Content Matters

GigaOm Acquires PaidContent Creating Premier Digital Media Brand

Tech blog GigaOm has acquired Content Next Media, parent of PaidContent and related blogs.

Content Next, first acquired by Guardian Media in 2008, has been on the shopping block in recent months, as GMG looks to focus its operations. 

Of all the rumored buyers (including AOL, Vox Media, WebMediaBrands, Dow Jones, SAY Media) this is likely the best possible result, both for readers and the Content Next team.

From the outside, it looks as though the two companies have very similar cultures. Both founded around the same time as independent blogs (by Om Malik and Rafat Ali), GigaOm has been able to remain solo, taking venture funding along the way.

The combined GigaOm - Content Next will be an impressive media company:

• Great editorial - from editors and writers like Staci Kramer, Ernie Sander, Mathew Ingram, Nicole Solis, Om Malik, Erica Ogg and others - will yield great coverage of the digital media and technology space.
• Both companies have great events - including Structure, Structure: Data, Mobilize, PaidContent, PaidContent Entertainment, and more.
• GigaOm has experimented with paid research, led by VP research Michael Wolf, which has the potential to grow further.

With a modest cost structure, the combined company should retain the flexibility and nimbleness to test and adapt in an ever-changing digital media environment. 

Congratulations to both companies. I look forward to seeing what comes next.

Going Native: Deciding between HTML5 and Native Apps

Almost every publisher I speak with these days is in the midst of developing, implementing or revising their mobile and tablet strategy. With technology changes coming faster than most can keep up, the mobile strategy you developed six months ago (post iPad 2 but pre-Kindle Fire) is most likely out of date.

And with the news that there were more iPads than desktop computers sold in the fourth quarter of 2011, it’s no surprise that mobile strategy is on the top of everyone’s mind.

Yet when speaking to publishers, I find lots of confusion. And the one topic that seems to cause the most confusion is the decision on whether to build native apps. Despite the near-religious debates that often arise on the topic, the decision on whether to go native app or not is based on a handful of straightforward questions you can ask yourself.

So, here’s a starting point for your decision tree on whether to go native.

How many platforms do you plan to support? Are all of your customers (current and intended) on a single platform? How likely is that to change in 6-12 months? For which platforms do you think that you need to provide full support and for which might a simple mobile browser version work? For most publishers, the iPad has emerged as the key tablet platform, with no clear second choice. It’s possible that the Kindle Fire may become a clear number two, but that’s not happened yet. And while smartphones are ubiquitous, the question will be whether your customers view phones as a real way to access your content.

How important is it for you to have your app included in the App Store? If you expect users to discover your app via the App Store, then you’ll need to create a native app. Or, at least put a native app wrapper around your HTML5 app (more on this later). Of course some publishers are choosing to bypass the app store, noting that buried among all the games and social tools, it’s unlikely a user will find your app unless they are specifically searching for it. That said, it’s important to keep in mind that providing an app in the App Store also gives you a way to get screen real estate. In theory, a user can save a browser page to their Home Screen, but I’d wager that fewer than one in ten have figured out how to do this.

Will your app generate revenue? There are many reasons to launch a mobile presence. The obvious one is for revenue generation – either via subscription, in-app sales or advertising/sponsorship. But there are many other reasons to launch. Perhaps it’s a lightly-used mobile companion to a desktop app, or a promotional app for brand awareness. While the latter two may be very important, it will be easier to justify the development and ongoing maintenance for a native app when you can tie it back to revenues.

Do you need both an online and offline experience? This can be a hugely important factor for certain types of apps. For example, news apps like The Daily or the New York Times need to support an offline experience. Readers often download the latest issue before reading it on a subway or airplane. Of course, to keep downloads manageable, the offline versions usually exclude video (which is streamed when online) and other large media formats, but the bulk of the experience can occur offline. But it’s not just news apps – the London Tube app provides maps of the London Tube and is available offline. Surprisingly, some of its competitors only work when connected – hardly useful when you’re on the platform and hear a message that the Jubilee Line has been closed for service.

