Want to win? Make it easier, not harder.

In March of 2011 I represented Newsweek & The Daily Beast at the Harvard Business School / Committee of Concerned Journalists “Digital Leaders Summit”. Just about every major media property sent an executive there, and I was privileged enough to represent the newly formed NewsBeast (Newsweek+TheDailyBeast had recently merged, but have since split).

Over the course of two days, we covered a lot of concerns across the industry – analyzing who was doing things right and how/why others were making mistakes.

On the first day of the summit we looked at how Amazon was posturing itself for digital book sales – where their profits were hoping to be, where their losses were expected, and strategies for finding the optimal price structure for digital goods.

Inevitably, the conversation sidetracked to the Apple Ecosystem, which had just announced Subscriptions and their eBooks plan — consequently being their new competitor.

One of the other 30 or so people in attendance was Jeffrey Zucker from NBC, who went into his then-famous “digital pennies vs. analog dollars” diatribe. He made a compelling, intelligent, and honest argument that captivated the minds and attention of the entire room. Well, most of the room.

I vehemently disagreed with all his points and quickly spoke up to grab the attention of the floor… “apologizing” from breaking with the conventional view of this subject, and asking people to look at the situation from another point of view. Yes, it was true as Zucker stated that Apple standardized prices for digital downloads and set the pricing on their terms – not the producer’s. Yet, it was true that Apple allowed for records to be purchased “in part” and not as a whole – shifting purchase patters, and yes to a lot of other things.

And yes – Jeffrey Zucker didn’t say anything that was “wrong” – everything he said was right. But it was analyzed from the wrong perspective. Simply put, Zucker and most of the other delegates were only looking at portion of the scenario and the various mechanics at play. The prevailing wisdom in the room was way off the mark… by miles.

Apple didn’t gain dominance in online music because of their pricing system or undercutting retailers – which everyone believed. Plain and simple, Apple took control of the market because they made it fundamentally easier and faster for someone to legally buy music than to steal it. When they first launched (and still in 2012) it takes under a minute for someone to find and buy an Album or Single in the iTunes store. Let me stress that – discovery, purchase and delivery takes under a minute. Apple’s servers were relatively fast at the start as well – an entire album could be downloaded within an hour.

In contrast, to legally purchase an album in the store would take at least two hours – and at the time they first launched, encoding an album to work on an MP3 player would take another hour. To download a record at that time would be even longer: services like Napster (already dead by the iTunes launch) could take a day to download; torrent systems could take a day; while file upload sites were generally faster, they suffered from another issue that torrents and other options did as well – mislabeled and misdirected files.

Possibly the only smart thing the Media Industry has ever done to curb piracy is what I call the “I Am Spartacus” method — wherein “crap” files are mislabeled to look like Top 40 hits. For example: in expectation of a new Jay-Z record, internet filesharing sites are flooded with uploads that bear the name of the record… but contain white noise, another record, or an endless barrage of insults (ok, maybe not the last one… but they should).

I pretty much shut the room up at that point, and began a diatribe of my own – which I’ll repeat and continue here…

At the conference, Jeffrey Zucker and some other media executives tended to look at the digital economy like this: If there are 10 million Apple downloads of the new Beyonce record or the 2nd Season of “Friends”, those represent 10 million diverted sales of a $17.99 CD – or 10MM diverted sales of a $39.99 dvd. If Apple were to sell the CD for 9.99 with a 70% cut, they’re only seeing $7 in revenue for every $17.99 — 100 million times. Similarly, if 10MM people are watching Friends for $13.99 (or whatever cost) on AppleTV instead of buying $29.99 box sets, that’s about $20 lost per viewer — 10 million times.

To this point, I called bullshit.

Digital goods such as music and movies have incredibly diminished costs for incremental units, and for most of these products they are a secondary market — records tend to recoup their various costs within the first few months, and movies/tv-shows tend to have been wildly profitable on-TV / in-Theaters. The music recording costs 17.99 and the DVD 29.99 , not because of fixed costs and a value chain… but because $2 of plastic, or .02¢ of bandwidth, is believed by someone to be able to command that price.

