I’d listen to Jon Stewart before Chris Anderson on fixing media’s business model

Image via Wikipedia

TechCrunch summarizes Wired Editor-in-Chief Chris Anderson’s rules for pricing on online media by calling them “counterintuitive.”  Author Erick Schoenfeld, writes that Mr. Anderson “articulated something that is now increasingly becoming obvious: As products go digital, their marginal cost goes to zero.”

“This is the law of gravity online,” says Anderson. “Everything that becomes digital will become free. There will be a free version, either you will be competing with free or giving it away for free and selling something else. If it is not zero today, it will be zero tomorrow.”

He then goes on to summarize Anderson’s new “rules”, which appear to be:

1. The best model is a mix of free and paid
2. You can’t charge for an exclusive that will be repeated elsewhere,
3. Don’t charge for the most popular content on your site,
4. Content behind a pay wall should appeal to niches, the narrower the niche the better

I’m scratching my head a bit here, and I’d love to have read more evidence of this actually working at mass scale. There are a bunch of counter-examples that a hard-headed business guy like me might push back on here with a hearty WTF.   First off, some counterexamples.

The best model is a mix of 100% pay / 0% free, like World of Warcraft.  It’s media IMHO, you want onto their servers, you pay to be there.

Any packaged software (or pharmaceutical for that matter) has a marginal cost of zero, it is still for pay.  I reject the idea that media–becuase its marginal cost is zero–cannot be for pay.  Plenty of other high-value products have zero marginal costs and extract high prices.  Linux and Windows have been two versions of digital OSs for more than 10 years.  Windows still has the vast, vast majority of revenue and unit share.

Plenty of authors are finding opportunities to charge for their content–especially in the financial sector. Jeremy Siegel for example.

Finally, nowhere do I hear that the core model of big media brand (e.g., WSJ) and all its writers are needed to do what they do.  I love the WSJ, and this stinks to write.  But the net net is that most news will be covered by more citizen-oriented news outlets by  citizen journalists and niches that are running around snapping Twitpics and posting to blogs.  This will mean that vastly smaller newsrooms are going to be needed to do what they do today.  Some will be needed and some are crucial.  But many will be continuing to compete with free.  Very hard to deal with.  This needs to get teed up and discussed.  Openly.

With that out of the way, now I want to explain why I think this talk is off base with respect to big media.  Brands such as the WSJ, Wired, Time, Newsweek do have a well-known problem–they’ve got a bunch of folks in a priesthood of journalism competing with their congregation of citizen bloggers, twitterers and so forth who are happily, ignobly disrupting the stuffing out of them.

Anderson’s prescription may work for them, but I’m extremely dubious.  I think that the congregation of citizens is going to disrupt all the slices of profit from the priesthood of jounralists.  While I might pay a few bucks for virtual currency on Zynga or a special hat on WeeWorld, I’m not going to pay $0.99 for an article that I can just read somewhere else.

I really think that we’re watching in journalism what we saw in the auto makers a few years ago.  We are looking at an industry that doesn’t realize its dead yet.   The business model needs far more dramatic reinvention in terms of what we’ll consume.  That debate ain’t happening though.  Instead, what we’re hearing is that the pricing model needs to go this long tail route, which is a baby step.  They’re using a pea shooter against an elephant on this.

As an example of how radical things need to get, here’s Jon Stewart talking to Katie Couric about what the TV news should do.  His ideas are closer to what I think needs to happen than working on a long-tail price model.

Jon Stewart Interviews Katie Couric

Here Stewart gives Couric all kinds of crazy suggestions–”free colonoscopy for viewers,” etc.  These get laughs, but he’s basically right.  Old media is going to need things like cage-matched talking heads debating health care pay-per-view, manage Wolf Blitzer’s as a multi-medai franchise similar to Tom Petty, and a bunch of other completely crazy ideas.