Do you need to access any special phone features? HTML5 is powerful but there are some things it cannot do. On the iPhone you cannot access the camera, the microphone or the light or gyro sensor with HTML5. That’s not a big constraint for most app developers, but it can be for some. Crowd Fusion client Tecca wanted to embed a bar code scanner in its app. That required a native app.

 HTML5 is improving rapidly… but it’s still not the equivalent of an app experience. This is important to understand. If you’re reading this blog post, I assume that you own an iPad. If not, I really recommend that you get one immediately. It’s almost impossible to understand how the app world is changing things if you’re not spending a good portion of your day on the iPad.

As I mentioned above, HTML5 web apps are getting better. But they still seem clunky when compared to comparable apps. Let’s take a look at a few to start:

Electionism is a brand new tablet-only HTML5 based news publication from the Economist. In fact, Economist parent, the FT recently acquired Pressly, the development team that built the Electionism site. I’d like to give kudos to the Pressly team. Electionism is one of the best HTML5 web apps that I’ve seen. Yet it still doesn’t feel quite like a native app.

Music discovery engine We Are Hunted is another compelling HTML5 web app. It works very smoothly for browsing artists and listening to music, but it’s a fairly limited app. If you want to buy music, the app simply launches out to iTunes for the transaction, then you have to manually return to the browser.

The good news is that HTML5 is improving rapidly. It’s sort of like the early days of AJAX development on the web. AJAX was really cool – you could potentially do things on a website that could previously only be done in a standalone application. But the early AJAX apps were clunky and felt like they were pushing the limits of browsers. That’s sort of where HTML5 stands today. But it’s already a huge improvement over the world of HTML and Flash and will continue to improve dramatically in the coming months.

It’s not an all-or-nothing choice. There are numerous hybrid apps on the market, using HTML5 for all that it can do, but wrapped in a native app wrapper either to provide special functionality or to get into the App Store (though simply putting a wrapper around a pure HTML5 app may not gain approval in the App Store). For Tecca, whom I mention above, while the bulk of the app is serving up content via HTML5, they needed an app wrapper and scanner as part of their offering, so wrapped it all into a native app.

So how do you make your decision? Think about your responses to the questions above. Hopefully, by now, you understand that the native app - HTML5 decision is not based on a set of preconceptions, but rather by the specific needs of your business. And, of course, your strategy can vary by device platform. There's nothing wrong with having an iOS app for the iPad and a compelling HTML5 web app for other mobile platforms, if you believe your most active users will be using the iPad. It's harder to remove an app than to add one - so if you're unsure about a platform, use an HTML5 web app to support that platform until you learn enough to make the decision to invest. And no matter what decision you make today, you'll need to reassess that decision every 3-6 months going forward. Welcome to the exciting world of mobile apps.

Innovate, Don’t Legislate

It’s an oft-repeated tale. An industry gets disrupted by upstarts with new technologies and business models. The incumbents act quickly – turning to their legal team for advice. Litigate and legislate and the typical responses that come back.

The approach to SOPA and PIPA is hardly new. We’ve seen this play out many times in many industries, most notably in the music recording industry. But in each case, the approach ultimately fails. Sure, it may slow the erosion of your business, but in the end a broken business model is still broken. And all of those efforts to solve the problem through legislative and legal efforts simply distract companies from focusing on what they really need to do, and often alienate your customers.

SOPA (and PIPA) are not the only current examples of this. The Research Works Act (H.R. 3699) recently introduced by Representative Carolyn Maloney (D-NY), aims to reverse the current public access policy under which any taxpayer-funded research is provided free of charge via the NIH website after 12 months.

The bill is being pushed by scientific journal publishers, who currently get a 12-month exclusive to sell the research in recognition of their efforts to coordinate the process of peer review.

My goal here is not to debate the specific merits of the Research Works Act nor those of PIPA and SOPA. Instead, I’d like to suggest a better way forward for publishers than relying on legislation and litigation. But before I do, I think it’s important to note that public policy or legal solutions are certainly appropriate in some instances.