Going back to our real-life example, 10MM downloads of “Friends” for 13.99 doesn’t equate to 10MM people who would have purchased the DVD for $39.99. While a percentage of the 10MM may have been willing to purchase the DVDs for the higher price, another — larger — percentage would not have. By lowering the price from 39.99 to 13.99, the potential market had likely changed from 1MM consumers to 10MM. Our situation is not an “apples-to-apples” comparison — while we’re generating one third the revenue, we’re moving ten times as many units and at a significantly lower cost (no warehousing, mfg, transit, buybacks, etc).

While hard copies are priced to cover the actual costs associated with manufacturing and distributing the media, digital media is flexibly priced to balance convenience with maximized revenue.

Typical retail patterns release a product at a given introductory price (e.g. $10) for promotional period, raise it to a sustained premium for an extended period of time (e.g. $17), then lower it via deep discounted promotions for holiday sales or clearance attempts (e.g. $5). Apple ignored the constant re-pricing and went for a standardized plan at simple price-points.

Apple doesn’t charge .99¢ for a song, or $1.99 for a video because of some nefarious plan to undervalue media — they came up with those prices because those numbers can generate significant revenue while being an inconsequential purchase. At .99¢ a song or $9.99 an album, consumer’s simply don’t think. We’re talking about a dollar for a song, or a ten dollar bill for a record.

Let me rephrase that, we’re talking about a fucking dollar for a song. A dollar is a magical number, because while it’s money, it’s only a dollar. People lose dollar bills all the time, and rationalize the most ridiculous of purchases away… because it’s only a dollar. It’s four quarters. You could find that in the street or in your couch. A dollar is not a barrier or a thought. You’ll note that a dollar is not far off from the price of a candy bar, which retailers incidentally realized long ago that “Hey – let’s put candy bars next to the cash registers and keep the prices relatively low, so people make impulse buys and just add it onto their carts”.

Do you know what happens when you charge a dollar for something? People just buy it. At 13.99 – 17.99 for a cd, people look at that as a significant purchase — one that competes with food, vacations, their children’s college savings. When you charge a dollar a song – or ten dollars a record – people don’t make those comparisons… they just buy.

And buy, and buy, and buy. Before you know it, people end up buying more goods — spending more money overall on media than they would have under the old model. Call me crazy, but I’d rather sell 2 items with little incremental cost at $9.99 each than 1 item at $13.99 — or even 1 item at $17.99.

Unfortunately, the current stable of media executives – for the most part – just don’t get this. They think a bunch of lawyers, lobbyists and paying off politicians for sweetheart legislations are the best solution. Maybe that worked 50 years ago, but in this day and age of transparency and immediacy, it justq doesn’t.

Today: you need to swallow you pride, realize that people are going to steal, that the ‘underground’ will always be ahead of you, and instead of wasting time + money + energy with short-term bandaids which try to remove piracy ( and need to be replaced every 18months ) — you should invest your time and resources into making it easier and cheaper to legally consume content. Piracy of goods will always exist, it is an economic and human truth. You can fight it head-on, but why? There will always be more pirates to fight; they’re motivated to free content, and they’re doubly motivated to outsmart a system. Fighting piracy is like a chinese finger trap.

Instead of spending millions of dollars chasing 100% market share that will never happen (and I can’t stress that enough, it will never happen), you could spend thousands of dollars addressing the least-likely pirates and earn 90% of the market share — in turn generating billions more in revenue each year.

Until decision makers swallow their pride and admit they simply don’t understand the economics behind a digital world, media companies are going to constantly and mindlessly waste money. Almost every ( if not EVERY ) attempt at Digital Rights Management by major media companies has been a catastrophe – with most just being a waste of money, while some have resulted in long term compliance costs. I can’t say this strongly enough: nearly the entire industry of Digital Rights Management is a complete failure and not worth addressing.

Today, the media industry is at another crossroads. Intellectual property rights holders are getting incredibly greedy , and trying to manipulate markets which they clearly don’t understand. In the past 12 hours I’ve learned how streaming rights to Whitney Houston movies were pulled from major digital services after her death to increase DVD sales [ I would have negotiated with digital companies for an incremental ‘fad’ premium, expecting the hysteria to die down before physical goods could be made ], and read a dead-on comic by The Oatmeal on how it has – once again – become easer to steal content than to legally purchase it [ http://theoatmeal.com/comics/game_of_thrones ].

