Content Matters

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.

 

 

 

 

 

Urban myths of magazine economics

Apple has announced its new subscription model and print magazine publishers are all upset. We’re hearing for mobile many of the same false arguments which they made a decade ago about the web. Here I refute a few of the most common arguments.

1. We need to “own the customer”

You've never owned the customer. Our relationship consisted of my sending a check, then you starting to send me “renew now” notices about 3 months in.  Let’s face it, if you had built a deep bond with the customer, you wouldn’t have to use those annoying insert cards that fall out of your magazine.

No, what you mean when you say you want to “own the customer” is that you want to monetize my contact information by selling mailing lists, cross-selling me other products and more. I really didn’t want you to do that in the past and I’ll be happy if you can’t do that in the new model.

2. Pass-along readership

The magazine industry touts that for every copy printed, five to seven people read it. Really?

Like your circulation figures, I think you’ve simply made that up.

I can see consumer magazines getting a modest pass-along readership in the same household, but when was the last time you physically shared a magazine with someone outsider your home? No, I can’t remember either.

Do you want to know what gets shared? Digital links. Embrace the sharing world of Twitter and Facebook and you'll get pass-along readership that blows away even your imaginary print figures. No, the ad rates won't match print, but that ship has long sailed.

Or, is the industry referring to dentist office copies?  Yes, that copy of Time (Newsweek, Reader’s Digest, etc) has been flipped through by a bunch of people. After all, it’s been sitting on that table for seven months now. But are you really looking to build your business on a captive audience in waiting rooms? And take a look around the waiting room. Everyone there under the age of 40 is staring at their mobile device. It’s mostly the blue-haired crowd that’s still reading print in the waiting room. Better tell the ad sales reps to go pitch to Buick, Depends and Life Alert.

3. I can cross-sell more effectively in print

This is nonsense. If cross-selling consists solely of sending me offers to buy other stuff from you, maybe that’s the case. But with digital media you can do so much more. You can easily bundle up special editions, including content from your various brands, into a digital product. You can embed all kinds of cool things to make my experience compelling, while showcasing your other brands. You’re not being limited by the platform or the business model, but rather by your limited imagination.

4. Our content is unique and our readers have a strong devotion to our brand

Remember those blue-haired ladies from the dentist office? They really are brand loyal. They’ve got a 15 year archive of Consumer Reports filed away in boxes and read each AARP magazine cover to cover. But their grandkids? Oh, they read something earlier today on their phone – it came from a friend on Facebook. But they have no idea who actually published it.

In some ways, I feel badly for magazine publishers trying to navigate this new mobile landscape. At the same time, I’m amazed at how so few of them have worked to leverage their brand in the digital environment. There are a handful of brands that have done so, but most of them are nontraditional media companies like the Onion.  Magazines have had 15 years to become indispensable on the web and have failed to do so. So now we enter a period where brands are diminished and where the platform is more important than the content.

To a great extent, I think what magazine publishers fear is that the period of truthiness is rapidly ending. Make the statement that the average issue has seven pass-along readers enough times and it becomes an accepted fact. As they've learned on the web, it's all too apparent which advertising works and which doesn't. The farce of pass-along readership will be similarly exposed.

Magazine brands are going to have to reinvent themselves if they’re going to survive.

To go mainstream, Foursquare needs to become more like Groupon

Foursquare has done a good job of attracting the early adopters – hypersocial mobile data users. If you’re young, single and living in an urban area (or a college town), the value proposition is huge.

The next stage of adoption (and monetization) is likely to be a tougher hurdle. There are two obvious directions for Foursquare expansion:  digital-savvy business users and shoppers.

While shoppers are the larger (and more attractive) demographic, let’s start with the digital-savvy business users. By this, I’m referring to those who are probably active on Twitter, but are beyond their bar-hopping days. These users (and I fall into this category), get the value of social media, yet struggle to find real value in Foursquare.  I know that I use Foursquare much more heavily when I travel than when I am in the office. Check-ins at clients are typically not appropriate and a daily check-in at Starbucks and the office just isn’t that exciting.