My first job out of school was with a startup called Legi-Tech, a McClatchy-backed online service which tracked legislation. (This was, of course, in the pre-Internet days.) Legi-Tech soon faced a competitor – it turned out that the State of New York decided that providing access to legislative information on a subscription basis was an attractive opportunity for them as well. Fair enough – we believed we could certainly put out a better product than the State could. But the State, or its Legislative Bill Drafting Commission to be specific, went further. They made the full text of new bills available on their service 2-3 days before the printed copies were made available to the public – or to LegiTech, to provide through our service. We believed that violated the freedom-of-information act – they were giving preferred access to public information to those who paid them. So, we hired lawyers and filed suit. Eventually, we won a settlement. Eventually, while we won that battle, we lost the war and Legi-Tech ultimately was shuttered. But in this instance, litigation seemed proper. We were not looking to protect our own rights, but rather to fight unfair business practices of the state-owned entity.

In most cases, litigation and legislation are the wrong approach.

Rather than investing in lawyers, what if these companies invested their time and efforts into trying to identify the best possible experience for their users?

For example, with movies, it’s pretty straightforward. The “going to the movies” experience is very different than the “I’m tired – let’s stay in and watch a movie” experience. Yet, as Fred Wilson notes in his Scarcity is a Shitty Business Model post, the movie industry as a whole would make significantly more money if they would make new releases available in theaters, on DVD and streaming, globally on the same day. But, with the exception of some small indie movies who are experimenting, the industry refuses to adapt and loses out – to piracy, to video games and to other forms of entertainment.

For b2b content, it’s largely the same. Journal publishers seem concerned they will lose out on the one-off use. To me, this seems misguided. B2B publishers should look to get 80-90% of their revenue from their core markets. For journal publishers, this would include life sciences companies, universities and government agencies. Their focus should be on delivering the best solution to meet the workflow of those users – on desktops, tablets and other platforms. That's where they can maximize their revenue opportunities.

Yes, there will be light users who have an occasional need for their content. Aggregators can pick up some of that business – by making their content easy to find and by providing top-notch metadata, summaries and analyses, which will make those users’ jobs easier.  But the answer is not to make that content inaccessible via the public web.

A good example of this is the market for SEC filings. In the pre-Internet days, there were companies that made their living by Xeroxing copies of SEC filings and overnighting them to users. When the SEC decided to put their filings online via EDGAR, it could have been the death of these providers. Yet today there are a half-dozen or more filings providers (Thomson Reuters Disclosure, EDGAR Online,  ICC, Perfect Information, Morningstar) all finding their own niche in this competitive space. While the one-off user is typically happy with the free service from the SEC, the business user is happy to pay for better search and better access, embedded within their workflow.

And, of course, the digital music business provided great lessons for other industries. The music industry started out with an L&L (legislation and litigation) approach, but it failed pretty miserably. Users wanted a way to get all of their music onto the devices they used in their daily life, and the threat of lawsuits were not a major barrier. What changed the industry was iTunes. Once users had an easy and convenient way to buy music for their iPod most chose that path, abandoning the free downloads. Today, with iTunes, Amazon, Google Music, Rhapsody, Spotify, HypeMachine and others, there’s no reason for most to pirate music.

The organization with the biggest push behind SOPA/PIPA is, of course, the Motion Picture Association of America. This is the same organization that sued to stop the VCR in the 70s, saying it would kill the motion picture industry. Of course, DVDs (the successors to VHS) now account for a third of their revenue. This should come as no surprise. The CEO of the MPAA is former Senator Chris Dodd, who succeeded former Kennedy aide Jack Valenti. The day that the MPAA hires a product person to run them will be the day that industry changes.

Of course, there will always be the handful of users who will choose piracy. For the most part, these are users for whom their time is less valuable than money. And they’re not likely to buy your product regardless. It’s a lot like the market for counterfeit luxury goods. When my niece was around 10 years old, she wanted a Kate Spade handbag for Christmas. Luckily, the tabletop vendor near my office had them for $25. Now, lobbyists will claim that my purchase cost the real Kate Spade $300; but there’s zero chance I’d have bought her a real one, even if no counterfeits were available. As Tim O’Reilly eloquently notes:

The people who are pirating are most likely the people who would never give you a nickel to begin with. Piracy serves people on the fringes who are not being served adequately by legitimate markets. Frankly, if people in Romania can download my books and enjoy them, more power to them. They weren’t going to pay me anyway.