As I write this (Feb 2012) it is faster to steal a high quality MP3 (or FLAC) of record than it is to either: a) rip the physical CD to the digital version or b) download the item from iTunes ( finding/buying is still under a minute ). Regional release dates for music , movies and TV are unsynchronized (on purpose!) , which ends up in the perverse scenario where people in different regions become incentivized to traffic content to one another — i.e. a paying subscriber of a premium network in Europe would illegally download an episode when it first airs on the affiliate in the United States, one month before the European date.

Digital economics aren’t rocket science, they’re drop-dead simple:

  1. If you make things fast and easy to legally purchase, people will purchase it.
  2. If you make things cheap enough, people will buy them – without question , concern, or weighing the purchase into their financial plans.
  3. If you make it hard or expensive for people to legally purchase something, they will turn to “the underground” and illegal sources.
  4. Piracy will always exist, innovators will always work to defy Digital Rights Management, and as much money as you throw at creating anti-piracy measures… there will always be a large population of brilliant people working to undermine them.

My advice is simple: pick your battles wisely. If you want to win in digital media, focus on the user experience and maximizing your revenue generating audience. If your content is good, people will either buy it or steal it – if your content is bad, they’re going somewhere else.

I’m glad to no longer be in corporate publishing. I’m glad to be back in a digital-only world, working with startups , advertising agencies, and media companies that are focused on building the future… not trying to save an ancient business model.

2016 Update

Re-reading this, I can’t help but draw the parallels to the explosion of Advertising and Ad Blocking technologies in recent years. Publishers have gotten so greedy trying to extract every last cent of Advertising revenue and including dozens of vendor/partner javascript tags, that they have driven even casual users to use Ad Blocking technologies.

And the biggest Brand mistake of the month goes to — Target.

Congratulations to Target on being the dumbest Brand of the month — possibly the year.

After the Supreme Court decision that rendered corporate campaign contributions legal and limitless, Target made a contribution to a Minnesota politician named Tom Emmer. Emmer is against gay marriage — and while I disagree with his beliefs — he does have a right to them.

Target’s contribution, however, has created a serious issue for their brand that may snowball out of control. While many politicians are smart enough to avoid hot-button issues like marriage – for both electability and contributions – Emmer embraces them. Instead of making donations to a generic candidate , who happens to oppose Gay Rights, Target stupidly entered the fray of the Gay Marriage debate by funding someone who is actively campaigning against them. Brilliant.

To make things even worse, Emmer is a supporter ( both financially and personally ) of Bradlee Dean, an unconventional minister / rock musician with some fairly extreme views on homosexuality, including the supporting the practice of executing gays and lesbians.

So Target contributed money to Emmer, Emmer said some things that are offensive to many of their customers, and then Emmer gave some money in turn to Dean who said things are beyond offensive to even more of their customers. That’s a fine mess they’re in.

Target is going to be giving tons of money to hundreds of candidates , because we live in a society where cash contributions mean political access and favors. Few people will have the foresight, or ability, to figure out which of the people they need to support to get some patronage are – for lack of a better phrase – polarizing assholes. This is a sad fact, but its unavoidable.

Anyone in PR and branding with half a brain knows that mistakes happen and people can forgive. But instead of condemning the situation, saying “This is awful – as are the comments”, backstepping out of the situation, and then making a 10x contribution to a politically related yet entirely non-offensive charity ( like a halfway house for at-risk LGBT teens ), Target said nothing. Days later they issued a statement that basically says “So what? Deal with it. We’ll contribute equally to politicians on both sides as we see fit, and this isn’t our fault.”.

Sorry, that’s not good enough. In fact this is bad, downright stupid, and will hurt the Target brand dearly. Instead of distancing themself from hate-speech and a politicized situation, Target is defending their actions. Consumers are now becoming outraged not only at the politics of the situation, but the arrogance of the corporate stance.

In a few weeks, Target will probably be forced to make amends and have a press conference where they apologize to hurting customers but they did no real wrong, and then make some sort of token goodwill gesture or contribution. It will be a touching moment that is perfectly executed after being orchestrated by a PR fix-it consultancy along with a gay lobby group that makes them realize that they can severely hurt the brand and bottom-line. Unfortunately this will be a forced moment – and one that should have come much sooner.

Making contributions to candidates is a dangerous game; your brand can become tied up in political nightmares no one should face. Most large contributers are smart enough to donate to Political Action Committees (PACS) that are rather nebulous — Save the Earth, Save the Environment, Save the Puppies, etc — then let them deal with funneling money to political campaigns. In fact, many PACs are nothing but intermediaries and shell groups designed to make political contributions to candidates with controversial stances non-offensive. Contributions like this can ensure candidates get their payoffs, and contributors get their patronage. Why Target strayed from this puzzles me.

