Content Matters

On Customer Care, AT&T and the iPhone

Customer care should always be at the heart of any company; in this economy that goes double. That's why I'm continually amazed by the poor level of customer service provided by so many consumer product companies.

Near the top of that list is AT&T. If AT&T took a strategic view of things, they might view the iPhone as an amazing lead generation device. Through the iPhone AT&T is gaining millions of subscribers who would never otherwise switch to AT&T. However, they know that their window of exclusivity won't last forever. Whether Apple chooses an additional partner this summer or renews the exclusivity for a year or two longer, the deal has a finite life. So, the strategic view from AT&T should be to use this period to deliver excellent service and quality so that users will stick with the company even when other carriers can offer the iPhone.

Well, that would be the strategic view, but the reality is far from it.

Last week, in preparation for a trip to London, I tried to activate an international dialing plan on the phone. I'd used the plan previously, but since my overseas travel is modest, I turn the service on and off as needed, rather than incurring a monthly fee when I don't need it.

I won't bore you with the details here, but after spending 15 minutes online, then 45 minutes with their call center, then a 30-minute drive to an AT&T store, they were unable to activate my calling plan.

So, as I arrived in London, instead of using AT&T to make calls, whenever I've been connected to WiFi (particularly in my hotel room), I've used Skype on my iPhone. Rather than paying the discounted $0.99 per minute or non-discounted $1.29/minute rate, I'm paying about two cents per minute to Skype and AT&T gets nothing but my continued enmity.

AT&T CEO Randall Stephenson has been quoted saying that he believes that customers who sign up for the iPhone are becoming loyal AT&T users. Well, the next loyal AT&T wireless user I meet will be the first.

Please Contribute: New Yorkers Without Summer Homes

OK, I borrowed the title concept from a comic (might have been Robert Klein but can't recall) who joked about setting up a foundation for New York Jews who didn't have a beach house. But that's the thought that popped into my head this morning as I read about Unithrive.org in the New York Times.

If you didn't read the article, entitled "I’m Going to Harvard. Will You Sponsor Me?", it describes what seems like a compelling program of peer-to-peer lending to students in need.

I'm a huge fan of peer lending and microlending programs. I've been a consistent supporter of Donor's Choose and am also a fan of Kiva. These programs bring transparency to the donation process and have demonstrated hugely impactful results. And I'm sure that Unithrive may provide similar benefits. But reading the article, you can't help but wonder how out of touch some of these people are.

I'll start with Unithive cofounder Joshua Kushner, quoted in the article as stating "I have friends who would spend 10 hours a week when they are not in class working at a coffee shop or in the dorms,” said Mr. Kushner, 24, referring to time that he considered wasteful. Josh is currently working at Goldman, Sachs and will soon be entering Harvard Business School.

Now, Josh may feel that working in a coffee shop or in the dorms is a waste of time. And I'm sure there are others who might agree. But, I disagree. I spent five nights a week tending bar for most of my college years. And while you can argue that I may not have learned a lot serving beers and shots at O'Heaney's, it tought me how to manage my time and to be accountable for all aspects of my student life.

Nor do I feel much support for Ricky Kuperman, a Harvard sophomore also interviewed in the article.  Ricky, a dancer, said in an interview that he wanted the $2,000 no-interest loan to visit Okinawa, Japan, in 2010 to spend time in the birthplace of karate. “If I don’t get the money, I will have to work longer next summer or during the term,” he said.“It will allow me to stay in shape and make getting cast in films or in dance projects that much more possible.”

These may all be wonderful opportunities, but they come off more than a bit tone-deaf, particularly in the current environment. College isn't necessarily about leading a privileged life where you can focus all your efforts on academics and adventure. College is about preparing for adulthood. It's about learning to live with others. It's about learning to make concessions and to work hard for the things that you want. The college years are also a great time to learn about real life - perhaps working at that coffee shop, Josh's friends might have the chance to meet a single mother who uses that job to put food on the table for her family. Perhaps it provides a dose of reality that Josh is unlikely to get at HBS or at Goldman.

My daughter is still a few years away from being ready for college. And while I don't want her to have to work five nights per week, I do want her to work during college, so that she continues to develop the values which will guide her adult life.