The pro-SOPA lobby puts forth estimates that piracy of digital media costs the US $200-250 Billion per year and an amazing 750,000 US jobs. Yet, all the calculations of losses are bogus, as noted above. The only real economic losses come around the fringes – where you have users willing to pay for a service but who choose to use an otherwise free or inexpensive version. And that $250 Billion figure? It’s made up. According to the Cato Institute’s Julian Sanchez:

The $200–250 billion number had originated in a 1991 sidebar in Forbes, but it was not a measurement of the cost of “piracy” to the U.S. economy. It was an unsourced estimate of the total size of the global market in counterfeit goods. Beyond the obvious fact that these numbers are decades old, counterfeiting of physical goods imported in bulk and sold by domestic retail distributors is, rather obviously, a totally different phenomenon with different policy implications from the problem of illicit individual consumer downloads of movies, music, and software. The 750,000 jobs number had originated in a 1986 speech (yes, 1986) by the secretary of commerce estimating that counterfeiting could cost the United States “anywhere from 130,000 to 750,000″ jobs. Nobody in the Commerce Department was able to identify where those figures had come from.

Now, let’s look at what most media companies have failed to do, while they’ve been fighting the legislation & litigation battles:

• They’ve failed to identify ways to leverage the changes in technology and media consumption to create new products for their core customers.
• They’ve failed (for the most part) to introduce compelling new mobile or tablet-based applications.
• They’ve largely failed to experiment with new business models, instead focusing on keeping the status quo.
• They’ve largely failed to embrace the technologies, tools and approaches (cloud, agile development) which the upstarts have used to displace them.

All in all, they’ve failed to create significant value-add that will give their customers no reason to ever consider the lesser, free alternatives and to reinforce the overall value of their brand.

Now, that’s not to condemn all media companies. There have certainly been sparks of innovation across all segments. But on the whole, publishers have been focusing a lot more energy on legislation and litigation than on innovation. And that’s a strategy that’s destined to fail.

Note: For those interested in more details on the Research Works Act, I’d suggest reading Michael Eisen’s blog post on the issue or this one from Scientific American.

Blackout SOPA

If you're like me, your twitter stream for the past few days has become a sea of avatars all with the #BlackoutSOPA banner at the bottom. At last count, nearly 5,000 users have updated their avatar with the message. 

To show your support, simply click the BlackoutSOPA link to update your avatar with a single click.

Of course, showing support for the BlackoutSOPA project is simply a gesture. Your Senators and Representatives, even those who are on Twitter, are unlikely to see you in their stream. That said, a number of major web companies (including some little companies like Google, PayPal, Yahoo, Wikipedia and Facebook) are considering a one-day web blackout in opposition to SOPA. That would go a long way in generating media attention to the issue.

However, elected officials respond most to their voters and donors. So, I hope that everyone who updates their avatar also takes a moment to call their elected representatives to let them know your position.

Here's a site that provides the contact details for your representatives and also provides a mini script for your call. 

SOPA and PIPA are poorly constructed bills. They do little to go after the true causes of piracy, and instead give large companies tools to decimate startups. Our politicians all talk about the need to support "job creators" but SOPA and PIPA are tools to stifle innovation and hurt early stage innovators. I'm particularly embarrassed to see that while NYC hopes to rival Silicon Valley for startups, both Senator Chuck Schumer and Senator Kristen Gillibrand have expressed support for PIPA.

I just got off the phone withe the office of my representative, Nita Lowey (NY18) and was thrilled to hear that she's now leaning against SOPA. When I last checked with the office a few weeks ago, she'd not yet taken a position. 

Mad Men 2011 aka digital ignorance redux

I’m looking forward to a new show that’s targeted to hit the small screen (in whatever form it may be) in the year 2041 - Mad Men 2011.