Target injected its brand into a heated political topic, and shouldn’t have. Target had a lot of opportunities to backstep and pull out and they didn’t – in fact, they made things much worse. The subject matter of the debate is irrelevant — this could have been healthcare, sick puppies, immigration, or really anything — a mass-market brand should always come across as politically neutral.

Twitter is worth a lot, Twitter advertising is not, Bad journalism is worthless

I set out to write a quick correction on a bad article that was discussed on the NY-Tech mailing list earlier this week, but this ends up being half about why Technology journalists and bloggers should just stop – as they rarely know what they’re talking about.

The article “How Much Are Twitter’s Tweets Really Worth?” on BusinessWeek.com has been gaining a bit of buzz across the industry this week. It’s a pretty good summation about how advertising works on Twitter – not because it’s a concise overview, but because it’s about as mindless and poorly conceived an article as the concepts that it speaks about. The writer, Spencer E. Ante, is an associate editor for Business Week. He has an impressive resume and articles behind him, so perhaps this was a postmodern experiment, or maybe he was just hungover from New Years eve. Whatever the explanation is, I’d love to hear it – as its the worst written article I’ve read in ages. The article is no longer online, so I’ll have to use quotes from a cached version in my criticism below. Let’s all take a moment and thank the “Fair Use” clause of US Copyright Law.

The article’s disappearance was not because of a paywall issue, but because it was – indeed – a steaming pile of shit. Businessweek now states:
> This story contained a factual error that rendered its premise incorrect. The story is no longer available. We regret the error.

I’m keeping this up, not to “rub it in”, but to note that the “factual errors” and “incorrect premise” are something that are pandemic to technology journalism. Writers at BusinessWeek, TechCrunch, Mashable, etc rarely know what they’re talking about – and giving them a podium to stand on is just… dangerous.

# Bad journalism is worthless , Twitter is worth a lot

The first half of Ante’s story is a schizophrenic overview of the recent search deals Twitter signed with Google and Microsoft. Ante starts:
> Google and Microsoft are paying Twitter $25 million to crawl the short posts, or tweets, that users send out on the micro-blogging service. It sounds like big money.

Sounds like big money? That **is** big money – Twitter is making $25 Million dollars to give two search engines a ToS license and access to index their data. In a world where Search Engine Optimization is a skillset or service, Twitter is getting paid by the major engines so they can optimize themselves. This is pretty much unheard of.

For whatever reason though, Ante then goes on to comment:
> But do the math and the payments look less impressive. Last year, Twitter’s 50 million users posted 8 billion tweets, according to research firm Synopsos, which means Google and Microsoft are paying roughly 3¢ for every 1,000 tweets. That’s a pittance in the world of online advertising.

This is where Ante shows that he must be drunk, hungover, or a complete idiot: This deal has absolutely nothing to do with online advertising. Google and Microsoft aren’t paying to advertise on Twitter, they’re paying to be able to show tweets in their own search engines. In fact, given how the integration of this deal works – where Tweets appear in the search engine results with a link back to Twitter – it should be Twitter who is paying the search engines. This is a syndication deal, not an advertising one. And this is to syndicate user-generated-content, not editorial! Twitter now has a giant ad, at the top of most search engine pages as syndicated content , and they got **paid** for it! Getting paid to advertise your brand, instead of paying for it, isn’t a pittance – it’s brilliant, revolutionary, and (dare I say) mavericky.

One of my companies is a media site. We’re not a “top media site” yet, but we’re hoping to grow there. Handling technology and operations, I deal with advertising networks from the publisher side a lot. Another one of my companies is advertising oriented, with a focused on optimizing online media buying and selling. Suffice to say, I know the industry well – which is why I find Ante’s next bit of information troubling:
> Top media sites often get $10 or $20 per thousand page views; even remnant inventory, leftover Web pages that get sold through ad networks, goes for 50¢ to $1 per thousand.

Here’s a quick primer. If you’re a media site with a decent enough brand or demographic, regardless of being at the “top” , you’re getting a fairly decent CPM. I don’t think Ante’s numbers are “right” for “top media sites” – in reality, top media destinations are a bit higher per inventory slot. Additionally, most web pages have multiple slots which together create a “Page CPM” that is the combination of the two. While each slot might get $10-20 , an average of 2 slots on a page would net $20-40. If you look at ad networks that publish their rates (like the premier blog network FederatedMedia.net) , or speak to a friend in the industry, you’ll get instant confirmation on this.