The idea that a pricing model as suggested is going to do the trick is in my mind, extremely short-sighted and likely to fail.  Media franchises will need to think radically about trying vastly new and different things, else they’ll be in the same spot GM / Chrysler are in now.

Jon Stewart’s become one of the most trusted ‘newsmen’ in the US, crazily.  His ideas on how to fix big media may make him the smartest business person too!

Filed under: business, marketing, social media, technology , Chris Anderson, jon stewart, media, Pricing

My Founder’s Institute Talk on Branding & Naming Your Startup

Last week, I had the pleasure of speaking as a Mentor at Adeo Ressi’s TheFunded’s Founder’s Institute with entrepreneurial superstars James Hong and Bryan Thatcher.  

First off, before I get into the topic, let me say that I think the TheFunded Founder’s Institute is innovating the approach to startups in an important way.  The approach is a mix of company building philosophies.  It’s one part bigger hammer–that is bring in lots of smart people as founders.  It’s also another part strong social networks, connect those founders to each other and to experienced, proven entrepreneurs.  Add top-tier, discounted, startup services (legal, accounting, etc.) and that gets at crux of the approach.  The new stock class—F-Class—which Ressi’s introduced is also super interesting.

There are a lot more unique details to how Ressi’s going about this, which I’ll not go into here.  But suffice to say, it is both empowering for entrepreneurs and it has a bunch of detailed thought behind it.  Ressi’s vision is big and broad.  It is exciting to be a part of, and I’m eager to help it succeed.   More concretely, I wish I had had access to such a thing when I was trying to start out as an entrepreneur.

Ok, so that’s the Founder’s Institute, now onto what I was talking about when James, Bryan and I spoke last week.  Our topic was Naming—as in, you’ve now figured out what customer problem you think you’re solving and what you want to do, now what do you call this thing?

This is a fantastically rich and interesting topic.  It’s also, IMHO, super super important.  When you’re a startup, your name is about the only marketing you really have at first.  Also, everyone—customers, potential employees, and potential investors—will ask you about your company’s name.  So whatever you name and brand your company had better be good.

My slides from the presentation are embedded here (hat tip to the folks at Igor International, who’s free naming guide was very influential):

(Shared with permission from TheFunded Founder’s Institute.)

It was a good discussion, and my sense is that this provides a useful prescription for startups thinking about what to name their company and how to approach their brands.  Some key points for reinforcement.

Having a process for naming helps.  What I think is particularly useful about this approach is that you can put numerical scores next to how you think about names.  This enables you and your team to have a concrete discussion about why someone likes versus dislikes a certain name.  This is important, as it enables your team to come to a more objective decision, as opposed to just who yells loudest.

Think BIG picture first, then worry about finding the .com or URL that’ll work. Following my talk, one common theme in speaking with people afterwards is that I think many people get hung up on the challenge of finding a good .COM URL that’s not already been picked up.  While certainly a challenge, I think that worrying about this tends to drive entrepreneurs to small thinking.  You’ll have to work through it, but that’s an end point, not the beginning.

As I’ve said in other posts—as an entrepreneur, my advice to other entrepreneurs is to think big in everything you do.  So when it comes to naming and branding your company, think big.  Go for a big name, figure out what that makes sense and helps position you strongly relative to your potential competitors.  Figure out a name that really delivers on the strategy that you’ve put in place.  Get that strategy right and solid.  Then you can go and figure out the more tactical issues of what the URL hunting strategy needs to be.

Commit to going through the process.  The other thing that I’d encourage people to do is really commit to going through the process that I’ve described in the PPT deck.  I’ve met with several companies over the past year who’ve listened to this process, ignored it, and then have ended up hiring a naming consultant to basically help them go through the same thing.

Acknowledgments to the folks at Igor International. Igor International have open sourced their naming guide, which is a great thing.  My deck basically walks through how I used that free information to secure Moonshoot, an awesome brand name, IMHO .  The tool Igor’s provided is for frugal founders like us a tool to go figure this out on our own.  Invest the time to commit to doing it.

