising

TV advertising is an industry that needed reinventing even before the Internet came along. To be more precise, media buying is the part of the advertising industry that desperately requires a makeover.

For the most part, media is a blunt instrument as a way to advertise. Buyers are offered baskets of viewers based on survey estimates that give them demographics and geography and not much else. Plus the commercials, especially in spot TV, often don’t run where they were originally promised.

One TV rep firm president once told me “our job is to sell television vaguely” and that his business was “creating discrepancies and cleaning them up”. Discrepancies are ads that didn’t run as scheduled and need to be rescheduled.It’s as if you were booking a trip and found out that instead of going from New York to LA, you went to Chicago twice. And you didn’t find out until after the trip was over.

This is the Six Million Dollar Man – we have the technology – we could fix him. But will we? Most TV viewing is done through cable boxes that at least know where they live. More importantly, TV is steadily shifting over to be an on-demand medium, either through actual on-demand streaming or via a DVR.

If the cable companies agreed to take on the role of Double Click for television, helping their content partners insert commercials in real time based on real criteria, the process of TV buying could become far more efficient and generate more money for the media with fewer commercials. Commercial clutter is choking free TV.

Will this ever happen? Hard to say, but NBC being bought by Comcast could be a step in the right direction.

Post #2 – Micro-payments

I am relentless in my belief that micro-payments need to play an important role in the future of online media. While I am not alone in this belief, “everyone knows” they’ve been tried and haven’t worked.

Tell that to the cell phone companies, particularly Docomo in Japan. When you use your smartphone to consume mobile content, or just make a phone call to get some highly personalized custom content (i.e. conversation), you are using a very effective and accepted micropayment system.

Your are either paying a bulk monthly amount for a certain number of minutes or maybe an unlimited plan. You may go over your monthly limit for data (most unlimited plans are going away) and you will start paying incremental fees for your content that month. Generally the content owner isn’t getting anything unless they are part of a service offered by your carrier, but the phone company is always making money and you probably never even think about it because the incremental cost is so low.

The same would be true if there were an underlying account charging you for each page you access or for each video you watch (or a per minute charge for video). For prices as low as a fraction of a cent, you are unlikely to avoid content you really want. You wouldn’t really have to think about it as long as the price was reasonable.

The problem of course is that there’s no way currently for content owners to put a micro price tag on their content and get paid. “Everybody knows” that micropayments don’t work. The reason is that a start up can’t get the critical mass. Only a handful of companies could implement such as system, but if they did, they would reap huge rewards.

The big ISP’s, like Comcast and Verizon, could do it, particularly if they co-operated to jointly exchange of customers. Amazon could do it. Google might be able to. Yahoo! has a shot at it, which could revive their growth hopes if successful. Netflix has a chance for a video-only version which could expand into other content.

There is a still a lot of high value content that is locked up because it’s too valuable to give away with only advertising banner support. If there were a viable micropayment system, a lot of owners would switch some portion of their content to it.

There are millions of dollars in fractions of a cent waiting for someone.