In terms of the remnant inventory, I think these numbers are even more off. Remnant inventory for random, run-of-the-mill websites and social networks will absolutely run in the 10¢ to $1 range. “Top” media sites are of a different caliber, and will monetize their remnant inventory at a higher range, usually in the $2-8 range, or utilize a behavioral tracking system that will net CPMs in that similar $2-8 range.

My main issue with this passage has nothing to do with numbers. What I find even more inappropriate, and wholly irresponsible, is that Twitter is not a “Top Media Site”. Twitter is undoubtedly a “Top Site”, however it is a social network or service. Twitter is not about providing media or content, it is about transactional activity and user-generated content. This is a big different in terms of online advertising. For a variety of reasons ( which mostly tie in to consumer attention span and use cases ) Social Networks have a significantly lower CPM – with most monetizing at a sub $2CPM rate, and a few occasionally breaking into a $2-8 range.

Ante’s comparisons just aren’t relevant in the slightest bit. Across the entirety of his article. But hey, there’s a quote to support this:
> The deals put “almost no value” on Twitter’s data, says Donnovan Andrews, vice-president of strategic development for the digital marketing agency Tribal Fusion.

Really? Really? A $25 Million Dollar deal to syndicate user-generated-content, puts “almost no value” on that data ? Either this quote must have been taken out-of-context, Donnovan Andrews has no idea what he’s talking about, or I just haven’t been given keys to the kool-aid fountain yet. Since Donnovan and I have a lot of friends in common (we’ve never met), and journalists tend to do this sort of thing… I’m going to guess that the quote is out of context.

# Twitter advertising is not (worth a lot)

The second half of Ante’s article is a bit more interesting, and shows the idiocy of Twitter advertisers:
> A few entrepreneurs are showing ways to advertise via Twitter. Sean Rad, chief executive of Beverly Hills-based ad network Ad.ly, has signed up 20,000 Twitter users who get paid for placing ads in their tweets. To determine the size of the payments, the startup has developed algorithms that measure a person’s influence. Reality TV star Kim Kardashian, with almost 3 million followers, gets $10,000 per tweet, while business blogger Guy Kawasaki fetches $900 per tweet to his 200,000 fans.

Using Twitter for influence marketing like “Paid Tweets” is a great idea – however these current incarnations are heavily favoring the advertising network, not the advertiser.

There is absolutely no way, whatsoever, to measure “reach” on Twitter – the technology, the service, and the usage patterns render this completely impossible. The number of Followers/Fans is a figure that merely represents “potential reach”; trying to discern the effective reach of each tweet is just a crapshoot.

When an advertiser purchases a CPM for an ad, they purchase 1000 impressions of the ad in a user’s browser. Software calculates the delivery of each ad to a browser, and those programs are routinely audited by respected accounting firms to ensure stability. Most advertisers, and all premium rate (as above) advertisers have strict requirements as to how many ads can be on a page (standard: max 2-3) and the position (require ads to be “above the fold”). 1000 deliveries roughly equates to 1000 impressions.

When an advertiser purchases a CPM on an email, they purchase 1000 deliveries of the email, featuring their ad, to users’ inboxes. When emails bounce or are undeliverable, they don’t count against this number – only valid addresses do. The 1000 deliveries are , usually, successful email handoffs. A term called the “Open Rate” refers to the percentage of those 1000 emails that are actually opened by the user, and load the pixel tracking software (this method usually works, it is not absolute but good enough). Typical Open Rates vary by industry, but tend to hover around a global 25%; with content-based emails around 35% , and marketing messages at 15%. With these figures in mind, 1000 email deliveries roughly equates to 250 impressions.

When an advertiser purchases a CPM on a Twitter, they merely purchase a branded endorsement (which is very valuable in its own right) that has a potential reach of X-Followers. This number of followers does not equate to the number of people who will see the tweet “above the fold”, nor does it equate to the number of people who will see the tweet on their page at all. Twitter has absolutely no offerings ( at the current time ) to count the number of people exposed to a tweet on their website – either at all, or in accordance with an optimal advertising situation. Twitter has itself stated that 80% of their traffic comes from their API – which makes those capabilities technically impossible for that traffic.