The more attractive market is the local shopping market; I’m using shopping in the broad sense – in addition to goods, it could be food, drink and other services. This is also the place where Foursquare expects to generate its revenues – through promotional marketing offers. Yet, so far, the promotional offers have been somewhat lame.

The dominant offer, at least for those in major cities, comes from Starbucks.  I’ve got five Starbucks within a stone’s throw of my office, so any check-ins in this area will likely yield the yellow “special nearby” sign with an offer from Starbucks. Yet that offer is sort of pathetic: Become Mayor of Starbucks and get $1 off on a drink. But that’s a pretty limited deal.  It took @michaelwolf 76 visits to become Mayor of his local Starbucks.  

Last week, when I was in London, it only took me about a half-dozen check-ins at the Starbucks on Old Broad to become Mayor, but that wouldn’t happen in New York or San Francisco. And what you often find is that the Mayor of a given Starbucks happens to be one of the baristas.

Checking in over and over in hopes that you, like Michael Wolf, may get $1 off on a frappucino, after dropping $200 just isn’t likely to get the mainstream user to adopt Foursquare.

 

Compare those offers to what you see on Groupon. The typical Groupon offer is 50% off or more. Recent deals I’ve received were for 67% off from Wine Insiders, 50% off skating at Chelsea Piers and 53% off at the NY Hall of Science. Those offers are why Groupon is experiencing huge growth. A chance to be the one person that day who qualifies for a buck off a frappucino just won’t motivate users.

Perhaps enabling rewards for multiple check-ins (e.g. everyone who checks in 5 times this week gets a half-priced coffee) would probably get many more people interested. There are complications, of course (you don’t have to actually buy anything or even step foot inside a Starbucks to check-in), but those are things that Foursquare and its marketing partners will have to figure out.

There are many potential innovative offers that can leverage location-based services. Content providers could provide access to premium content to users checking in at a conference; wine brands could offer special deals on wine pairings at a restaurant. I can think of dozens of compelling offers that would make users  more likely to check-in.

 

I think it’s inevitable that checking-in with location-based services will become mainstream in a few years. But if Foursquare wants to be the leader in this space, it needs to provide greater value to mainstream users.

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.

 

Five Questions for Russell Perkins

Next up in the Five Questions for... series is Russell Perkins, Founder and Managing Director of the InfoCommerce Group. Russell has more than twenty years experience in all facets of the database publishing industry. He has worked with numerous directory and data publishers in advertising and premium content businesses.

Content Matters: 2009 will certainly have its share of challenges. What do you see for the Content industry in 2009?

Russell Perkins:
We’ve spent the last six months watching the newspaper industry implode before our eyes. Hot on its heels is the yellow pages industry, which is crumbling rapidly. The consumer magazine industry just reported a huge drop in advertising pages, and we all know what’s happening with B2B magazines. Recent reports on some “household name” blogs with huge traffic suggest that even these new media players are struggling from a revenue perspective. On the surface, content doesn’t seem like a great place to be these days. But look for commonality among all these different media, however, and you see one thing: high dependence on advertising revenue. What we’ll see in 2009 is the beginning of a profound re-examination, particularly by advertising-based publishers, of their revenue models. The problem lies not with our content, but with our monetization.

CM: So how do you see this re-examination playing out?

RP: As an industry, we’ve pushed ourselves into a tight corner. We’ve trained the marketplace not to want to pay for content at the same time we’ve let advertisers dictate the terms of their relationship with us. You can argue whether or not we needed to do either or both of these things, but the fact remains, we did them. If you can’t sell subscriptions and you can’t sell advertising, something has got to give. My belief is that publishers are going to have to draw the line and re-define their relationship with their customers (advertisers and users) in a way that lets them make money. It will be ugly for a while, but those publishers who are truly delivering value will find they can charge for it.