The premise sounds pretty cool – they flash back to the year 2011 and look at the ad agencies and media companies of the day and – full of anachronisms and the seemingly bizarre behavior of the day.

Like the current Mad Men series, it will have infidelity and corporate infighting, but what will make the show special will be those flashbacks to 2011. No, I’m not speaking of the retro fashions. And it’s not the fossil fuels that powered their cars then, but rather the fact that the leaders of the agencies of 2011 themselves seemed like dinosaurs.

In the pilot movie, they’ll open with a scene at a large media conference. CEOs of various media and agency companies will be discussing their use of social media. Here are a few of the gaglines you’ll hear:

Maurice Levy, Chairman of mega agency Publicis will be asked about  whether he uses Twitter, to which he’ll reply:

"I understand how to wash dishes. I don't do it regularly"

[queue laugh track]

Hachette’s Arnaud Norry will eagerly chime in:

"I think communicating with text only with a very limited way of expression is not my style"

The scene ends with several media leaders openly ogling the shapely rear-end of one of the agency associates while one slowly exhales cigarette smoke. Oh, wait, that was a commercial for a Herman Cain campaign ad from the same year.

If only these were punchlines from some future retro show. In fact, they were real quotes coming out of this week’s Reuters Global Media Summit. The fact that major media executives can still be so dismissive of social media is sad. More than anything, it shows a complete lack of understanding that the current display advertising model no longer works.

As Andy Weissman describes it:

“…display ads online are the wrong metaphor. They come from a construct where web services were viewed as "pages" - magazine pages. They were invented by applying an old model (magazines) onto a new medium (web services) and assuming that the user is a "reader" and will accept being interrupted. Over time, the web has proven both these paradigms to be untrue in a truly profound way.”

Would Levy hire a practice leader for Publicis who has never worked in advertising but has "watched plenty of commericals on television"?  More importantly, would a client allow Publicis to assign them an account planner who had never worked in the agency business nor ever used the client's products and services?

What media and agency executives still seem to miss is that social media is not just another publishing platform. Twitter is not about pushing out 140 character headlines. It's about engagement and you can't understand engagement by simply watching someone else do it.

 

 

 

 

 

The Verge Offers a Compelling Vision for Online News

To much anticipation, consumer tech blog The Verge launched yesteday. The Verge is the newest site in the newly named Vox Media stable, joining SB Nation, and is led by Joshua Topolsky and much of his editorial team from Engadget along with publisher Marty Moe.

Engadget, of course, was the leading gadget blog on the web (and, at one time was the top overall blog in terms of traffic). Josh and much of the Engadget team left as AOL closely integrated the blog into the Huffington Post organization.

SB Nation had already made a name for itself through its dual focus on great editorial content and a heavy emphasis on its technology platform. In fact, their mantra, under CEO Jim Bankoff, was Always Be Coding, not the typical fare you’d expect at a media company. And they are bringing that technology focus, along with an emphasis on local, social, real-time news to the new site as well.

I think the Verge is well-positioned for success in this market. Others have commented on their fresh-looking UI. I agree, but design can be copied by others (and other sites, like Newser, have created similarly compelling visual designs). I see two critical factors that position The Verge for success:

Posts built on top of Structured data. Blogs are just blogs – a bunch of articles you can browse or search for. But The Verge starts out with a structured database of products and layers its articles on top of that. This provides a number of benefits:

• Great product pages. Take a look at the page for the Samsung Galaxy S II Epic 4G Touch. It’s got specs, reviews, photos, a video and an easy comparison engine.
• Better navigation – The Verge offers faceted filtering, so you can find stories on digital camers from Canon, Nikon and Panasonic, costing under $200 and with a review score of 6 or higher. The filtering is a bit quirky right now, but I expect they’ll resolve those bugs quickly.
• Easy new product development. It would be incredibly easy for The Verge to launch spin-off products - like sponsored mobile apps ranking the best products by category, or to offer up APIs to shopping sites. For every top 10 list you can imagine, they could easily pop out an app or microsite.
• Better SEO for the publisher – blog posts have a short shelf life, but detailed product pages can live for a long time.