I have friends who had to take time off in the middle of college to earn enough money so they could finish up a year or two later. And I'd be happy to participate in a peer-lending program to help students be able to afford their tuition or rent. But sending a young person on a trip to the birthplace of karate or backpacking across Europe? Sorry, I'll direct my funds to Kiva or DonorsChoose in that case.

(Josh Kushner photo sourced from Gawker)

To dominate smart phone market Apple should drop AT&T for Verizon

Dropping the entry price for the iPhone to $99 will, no doubt, put added pressure on Palm, RIM and others looking to enter the smart phone market. While total cost of ownership of the Pre may be lower, I think most users rarely consider that and by dropping the entry price, they will make the iPhone more attainable for many users.

According to GigaOM, users of the existing iPhone 3G phones (like me) won't see the new data speeds being touted for the new phones.

While the new 3G S will be compatible with High Speed Packet Access (HSPA) 7.2 technology, which offers theoretical peak download speeds of up to 7.2 Mbps, though actual speeds will vary as these capabilities become available. AT&T plans to begin deploying HSPA 7.2 later this year, with completion expected in 2011.

That news will hardly ingratiate iPhone users to AT&T, a love-hate relationship that's got very little love in it. Most iPhone users tolerate AT&T only because it's the sole carrier unless you want to hack your phone. Despite AT&T CEO Randall Stephenson's beliefs, I don't think there are any iPhone users who really like AT&T.

In fact, I think the one move that Apple could make to dramatically increase iPhone market share would be to kill the exclusivity provision with A&T and strike a deal with Verizon later this year. Today, the two carriers' networks are incompatible, so Apple would have to manufacture two versions of the phones. But that may be a modest cost to pay in order to dramatically increase sales. The key question is likely to be how aggressively AT&T will continue to subsidize the cost of the phones in order to keep exclusivity. But, with Palm, RIM and even Nokia stepping up their game, the time may be right for Apple to reach out to Verizon.

A Sale is not a Partnership

Your company providing goods or services to me in return for cash is not a partnership. Yet I get emails all the time saying "looking to partner" or "We would like to partner with you" from recruiters and other vendors of goods and services. I also get a cold calls from overseas call centers making the same pitch.

Now, perhaps that headline improves your email open rate and maybe (though I would be surprised) it actually leads to real business. But for me, it's a quick way to state "I'm dishonest and I'd like to do business with you".

Earlier in my career, when I ran a sales organization, I used to be able to determine in the first 60 seconds of a cold call which sales training the rep had been to. Was it SPIN, Miller Heiman, Selling to VITO or the dreaded "Getting to Yes" approach? Each of those processes, when applied correctly, can help improve sales performance (OK, I'm not so sure about the annoying Getting to Yes approach).

I'd guess that this new "partnering" claim probably is derived from the book Stop Selling and Start Partnering by Larry Wilson. I've never read the book, and I'm sure that Larry Wilson is a nice enough chap, but trying to rebrand your existing sales process as partnering just isn't going to cut it. To use an overused cliche of the past year, it's just lipstick on a pig.

I've been in the technology space for more than 20 years and have struck many partnerships. A partnership is when two or more organizations collaborate to come up with ways in which they work together towards a common goal, generally each bringing various things to the table. While a partnership may involve one company writing a check to another, that's not the primary focus of the partnership. Partnerships require shared risks and shared upside.

So, before you ring my phone and pitch me on a partnership, think about what you're about to pitch. Are we truly collaborating, sharing risk and enjoying mutual upside? Or, are you about to ask me to write a check for your goods and services?

Stephen Colbert, Gates Foundation Team to Support Donors Choose

I spent my morning in the auditorium at Manhattan Bridges High School in Hell's Kitchen.

It was there that Stephen Colbert, along with representatives of the Bill & Melinda Gates Foundation came together to announce a $4.1 million grant to Donors Choose.

The "Double Your Impact" program will provide half the dollars to fund an expected 17,000 projects, which will touch 300,000 students. Qualifying projects will focus on college readiness.

Stephen Colbert, who was recently named to the board of Donors Choose, served as moderator of the event, with a panel consisting of Donors Choose Founder and CEO Charles Best, Gates Foundation director of education Vicki Phillips and Elizabeth Smith, a teacher at Manhattan Bridges, who twice has had projects funded through Donors Choose.