Gauging the number of Tweets sent out over the API won’t work either — Twitter applications built on the API tend to have “filtering” capabilities, designed to help users make sense of potentially hundreds of Tweets that come in every hour. When these client-side lists or filters are used, sponsored tweets may be delivered to the application- but they are never rendered on screen

Looking at common use-patterns of Twitter users, if someone is following a handful of active users, all Tweets that are at least an hour old will fall below the fold… and tweets that are older than two hours will fall onto additional pages. This means that twitter users would effectively need to be “constantly plugged in” to ensure a decent percentage of impressions on the sponsored tweets.

A lot of research has gone into understanding usage patterns in Twitter, as people try to derive what “real” users are: a significant number of Twitter accounts are believed to be “inactive” or “trials” – users who are following or followed-by less than 5-10 users; the projected numbers for “spam” accounts fluctuates daily. Even in the most conservative figures, these numbers are well into the double digits.

Social Marketing company Hubspot did a “State of the Twittersphere, June 2009” report. Some of their key findings make these “pay per tweet” concepts based on the number of followers even more questionable. Most notably, Hubspot determined that a “real” Twitter user tweets about once per day (the actual number is .97). Several different Twitter audits have pegged the average number of accounts followed by ‘seemingly real’ accounts ( based on number of followers, followings, and engagements with the platform, etc ) to be around 50 – so an average user should expect about 50 subscribed Tweets daily as well. The Twitter.com site shows 5 tweets “above the fold” ( which represents 20% of their traffic, and a quick poll twitter clients shows an average of 7 ). Assuming Tweets are spread out evenly during the day, an average user would need to visit Twitter about 9 times a day in order to ensure seeing sponsored Tweets. In the online publishing and social media world, expecting 9 visits per day, every day, by users is… ridiculously optimistic. Realistically, users likely experience a backlog of older, unseen, tweets on login – and sponsored tweets get lost in the mix.

As I stated before, the “celebrity advocacy” concept of a sponsored Tweet is very desirable concept for advertisers — and one that would decidedly command a higher rate than other forms of advertising. However, the concept of “Actual Reach” on Twitter is nebulous at best. A better pricing metric for Twitter-based advertising would be CPC (cost per click ) or CPA ( cost per action ) , where tweeters would be paid based on how many end-users clicked a link or fully completed a conversion process.

Dear Hulu, I told you so.

Dear Hulu,

I told you so.

A few weeks ago you blocked Boxee.

I said in my article [Hulu’s dumbest move: blocking Boxee](http://www.destructuring.net/archives/2009/02/19/hulus-dumbest-move-blocking.html)

> See, internet people are smart and savvy. It won’t be long until someone makes a plugin / patch / version of Boxee that identifies itself as Safari or Internet Explorer or something else — re-enabling the ability for users everywhere to revel in streaming video.

Guess what. They did. And it wasn’t even hard.

Boxee now shows Hulu content through Hulu’s own RSS feeds.

So take this warning…

If you’re lucky, and they’re still identifying themselves as Boxee devices — don’t block them. Embrace them.

Don’t follow the advice of your content producers — educate them. Help them understand new media.

Tell them:

> Someone is sitting back on a couch. there are probably multiple people watching. this is probably on a big screen. we can charge 5x the CPM for this display.

And have a business that works not only for you, but your consumers and corporate partners alike.

You’ve been given a second chance — don’t miss it.

Hulu's dumbest move: blocking boxee

Starting this week, Hulu will block the boxee client from its streams.

The heads of both Hulu and Boxee addressed it on their corporate blogs, calling it unfortunate
[Boxee Posting](http://blog.boxee.tv/2009/02/18/the-hulu-situation/)
[Hulu Posting](http://blog.hulu.com/2009/2/18/doing-hard-things)

The summary is very simple. Hulu’s content providers got mad to learn that people were watching Hulu on TV sets, not on computers. TV ads & Neilsen metrics provide for more income than online view ( online viewing was designed as a way to make extra cash, not make big $$ and cover production costs ) — and the content producers don’t want to steal people away from network viewing. They want to get people to watch ads on their couches in groups, on the big screen, where revenue is better and ROI/efficacy is higher.

The situation is obviously unfortunate to boxee & other set-top-device/media-center users… but also a huge setback for Hulu.