Filed under: business, entrepreneurship, free stuff for startups, internet, marketing, technology , Branding, entrepreneurship, Founder's Institute, marketing, Naming, Start-ups, Startups

DriverSavers & Its Awesome Customer Experience

Cover of The Incredibles [UMD for PSP]

This mail is a big shout out to the Incredible folks at DriverSavers, who saved over 20K of our photos from a HD and backup regimen that went horribly wrong.  I also think that there are some terrific lessons here that any company–large or small–can take in terms of delivering a great customer experience.

The background

My wife is a serious amateur photographer.  She takes a lot of pictures that are artistic, and as we have two young children, she also takes tons of pictures of our children.  Our approach to backing these up was to use an attached HD to her mac, with a backup HD that used Apple’s Time Machine.

The problem we faced was that the HD failed slowly.  When my wife would look at photo thumbnails, they would appear to all be there.  When the HD finally failed, and we went to Time Machine, we weren’t able to find any archived copy that had the actual JPEGs of the 25K photos that it was supposed to be backing up.  Disaster time.

After a few trips to the Apple Store and elsewhere, we got pointed to DriveSavers.  DriveSavers is a data recovery service in Novato, California, that promises to deliver data from hard drives that have suffered massive failure.  They’ve apparently been involved in recovering data from drives damaged in 9/11, drives that have been in fires, underwater, etc.

From the beginning of this experience, DriveSavers approach impresses.

First call. Upon my first call to them, I was instantly connected with a real human being–no long number prompt trees.  Despite the fact that I was *desperate* to get a solution, my advisor at DriveSavers slowly and calmly asked me to walk through the situation in detail.  This works to his favor, as it lets me and my wife get out all the concern and anxiety around having lost all the photos our children.  He listened very patiently, would have let me go all afternoon, if that was going to be needed.  As he listened, he then started asking a few questions about what happened with the specific drive, how big it was, when it had failed, had we continued trying to use it after we had had it fail, etc.

After about 20 minutes, our Advisor suggested his path forward.  First off, as we only needed photos recovered, he thought we’d qualify for a price point that was roughly 40% less than their normal drive recovery.  This was a relief as this ain’t cheap.  Second, and frankly more important, he was confident that they could have excellent chances for successful retrieval.  This is what I wanted to hear.

I wanted to hang up immediately and get myself up there to hand off the disk, but he then asked that I work with him to answer some more questions, as he walked through what they woudl do with the disk and how it would work.  This turned out to be awesome–he made me understand that they do this all the time, that the disk failure I experienced was very common, etc.  Now I was in the car and ready to run stop lights to get to him to save our photos.

DriveSavers Office.

DriveSavers office in Novato has its entry wall covered with photos of celebrities who have had their drives saved by them.  The Late President Gerald Ford, Bruce Willis, Brad Bird (writer/director of Pixar’s The Incredibles), Johnny Depp, etc.  That wall dropped my blood pressure even further.

The people in their offices had the same message as our initial advisor–they’d have the disk back to us in about 5 business days, all the content they could recover put onto a brand new drive we provided.  They also gave us a phone number to call anytime–24/7–in case we wanted to check in.

Very impressive.

5 days later.

5 days later, they called me to let me know that our engineering supervisor, Bohi Nadler, had successfully signed off on a saved data set that we could pick up at our convenience. My wife drove up to pick up the photos.  We have the business cards of the specific engineer who did the work, a set of new tips on how to manage data backup and recovery at home to a stronger degree than ever before.  (We now use 2 HD backups and have all our photos on Smugmug as well.)

I love these guys, and had to share the experience a bit.