Donors Choose is an amazing organization. Founder Charles Best, a former Bronx social studies teacher  came up with the concept in conjunction with his students. To-date, the program has funded more than 80,000 projects, impacting more than 2 million students in all 50 states.

Donors Choose blends the concept of micro-donations with transparency, control and accountability. It's an amazing model and it's a model for individual philanthropy. To explore the projects currently seeking funding, visit Donors Choose.

I caught up with founder Charles Best for a few minutes at the end of the event.

 

Where Might the Best and Brightest Go to Work?

The New York Times today has an article entitled Crisis Reshaping Wall Street as Big Banks Lose Top Talent, which spotlights the decisions some on Wall Street are making to leave the big investment banks..

This is a discussion I've been having with friends (both online and off) for much of the past year.

For those in the New York technology industry, the financial markets have been both boon and bane. They create a strong market to sell into, but they also make it much harder (and more expensive) for startups to recruit technology talent. In Silicon Valley, the decisions are between startups or the former startups who've grown up a bit. In Silicon Alley, we've had to compete with Goldman, Morgan Stanley and others who offer salaries and benefits with which startups are unable to compete.

Of course, it's not just IT and MBA students who go to Wall Street. For more than 20 years, the top graduates of law schools and various undergrad and graduate school programs have been recruited by the top investment banks.

So, if there is a shift, is that a bad thing? Personally, I think it will be healthy for the Street and certainly for other industries.

If I were starting my career today, finance would not be near the top of my list. There are so many fields undergoing transformational change where young people can make a huge impact, such as health care, energy or technology. For those who love finance, there are great opportunities with smaller firms where entrepreneurial skills can be applied. And, of course, there are public sector roles where the smart young leaders can help reshape our society.

What would be the negative impact of a brain drain on Wall Street? I think the Street can survive without the invention of new financial instruments for a few years. Meanwhile, getting the best and brightest to focus on solving the challenges of energy, healthcare, infrastructure and information technology will have a big positive impact on society.

Associated Press to Internet: Drop Dead

The Associated Press's plan to more aggressively police use of its content on the Internet seems less about saving the newspaper industry and more about justifying their own existence.

Do the AP's owner-partner newspapers really want their content removed from the Google index? How much might that reduce their traffic? Depending upon the news outlet, I'd guess Google accounts for between 25-50% of the traffic. How will those rapidly falling CPMs look when they lose half their traffic?

I realize the A.P. is in a tough spot. Newspapers rely upon its syndicated content, especially as they cut their own editorial resources. At the same time, the newspapers have pressured the A.P. to cut its fees. But the A.P.'s approach here doesn't do anything to address the long-term problem.

The problem remains that the basic business model for newspapers - that of being a near-monopoly for local advertising - is gone. The classified business has moved to Craig's List and elsewhere and it's not coming back. And the basic concept that a local auto dealer or department store should fund the cost of an editorial news operation no longer makes sense.

So, should the AP be allowed to go after those who steal its content? There are spam and splog sites out there which duplicate the content in its entirety and provide no links back to the source pages. So, yes, AP should go after those sites and partner with sites like Google to ensure those spam sites are not included in the Google index. But if they go after search engines and aggregators who follow the "fair use" doctrine, I think the cure may be worse than the disease. We'll see AP content removed from the search engine indexes and see new competitors spring up to fill the void. Meanwhile, AP newspaper partners will see a drop in page views, further eroding advertising revenues.

The solution should lie in partnering with the search engines and aggregators to ensure that AP-syndicated content is shown in the best light and drives the most traffic to its partner sites. The AP should be providing widgets for its partners' use on social media platforms and mobile devices, all designed to help them grow their share of news content consumption. They could also work with aggregators to develop ways to generate shared revenues. Instead, they seem focused on a plan to make themselves irrelevant on the dominant platform for news - the Internet. Sure, they may generate some short-term licensing revenues, but in the long-term, they're destined for irrelevance.

Associated Press - be careful what you wish for.

Spreading rumors at 140 characters $$

Buy the rumor, sell the fact

It's one of Wall Street's oldest maxims.