Let’s be clear about this – Hulu didn’t want to do this. They make money every time someone watches a video on their site – whether its Boxee or a PC. They don’t care how people watch the content they distribute. It’s the content providers that forced this action.

But in caving in to their providers, Hulu became responsible for the largest mistake they will have made.

See, internet people are smart and savvy. It won’t be long until someone makes a plugin / patch / version of Boxee that identifies itself as Safari or Internet Explorer or something else — re-enabling the ability for users everywhere to revel in streaming video.

And once people do that, those media devices are identifying themselves as not-boxee. Those devices are saying “Oh, hey there. look at us, see, we’re NOT connected to a TV, we’re just a computer”.

And those devices aren’t saying “Yes! we’re a boxee device! Someone is sitting back on a couch. there are probably multiple people watching. this is probably on a big screen. you can charge 5x the CPM for this display.”

And that is what Hulu – and the brain-dead shortsighted content producers – lost. Boxee and other set-top devices are how people will consume media in the future. It’s happening already. The rise of their popularity combined with the costs of cable in a flailing economy have many people dropping subscription services for broadcast networks and online viewing.

So in short, Hulu shot itself in the foot.

Boxxee users will get hulu content again, surreptitiously, but Hulu will only be making standard CPM rates for it — and losing out on a chance to charge for premium CPMs.

By the time Hulu can make the content providers wake up, far too many projects will be made to liberate video onto set-top devices — and they’ll start spending all of their money on bribing projects to identify themselves as set-top devices , or lawyers to threaten and sue developers. ( and that is successfully or not, as they’re spending money and not winning anything)

So congratulations Big Media, you’re an idiot. Again. Next time technology & culture shifts, try embracing it and designing new revenue streams on it — not try to quash it and live in the past.

Your Social Media Campaign is… Stupid.

Dare I say it? You betcha — your Social Media Campaign is… Stupid.

Two years ago Brands and Advertisers weren’t just cautious of social media, they were apprehensive and distrustful.

In as quick of a 180° change as Social Networks opened last summer, marketing interests have rushed to embrace social media… albeit with overwhelmingly pointless campaigns.

Everyone feels they need to have a Facebook App, a MySpace page, a Twitter campaign… the list goes on…

The marketing budgets spent on these endeavors are no laughing matter, and neither are the talents hired — with some of the best and brightest production shops, digital agencies, and creatives backing the efforts.

So what is going wrong?

Why are Facebook apps turning into ( as Advertising Age proclaims ) brand graveyards ? Why are Twitter campaigns failing , when there are so many success stories out there? Why are you all alone, because will no one be your friend on MySpace?

The problem is simple — bad strategy.

In a rush to homestead on Social Media properties, everyone has gone out and hired “Social Media Consultants” — ‘experts’ who overwhelmingly have little to no background in advertising or digital media , they just ‘get’ social media and are avid networkers. These are people who know little about ROI or Branding, instead measuring their success by the size of their contracts.

My friend Phil Gillman has been talking recently about how Advertising has failed online because marketers have been trying to keep too unified a messaging across media – and not tailoring online activity to the interactive marketplace. He’s right – a lot of issue is that television campaigns won’t work online.

But I say this goes a step further — not every online medium is the same. Facebook and MySpace have vastly different cultures — as do all the niche social networks. You wouldn’t run the same mix on NBC, BET and Univision — so why run the same social media campaigns across networks?

Some online projects can be ‘insanely viral’ — others are not. My friends The Barbarian Group are often lauded with their success with the Subservient Chicken campaign for Burger King — and they should be, it reached across demographics with equal appeal. But where is the appeal to Facebook or MySpace users for displaying the latest news from The Wall Street journal on their page? That’s not social media strategy, that’s social media stupidity.

When my company FindMeOn was working with non-profit and political groups to streamline our social network mapping technology, we ran into the same conversation during every meeting — clients wanted to run the same online campaign on 15 different networks. We always gave the same answer — and every time I consult I still give this same stock answer:

– I understand your position, it’s a bad one.
– I’d be glad to take your money and implement that – or you can just give me money for nothing in return, because you’re not going to get any ROI off of this
– Every social network and medium is different — you need to leverage your brand against them

The strategies I always recommend is nothing more than common sense:

– Discover your core audience on each network, and communicate with them. Facebook and MySpace users are not the same, and will not react to the same messaging.
– The key is in communication — you need a two-way brand relationship.
– By building up users across networks, you can leverage their homesteads in each network and reach more people.