The other key feature that The Verge has incorporated from SB Nation is the concept of Story Streams. Similar to the experimental Google Living Stories, Story Streams are designed to allow the reader to follow a story over time. A new reader can read the full story, while someone who’s been following the story can dip in for a quick update. Writers can update posts anywhere within a story, and those updates can be pushed out to readers. Unlike most editorial articles where additional data shows up at the end of the story, with Story Streams, you’ll typically see the newest information at the top, with links to prior updates.

Looking at the Story Stream for the Amazon Kindle Fire, there are 12 updates, beginning with rumors of the new Kindle in late September, and ending with a gallery of images from last week.

The consumer technology space is a crowded one, and The Verge will not have an easy time leapfrogging the existing players. But they've got all the ingredients to make it happen.

And for online media companies looking for ways to drive revenues and create new products, they could do a lot worse than looking at The Verge's use of editorial on top of structured data as a model.

 

SIIA Seeks VP, Content Division

Longtime head of the SIIA content division Ed Keating has announced that he is returning to the industry, joining Fortis Business Media as Chief Content Officer. I wish Ed great success in his new role.

As a result, the SIIA (Software & Information Industry Association) is now actively recruiting a new VP for the content division.

I sit on the content division board, so have had the chance to work closely with Ed and the rest of the SIIA team. The VP role is an interesting position, working closely with member companies to develop programming to meet the needs of the industry. We have a strong board, supporting the association and it's a great opportunity to take a macro look at the content industry and help drive innovation.

A full job spec is provided on the SIIA website.

Interested parties should send resume and salary requirements to employ@siia.net.

 

From distribution to discovery: the disintermediation of book publishing

Book publishers have long feared that once Amazon (AMZN) completed its disintermediation of bookstores, publishers would be next in their sights. And according to this NY Times article, that day is rapidly approaching.

But this isn’t some nasty plot by Amazon to take over the publishing world (well, OK, maybe in part), but rather it’s the logical progression of a rapidly changing market.

In the traditional book publishing business, the role of publisher was largely focused on production, publicity and distribution. Publishers, leveraging their marketing budgets and relationships with bookstores and book reviewers, were able to take a book and get it into the hands of readers.

In the new world of publishing, the value chain has changed. Production and distribution are largely free and the key factor for success is driving discovery. Publishers with deep pockets can still drive some awareness through traditional advertising, but even that’s a lesser aspect of how to generate success.

Going forward, publishers need to show that they can drive awareness of their authors’ books on platforms like the Kindle, iBooks and Google, while leveraging social platforms like Facebook, Twitter and Goodreads. Publishers will have to embrace new models, like offering free eBooks to drive awareness.

While “big name” authors have always developed their own following, now every author is their own brand. Publishers who help authors develop their brand and drive discovery and awareness will succeed. The rest will find themselves quickly becoming irrelevant.

How the Kindle Fire Changes the Digital Media Landscape

I wasn’t planning to blog about the Kindle Fire. There’s tons of coverage already and the last thing we need is yet another blog post touting its features.

But there are a few things that seem to be confusing lots of people, so I’d like to focus on those.

First, while both Amazon (AMZN) and Apple (AAPL) want to “own” the delivery of media to consumers, their strategies are completely opposite of one another. Apple makes its money on hardware. Music, books and video are simply a means to sell more devices. Amazon, meanwhile, makes its money selling media. Devices are simply a means to sell more books, music and video content. So, when you see hundreds of tweets that Amazon is losing $50 on each Kindle Fire, that’s by design. It’s a razor and razor blade strategy designed to establish Amazon as the clear #2 in the tablet market so that they can sell more content.

The second issue is about whether the Kindle Fire will slow the sale of the iPad. While I’m sure that there are some who, considering an iPad, will instead choose the Fire, I don’t think that’s where their biggest impact will be. In fact, for Apple I think the bigger impact will be on the iPod Touch. When I mentioned the Fire to my 12-year old daughter, she thought it sounded cool, but said “it does less than my iPod”. In her mind, it was a Kindle that does video. I then mentioned that it also has a music player and can play games and her eyes lit up. She’d been saving up for an iPad, but I think she’s adjusted her sights to the (more attainable) Kindle Fire.