Lessons on customer service

This experience really showed me how few companies really get on it regardign customer service.  Here are some of the key tips and techniques that I think are important:

• Have someone answer the phone, and if not, then at least be super responsive.
• Let your customers vent, listen, and guide them through your solution.  This both disarmed me and gave me a sense of hope.
• Always offer a deal.  It was very smart of them to offer me 40% off for a Photos Only recovery.  I felt it was expensive, but at least not full price.  I was “saving” money.  Help your customers feel like they’re saving money, always.
• Get every human at your company to have a consistent message to your custoemrs.  Having the receptionist have the same information as the sales advisor and the engineer made a difference, I felt as though they knew who I was and were willing to help me.
• Humanize the service–they told me the name of the perrson who actually did the work.  Having a name behind the work made me feel even happier about hte experience.

I can hardly believe that a data recovery service can create such a positive feeling in their customers–part of it surely is the magic of finding what is lost that is valueable.  But I truly believe that their ability to think through the experience they want their customers to have is waht makes their business truly stnadout.  We can all learn from this, and I wanted to both share my tgratitude and my lessons.

Filed under: entrepreneurship, marketing, technology , business, customer service, marketing, technology

Be in the Review—MKTG Lessons from Windows Mobile

Yesterday was a tough day for Microsoft, and not because of its earnings announcement, which Silicon Alley Insider rightly calls its first revenue drop in memory “horrible, considering the circumstances.” 

I think it was a much harder day, because of two prominent articles talking about the relative mobile ad share and Application Development traction of the Iphone relative to Microsoft Windows Mobile.  The lesson from this is useful to marketers everywhere—namely, get in the review!

First, Erick Schoenfeld’s article Android Catches Up To Palm In Mobile Ad Market Share. IPhone Still Blows It Away compares ad share on mobile OSs, with the Apple IPhone garnering 50%, RIM at 12%, MSFT’s WM at 11%.  #3 in the market, never a place MSFT wants to be.  It is especially tough that the story is about Android playing catch-up to the IPhone.  Microsoft’s Windows Mobile platform is an also-ran, not even mentioned. 

Second, in MG Siegler’s article “Zero Remains a Popular App Number for Non-Iphone Owners” analyzes the user traction of apps on IPhones versus non-IPhone platforms.  The classic “Leader v. Everyone Else” story.  Here the only Microsoft comparable is the Motorola Smartphone Owners.  What’s very tough here is that  Windows Mobile isn’t even called out, it’s as if Motorola is the only platform not Apple, RIM or Android.  Yikes. 

I love Microsoft, loved working there.  I remain an unabashed fan, and those who count it out are nuts IMHO.  Great people are still there.  Great businesses are still there–Windows 7 should be a super release.  XBOX and XBOX live are coming along, as businesses .  The Server and Tools business is a powerhouse, despite current market conditions.   Its enterprise business is thriving.  MSFT is and will remain powerhouse.

In mobile– a vitally important area of growth and focus in this industry and to MSFT–to not even be mentioned is a real problem.  This is particularly true, as Windows Mobile is now nearing release 7.  With a v7, having traction as a dev / app platform is vital. 

The silver lining is that the mobile app dev platform is still *very* early.   MSFT has come back before, and it can again.  Still, it’ll be important that the WM marketing guys are extremely aggressive in getting the word out and getting into the reviews. 

 

Filed under: business, marketing

How *NOT* to demo a product: Bezos’ Kindle 2 Demo on Jon Stewart

I can *totally see* his marketing people pitching Amazon Founder & CEO on the brilliance of the idea.  Pitch the Kindle 2 on Jon Stewart.  The audience demographic is spot on – smart, relatively wealthier 18-34 year old males.  The show oozes cool.  Jon Stewart’s funny and well-read.  And Jeff Bezos is an articulate, engaging fellow.   And—best of all—the Kindle ROCKS—what a product, it’s awesome.   What a perfect way to take the Kindle 2 beyond its early adopter roots into the early majority. 

What could possibly go wrong???  Well, it turns out quite a lot. 