Users want to feel like they’re interacting with your brand. Syndicating content or duplicating campaigns across social networks by merely find/replacing logos and names does nothing but cheapen their experience.

Marketers need to be critical of themselves and their campaigns – no one seems to ask “If I’m a common user, why would I download/use/install this?” We don’t live in a field of dreams — ‘If we build it , they will come’ is nothing more than foolish optimism.

Which brings me to my case in point – Twitter. I haven’t read an issue of “Advertising Age” in months that doesn’t have at least 3 articles on the now-ubiquitous service. If someone isn’t already using Twitter for brand reinforcement and advertising, they’re openly talking about their plans to. There’s even a few pay-to-post brand advertising networks coming out on it.

I like using Twitter as an example, because it’s the perfect illustration of who “gets it”, and who doesn’t in social media — it also best-illustrates the key points in Social Media marketing.

Many people gauge the effectiveness of a Twitter account based on the number of ‘followers’ — assuming someone with 50-500 followers is not as effective as someone with 500-5,000. This is a dangerously wrong assumption — and one built on fundamental misunderstandings of both Social Media and basic marketing skills. The success of your brand in Social Media depends on one thing and one thing alone — engagement.

Twitter is not a syndication platform — it is not a newsletter, a RSS feed, or a subscription service. It’s a platform for engagement.

While the most popular Twitter brands have average 20,000 followers ( i.e.: Zappos CEO Tony Hsieh and Gary Vaynerchuck of WineLibrary ), their ROI has never been exhibited by their quantity, but instead their quality. The success of these Social Media campaigns lie in their use of bi-directional customer engagement — with the brands not only broadcasting information, but interacting with consumers on a personal level. To reinforce this point, I often like to remind people “It’s SOCIAL, stupid.”.

FindMeOn always advices non-profits and organizations to not create personal/closed whitelabel networks, but build open social networks that leverage their fans’ existing accounts.

One of the 2008 Presidential campaigns *really* wanted us to build them a closed network. Our response? “That’s a bad idea. Why would you want to have a bunch of your fans feeding off each other? They need to be talking out in the open – you need to use them as your advocates.”

Instead of bringing people together behind closed doors, your online property should be a gathering place , a common hub or ‘linkage’ for your followers across websites and networks. For example: if you leverage Flickr or MySpace for photo sharing, instead of building your own photo gallery, their photographs appear across sites. You gain brand positioning within their activity streams and, consequently, gain a chance to convert more followers. This is the social media equivalent of “Collateral damage” – we call it “Collateral Branding”.

Twitter exemplifies Collateral Branding — and Social Media Marketing best-practices — because of how it’s engagement model works.

Let’s take the example of someone with 5000 followers: if all they do is broadcast a bit of information every few hours, all they really have is 5000 passive listeners. That’s nothing to really boast about. Really, what good does it do to your brand to blanket a few thousand people with random news blasts? This is the social equivalent of opt-in spam, and can leave consumers disaffected or damaged.

Now let’s look at a Twitter brand with 500 followers, and characterize them as someone who actively engages with their fans. That means using the network and tailored communication to open a dialogue with users – not just broadcasting to them, but fostering a conversation. This doesn’t just build a stronger, more positive connection with the brand, but has the potential to engage more users in new, unique, and positive ways. While their messaging may only be directed at 500 people, every user-generated message addressed @them shows up on the timelines of those originators’ followers. If the brand receives 50 messages from unique followers each day, and those users each average 100 followers themselves, their realized Social Marketing Imprint is the sum of their outbound messaging ( 500 unique users ) + their inbound messaging ( 50 users * 100 followers = 5000 potentially unique users ).

So in this example, our brand with 500 followers is not only fostering a better brand connection and reinforcement with its consumer base, but is actually creating a slightly larger marketing imprint. Who woulda’ guessed?

Social Media is still a young concept for marketing, but it can be extremely powerful when done right. Don’t just build apps and broadcast messages, hoping people will install them. Actually think about what you’re building, why you’re building it, and what the ROI will be. Having a Facebook app or Twitter page is not ROI – using them to create and foster brand loyalty and sales is. If you’re a brand or advertiser, you shouldn’t question Social Media — online advertising and social media has a proven track record; you simply need to question your strategy and show a little common sense.