For traders, the idea that you can thoroughly investigate each rumor and determine which are important and which are factual, all before the price moves, is folly.So, traders trade the rumor. In bull markets, that means they buy the rumor, then sell when the news come out. In bear markets, they short the rumor, then close the position on the news.

 

Yesterday, this blog got into a bit of a kerfuffle when it reported on how web news outlets and Twitter were covering the rumor that Blockbuster (NYSE: BBI) might be preparing to file for Chapter 11 bankruptcy. That post noted that the story, which originated on Bloomberg News, was quickly picked up via Twitter, while traditional web news outlets such as Google and Yahoo trailed.

 

While my blog post was focused on how the news spread through the web, it was picked up by FT.com's Alphaville as part of a story noting how the rumor was incorrect. So, that got me thinking about rumors and Twitter, and whether the 140 character limit might cause rumors to be spread with less background information.

 

140 characters is not a large canvas. Even for the artful editor, communicating a topic in 140 characters can be a challenge. Yet one of the great things about Twitter is its ability to include links, usually in about 20 characters thank to Bit.ly or TinyURL. So, the user is typically left with 120 characters in which to communicate their message, leaving room for a link.

 

In this case, a better tweet might have been something like:

Blockbuster ($BBI) hires law firm Kirkland Ellis, explores various strategic alternatives for capital http://bit.ly/PBk4s

But traders are not editors; they pick up on rumors, act on them and sometimes, share them.

 

Now, let's look at the impact of this. We can start with the timeline of events. This is based only upon what I can see from the Internet. I'm not looking at the underlying news pipes or tick streams.

 

2:01pm Initial story posted to bloomberg.com, BBI trading at $0.79

2:06pm BBI trading at $0.37

2:07pm First tweet seen on StockTwits

2:10pm BBI trading at $0.18

2:13pm Briefing.com headline reads " following Bloomberg headline saying co hired Kirkland & Ellis for bankruptcy advice"

 

In looking at the timeline, it seems that the Twitter element was not a big factor in the sell-off. In essence, the story is that Bloomberg posted a story indicating potential adverse news for Blockbuster and the markets quickly responded, tanking the stock. From that standpoint, this is no different than thousands of other market events in the past. There's a sign of possible trouble with the stock, traders trade on that rumor, then the final news comes out.

 

I'd also question whether the final news really dispelled the rumor. Blockbuster quickly came out with a response, saying they were not filing for Chapter 11. But the reality is that they've hired a law firm to help them deal with impending capital challenges. The ultimate outcome of that may or may not be a bankruptcy filing, but it's clear that the already distressed company is liquidity-challenged in a very difficult credit environment and that they've hired Kirkland & Ellis, a bankruptcy counsel.

 

Returning to the premise of this post, though, is 140 characters appropriate for sharing information? While it has its limitations, they're no more so than those of the traditional media for spreading rumors - the telephone or the trading floor. And, while I'd encourage tweets to include a link to supporting data, the goal of the tweet is not to provide a detailed analysis of the situation but rather to give a quick alert that something is happening. Could Twitter be a tool that people could use to knowingly spread false rumors? Certainly. And that creates opportunities for sites like StockTwits and others, to define ways in which participants earn trust from the community.

 

Five Questions for Lauren Rich Fine

Lauren Rich Fine has a fairly unique perspective on two industries which are in the midst of transformational change: news and financial services. For nearly twenty years, she followed the newspaper industry as a sell-side analyst at Merrill Lynch. When she stepped down from that role two years ago, the subprime crisis was still considered an isolated problem and private equity firms were paying a premium for newspaper companies. What a difference twenty four months makes.

More recently, Lauren has moved to the alternative media space, serving as Research Director for Content Next Media, publisher of PaidContent and related news blogs. Her latest report for Content Next is Playing a New Tune: The Music Industry's D-I-Y Era. Fine also serves as Practitioner in Residence at Kent State University's College of Communication and Information.

Content Matters: The world of investment research has changed dramatically since the Spitzer settlement. This has contributed to the emergence of the independent analyst and the professional blogger. What do you see ahead for investment research?

Lauren Rich Fine: I think you will see more well known analysts hanging up their own shingle, lilke Ivy Zelman and Meredith Whitney. I have chosen to do the part of the job I really loved, which was forward looking industry research; I was less interested in picking stocks so the position as Research Director for ContentNext was perfect.