For households like mine (we have 2 iPads, 2 iPhones, 1 iPod Touch and 1 MacBook Air), the Fire becomes a great secondary device. It won’t replace my iPad, at least not the first generation without 3G. But at $199, it’s definitely something I’d want to have around the house as an extra screen.

Of course, the introduction of the Kindle Fire will probably have its biggest impact on the Barnes & Noble Nook, as well as other Android-based devices planned for release later this year. For hardware-only manufacturers, who can’t subsidize the device through media sales, the Kindle Fire with its $199 price will be a shot across the bow. While there may be a few temporary niches for Android tablets with 3G or similar, this is clearly shaping up as a duopoly and I think it will stay that way for a while.

It will be interesting to watch how Amazon’s pricing strategy for the Kindle and Kindle Fire evolves.  The entry point for the basic Kindle has dropped from $249 to its current $79 price and I think that it will soon approach zero. It would make sense for Amazon to use the Kindle as the lynchpin for a continuity program like the book clubs or Columbia House record club of the past. Get a Kindle for free with a commitment to buy 12 books. If I’ve got $100 worth of print books in my cart, it would make sense for Amazon to simply offer to give me the Kindle for free if I switch those to digital.

It’s clear that there are two key players in the digital content platform space – Apple and Amazon. And while there’s room for others, such as Netflix and Hulu, they will have to work within the Amazon and Apple ecosystems in order to thrive. And that’s the big change that the Kindle Fire brings.

Some Qwik Thoughts on Netflix

The meme of the morning is Netflix (NFLX) splitting their business into two - retaining the Netflix brand for the streaming service and rebranding their traditional DVD-by-mail service as Qwikster.

I'm a big fan of Netflix. They've been one of the great "disruptive forces" stories of the past ten years. They took a new model into a space with a dominant player and now totally own that market.

The other great thing they've done is aggressively look to disrupt their own DVD business with a streaming video business. Most disrupters eventually become disrupted themselves (think Microsoft). But the best companies are those not afraid to eat their own young, and Netflix has shown a willingness to do so. And disrupters tend to need to be there early - before their customer base seems "ready" for the disruption. Again, kudos to Netflix for this.

From an operational standpoint, it makes sense to split these two businesses.

The tradition DVD business was really about logistics. What made Netflix a success was that they could quickly process all those DVDs, so users typically receive a new DVD within 2-3 days of dropping an old one in the mail. It's why five years ago, Netflix hired former postmaster general Bill Henderson as COO.

The streaming business is about scale in a totally different way. Rather than scaling for logistics, Netflix streaming needs scale in system architecture. In this new business, it's competing with Apple, Amazon and Facebook, not Blockbuster and Wal-Mart.

So, it's little surprise that operationally, Netflix wants to run these two businesses separately. What is surprising, though, is how they seem willing to divide the customer experience across the two systems.

I use both the streaming and DVD service. I'd love to stream everything through my Roku or on the iPad, but half of the movies my family wants to see are not yet available in their streaming service, either because they're too new, or conversely, too old (e.g. Close Encounters of the Third Kind was on my daughter's wish list last week). A single queue makes the hybrid model manageable until such time that the streaming service is more complete.

Netflix should look to Amazon for their model. I mostly buy ebooks these days, either for my iPad or my daughter's Kindle, but occasionally there are books not yet available in Kindle format (continuing her Spielberg theme, my daughter wanted to read Jurassic Park, only available in print). On Amazon, I do one search - and can see all formats available. The same applies to music - where I see digital downloads and CDs.

If Netflix wants to run these as two separate operations, that's their issue. But the divide should be hidden from the customer. The hybrid model is their big advantage. Otherwise, they open the door for Redbox or Blockbuster to take back some of the DVD market, while Amazon, iTunes and Facebook vie for the streaming and download business.