Words can barely do all this justice, so I’ve embedded it in an articel below.  

http://mediamemo.allthingsd.com/20090224/jeff-bezos-sells-the-kindle-to-jon-stewart-wed-make-it-cheaper-if-we-could/ 

The key issues that I saw were:

• There was no interesting content on the Kindle for Jeff to show Jon.  Jon picked up the reader and all he saw were those ‘screensaver’ photos of authors that the Kindle scrolls through. 
• Jeff had very weak messages on the Kindle’s benefits.  The key benefit Jeff promoted was that the Kindle let you ‘read one handed.’  WTF?  WTFF?
• Jeff jumped the shark or whatever you call it when he said this was unlike other interviews he’d done.  This was the kiss of death, the coup de grace, the creme de la creme, when Jeff remarked (nicely, mind you) that this wasn’t like other interviews.  This was the silent but deadly!  Jon Stewart’s interview was straight-forward for Jon—what is this thing?  why is it good?  and I’ll make of you if your answers suck!!!  Jeff didn’t have a fawning press hack asking him about the future, just basic, Product Manager 101 questions.  To say this was unlike other interviews, having watched it, is nuts.

Ok, so what would I do differently.  Pretty simple:

• Have an interesting demo, get an “Ooooooh/Aaaaaah” out of the audience.  Oprah may love your thing, but Stewart’s never seen it.  If you’re going to show someone for the first time in front of an audience, then actually demo the damn thing so that people can be wowed and give you some ooooh factor.  Then Jon Stewart can’t quite rag on you so bad.  Cripes with a Kindle, you have to figure some folks in the audience love the dang thing and would hoot for it even with a crappy demo—make that a part of the thing.  I’m still shocked that Bezos didn’t demo the thing.
• Speak about the benefits your product provides as if you were a human being.  The Kindle is such an awesome product, even with all its shortcomings.  Saying it’s benefit is that you can read one-handed is almost criminal.  B- entries would include: say you travel a lot and you like to read.  Now instead of carrying along a set of books, you just carry this.  IMagine you’re someone who likes to read 6 books at any one period of time, alternating between them.  Customers tell us its great to have one device to switch between them, not look all around the house for the book they want right now.  Finally, for the future, imagine you go to college and you have 440 pounds worth of books, imagine what this might someday be able to do for you—we’re working on it. 
• NEVER say on camera that this is unlike any other interview you’ve ever done, unless it’s for your child’s elementary school newsletter.  This showed me that Bezos hadn’t prepared, or his marketing people hadn’t build a set of talking points, whatever.  The net was it was clear that this was off script.  It made Jeff look like a tourist in the land of Stewart.  This is unfortunate, as I really really like what Amazon is doing.  I’m a happy Kindle customer.  Good cautionary tale.

Filed under: business, marketing, tech, technology , bezos, business, jon stewart

Do the ad campaign first

Seth Godin discusses an interesting question today on his blog: “Which comes first, the product or the marketing?”

He argues that marketing (broadly defined) should come before the product.  In other words, define marketing by Peter Drucker’s standard of “creating a customer,” and then and only then build the product.

This is hard to argue with–of course, you need to know who your customer is and what their pain points are before you go off burning time and money building a product for them.

Sure thing, makes total sense.

I would go a step further though.  I suggest that a team start with the marketing (as Seth advocates), with the explicit goal of being able to create the ad campaign that would exist when the product was in market.

Now, I know many people think Big Media / Old Marketing advertising is dead (see Seth Godin’s Meatball Sundae, e.g.).  And it may well be that you are designing a product that will never have a TV ad run for it.

I don’t really care about what ads you end up running, instead, I’m advocating that you sketch out the ads you would run if you were going to run them.  Here’s why: the marketing task of building an advertisement forces you to develop several key elements of your marketing thinking.  For example, advertising forces you to develop (and stick to) a single main idea for what it is that your product is all about.  BUilding an ad requires you to articulate what are the truly compelling benefits? And, finally, an ad forces you to communicate those benefits or your positioning in a cogent, concrete, and brief way.

For those reasons, I am a big believer in doing the work to build the ad campaign first, based on the marketing work that goes into it.