CM: In an interview shortly after you left Merrill, you were asked what you might want to do next. You suggested that you’d love to help Sam Zell with his then just-acquired Tribune business. A lot has changed since then, particularly the end of cheap credit. But, credit aside, what might you have done to make Tribune a sustainable business?

LRF: I would have made changes a lot faster. I would have communicated more directly with my readers and explained the changing landscape for newspapers. Online, I would have had the editors use quality Internet content for nonlocal content, and even use it in print, and focus my dwindling resources on local news, particularly investigative reporting. I would have really tried to energize my sales force, both for print and online. There are many other things, but overall, experimenting and moving more rapidly could have helped.

CM: Gordon Crovitz recently suggested users should pay for news with micropayments. Newsday has announced plans to make their news available only to paying subscribers, while US News is publishing a paid PDF magazine. But the genie has been out of the bottle for ten years. Can publishers (other than perhaps the FT and WSJ) really get consumers to pay for news?

I don't think so. The WSJ is providing information that is required to do a job, v. the average metropolitan papers which is read to be an informed citizen. One produces a return on investment, and by the way, is frequently paid for by an employer. The comparison to iTunes is flawed as a purchase of a song can be heard over and over again v. news which becomes stale very quickly.

CM: We’ve seen a handful of blog acquisitions by traditional media in the past year (including ContentNext, Ars Technical, etc), but not as many as some of us anticipated. Why do you think that is and do you see that changing as the ad market comes back?

LRF: It is hard to maintain a site that is proprietary and dominant market share. The barriers to entry are so low that when one does the build v. buy, frequently, build wins out. It is getting harder to break through the clutter and have a site with enough traffic to really attract advertisers.

CM: While there’s a lot of gloom and doom about, there are always bright spots. Weak economies bring transformation and change. What are you optimistic about in 2009 (professionally or personally)?

LRF: Well, I for one am happy to say goodbye to the era of excess and lack of accountability. While I am deeply concerned about the rising unemployment rate, I don't mind that my 5 teenagers will really learn to work hard to get what they want. Personally, I have an amazing family that I enjoy watching mature and a few jobs (I am also a practitioner in residence at Kent State University) that keep me fulfilled and bring me into contact with smart, innovative people.

Five Questions for David Meerman Scott

This week, Content Matters caught up with e-marketing thought leader David Meerman Scott. David is a highly sought-after speaker and is author of the "The New Rules of Marketing and PR" and "Cashing In With Content". His newest book, World Wide Rave: Creating Triggers that Get Millions of People to Spread Your Ideas and Share Your Stories was published last week and is quickly moving up the marketing and e-commerce charts on Amazon. David can also be found @dmscott.

David is one of my favorite marketers to read or hear because he eats his own dog food. His speaking career was jump-started to some extent by the "world wide rave" started by his earlier eBook on the New Rules of PR (which he later turned into a full-length hardbound book). The ebook, which suggested that in the web environment, companies should target their PR efforts directly to end-users rather than to traditional media channels, was quite provocative at the time and set off a bit of a flame war on the PR and media blogs. That led to several hundred thousand downloads of the ebook and lay the groundwork for much of his subsequent work. So, when David speaks (or writes), I pay attention.

Content Matters: Your new book, World Wide Rave, discusses ways in which marketers can trigger the type of web buzz that typically happens only virally. Can you share a couple of examples of companies who’ve done that well?

David Meerman Scott: A World Wide Rave is when masses of people around the world can’t stop talking about you, your company, and your products. Whether you’re located in San Francisco, Dubai, or Reykjavík, it’s when global communities eagerly link to your stuff on the Web. It’s when online buzz drives buyers to your virtual doorstep. And it’s when tons of fans visit your Web site and your blog because they genuinely want to be there.

One of my favorite stories is Erin Weed, founder of Girls Fight Back!, uses her Web site, MySpace and Facebook groups, blog, and YouTube videos as a way to promote women's safety and self-defense issues.

Girls Fight Back makes safety education accessible, especially to young women in their teens and twenties, through her education Web site and live seminars conducted all over the United States. She teaches girls and young women why they are their own best protectors, and then shows them how to reduce the risk of violence and fight back if necessary. Amazingly, Erin has trained over a half million girls and women to fight back.