A great example of this, is the MacBook Air.  Here’s an excerpt from a Steve Jobs interview on the MacBook Air and it’s development:

We decided a few years ago to build the world’s thinnest notebook. And so, it started in the design phase, figuring out how small we could make things,” Jobs told CNBCs Jim Goldman. “And we probably built 100 models to get to this. So the first step was just holding a model in your hand and saying, ‘if we could make this real, we would all just lust after this.’ And, we did! So its been about two years of work to make this…

It’s [takes] precision machined aluminum to get it this light and this thin.”

Now look at the ad.  I would be willing to bet a lot of money that execs at Apple had the vision of an ad with a beautiful Apple Laptop sliding out of an inter-office envelope very, very early in the design phase.

It clearly articulates to the marketing and engineering teams what the vision of the product is all about.  And when it comes time to launch the thing, you know exactly what your single big idea is all about, you know how to communicate it cogently etc.

Now the counter to this is to do “the marketing first” and then build the product, and the heck with the ads.  This is ok, but it has risk.  Notably, if the product teams start making compromises along the way, if there’s feature creep, etc., then you start losing site of precisely what the single main idea of the product is.  The product limps across the finish line with nothing distinct, nothing unique, and the marketing guys then get out the lipstick and start doing  pig dressing.  This happens all the time, not because people are stupid or incompetent, but because there was never a flag stuck quite deeply enough in the ground at the beginning to state what the product was and who it really was for.

Having lived through that a few times, without naming the specific products, I’ll tell you that nothing is worse as a marketer to have a product that lacks a single main idea or cogent set of benefits.  No one’s happy–the engineers think you suck as a marketer.  The partners think you’ve built a crumby product.  And you have nothing to do but stand fast and just pitch, pitch, pitch.

Force your team to do the ads first.  Having them early will help everyone stay synched on what the core benefits are that you’re building.  And if the team can’t agree on the benefits to customers that you’re trying to build at the outset, well, that should be a pretty good indicator that the team doesn’t know what its trying to do.

Technorati Tags: seth godin,marketing,business

Filed under: business, marketing, tech, technology

Case Study: Online Savvy of the Presidential Campaigns

I’m going to write more about this in the coming weeks, but one of the big historic elements to the Obama versus McCain campaigns is the innovation that the Obama folks have used in technology.

In 2004, the GOP trounced the Democrat party on the vector of far better database marketing and statistical models.

In 2008, there’s no question that the Obama campaign has raised the bar in a big way on the front of using technology, social media, and good old-fashioned technology marketing to get the word out, build relationships, and drive conversations.

One example I came across today on YouTube–a calculator to check your tax savings based on the two competing tax plans.  Pretty simple, pretty effective. 

 

Filed under: internet, marketing, politics

Crowd-Sourcing a Name: A Loser’s Bet

TechCrunch writes up entrants to the field of crowd-sourced naming firms.  The idea as it’s explained is that a company looking for a brand name or whatever will submit a request to the site, and then the wisdom of crowds will spit out a killer name.

The article mentions that TechCrunch submitted a project on their own and was not super impressed with the results.  This doesn’t surprise me–thinking a crowd is going to light on a great name for something of your’s is fantasy-land.  Crowd-sourcing a name is a loser’s bet.

My view is that getting a killer name is one of the most important things you can do.  If you’re a start-up, you don’t have money to burn on marketing.  Every opportunity you might have to build and drive value from any source is useful.  In this environment, having a great name, an identity that can break-through and stick in the craw of someone is exactly what you need.  You won’t get that from a bunch of random folks who don’t know you.  If you’re starting a company, this is your responsibility.

The best discussion on how to build a name that goes the distance is courtesy of Igor.com.  I’ve written about them before, and their killer discussion guide.

If you need to name something, don’t go the crowd-sourced route–go to Igor.com.

(I have no professional affiliation with Igor.com.)

Filed under: entrepreneurship, free stuff for startups, marketing