Anywhere from 200 to 1,000 people attend each hour-and-a-half-long seminar. Erin was having a hard time getting the teen and college girls to log on to her website after speaking gigs and paper sign-up forms to gather email addresses for 500 or more girls at a time was impractical. She realized she had to somehow get to them (as opposed to the other way around). So she gets all the girls to text message their email addresses from their mobile phones, which automatically load to a web page.

Get this... nearly 100% of the girls volunteer their email addresses. Clearly, Erin's understanding about how girls and young women communicate (with mobile phones) is critical. Yet how many organizations fail to understand this? All I have to do is look in my home mailbox and see all the junk mail that colleges, camps, and the like are sending to my teenage daughter.

Another favorite example is Lisa Genova. After her novel, Still Alice was rejected by publishers, she decided to self-publish her novel and received a stamp of approval from the Alzheimer's Association. Her blogs developed a huge platform and the book sold briskly.

As a result of Lisa's World Wide Rave plus the measurable sales success on Amazon.com and other online booksellers, Lisa generated buzz in the book world too. An agent contacted her and sold the book at auction in June 2008 for just over half a million dollars to Simon & Schuster. The book, that the publishing world initiall ignored, was a World Wide Rave and when the new edition was released in January 2009, it made the New York Times Bestseller list.

CM: You encourage companies to “Lose Control”, asking them whether they’re more like the Grateful Dead (encouraging sharing) or Led Zeppelin (total control). Publishers have been having this debate for 20 years. What are some simple steps that publishers, locked into a control mindset, might take to get outside their comfort zone? How can they go from being "Trampled Underfoot" to creating a "Ripple"?

DMS: If you step back and look at the ways musicians make money besides the recordings—concerts, endorsement deals, merchandise (such as $35 t-shirts), and “souvenir” packaging of the music (booklets included in a CD case, for example), not to mention royalties for the use of music in television, movies, and advertising—you start to suspect that clamping down with rigid controls may not be the best strategy. Think about that: the music industry is trying to prevent the spread of their product!

If I were a music executive (or musician), I’d make much of my music available for free online, and I’d encourage people to share it. I would have the confidence that providing music for free would drive sales of my other products. Many unsigned bands are prospering with this strategy through their own MySpace pages or Web sites, and some are finding absolutely tremendous success.

CM: You recently wrote about Century 21 real estate shifting its national television advertising budget to online. With current economic conditions, do you see more of this in 2009? Are there specific sectors or market segments where this seems more likely to occur?

DMS: Marketing on the Web can be free. It costs nothing to put up a YouTube video. It costs nothing to create a blog. It costs nothing to create a presence on Facebook. Yes, with the economic downturn, smart companies are looking to leverage the Web in new ways.
We’re living in a time when we can reach the world directly, without having to spend enormous amounts of money on advertising and without investing in huge public relations efforts to convince the media to write (or broadcast) about our products and services. There is a tremendous opportunity right now to reach buyers in a better way: by publishing great content online, content people want to consume and that they are eager to share with their friends, family, and colleagues.

CM: As marketing budgets get slashed, what are a couple of things that nimble marketers might focus on to maximize their marketing ROI?

DMS: Yes, you can harness that power and virtually anybody, if they're smart about creating something interesting, can generate something that will spread. Now, that's not to say that everybody can generate a million views of a YouTube video, or that if you do something, everyone in the world will know about it.

Within your marketplace, among the people you're trying to reach, if you have a niche product, it's still absolutely possible to reach a large number of your potential customers online with something very interesting. It could be a video, an e-book, some kind of chart or graphic, a photograph, some data or metrics, or an interesting way of looking at what's going on in the marketplace. It's possible to spread any one of those things. Yet most companies haven't been creating information with the idea that it's going to spread. Instead they've been creating information with the idea that they have to ram it down people's throats. It's a very, very different technique to create something that is primed to be shared.

CM: While there’s a lot of gloom and doom about, there are always bright spots. What are you optimistic about in 2009 (professionally or personally)?

DMS: I'm very optimistic. So are all of my smart friends. When there is chaos and fear, there is also a tremendous opportunity.