CM: You have written about changes in the lead generation space, shifting more risk to the publishers. What might we expect to see in that area in 2009?

RP: Lead generation is a hot area right now. Some are even calling it salvation for some advertising-based publishers. Yet the trends in lead generation are anything but positive, and support my previous contention: as an industry we are being pushed by advertisers to assume more risk and do more work, all for less reward. Pay-per-click is rapidly becoming a fond memory as advertisers are now starting to push for “pay-per-sale.” I contend than publishers can’t allow themselves to be commission sales reps for their advertisers, even if the commission is a percentage of the sale amount. With this kind of arrangement, publishers take all the risk and have no control. Necessary checks and balances cease to exist.

CM: Who’s doing it well? Can you share an example or two of data publishers succeeding in this market?

RP: We’re constantly surveying the industry, and while there are no shortage of glitzy and exciting companies with interesting new business and monetization models, one company I would hold out as having gotten things right in so many ways is Lexis-Nexis Martindale Hubbell. Here’s an example of a 100-year old B2B print directory that not only moved online in innovative ways, but also spawned a B2C sister website that leverages the same database. It’s a gutsy but intelligent ground-up re-positioning of the product as a client development service for lawyers. In every respect it’s sophisticated, elegant and powerful and a great place to look for fresh ideas and best practices.

CM: Historically, the period coming out of recession is often one of transformation and change. Where might the opportunities lie for publishers when this economy recovers?

RP: I think this recession is likely to bring one key benefit that came out of the dot com bust: a clearing out of silly, trendy and inherently flawed products and companies that will yield added importance and strength for those that survive. The last few years looked to me like a quiet replay of the dot com era: a profusion of venture-backed start-ups with unpronounceable names, impenetrable business models, and an emphasis on giving away free content and services to quickly build a user base or audience. One of the most succinct quotes I ever heard on this subject was, “free is not a business model.” A stable and prosperous online content industry – whether advertising or subscription-based – demands that we stop doing business in a fearful and reactive manner, and start charging fairly for the value we deliver. Interestingly, I think subscription-based publishers have figured this out. Advertising-based publishers still have a way to go.

Economy, Shifts to Online Create Drag on Mainstream Media Advertising

The top 100  U.S. advertisers increased their ad spending by just 1.7% in 2007, according to the latest Ad Age 100 Leading National Advertisers report. That’s lower than the 2.2% inflation rate.

The only strong growth category among the 100 LNA was online advertising.  Online display advertising grew 33% among the 100 companies, increasing by more than $1 billion to $4.185 billion.  That billion dollars came right out of traditional media coffers; newspaper advertising dropped $674 million while television advertising fell more than $400 million.

You can see the path of the dollars directly with some of the advertisers. General Motors cut their television spending by nearly $175 million, while increasing their Internet ad spend by $93 million.  Ford spent an additional $64 million online, while cutting their TV budget by roughly the same amount.

And it’s likely that the trend will accelerate in 2008.  Automotive slipped to #2 in total ad spending (behind retail) in 2007, but still accounted for $18.7 billion out of the $149 billion for the 100 LNA.  Struggling US automakers General Motors, Ford and Chrysler account for a quarter of that total.  And that was before $4 gas prices. I don’t imagine we’ll see huge ad spends for Hummers and F150 pickups the rest of this year or in the foreseeable future. The Olympics and the elections may soften the blow somewhat for television but that's not enough to reverse the trend.

Meanwhile, the online segment seems to be holding its own for now.  The Internet Advertising Bureau’s Q1 numbers showed an 18% year-over-year gain, though the total spend of $5.8 billion was slightly lower than the record $5.9 billion for Q4 of 2008. (Note: the IAB figures include all web advertising, while the Ad Age/TNS numbers are for display ads only and exclude search advertising). While I expect the online display advertising growth rate to slow during 2008, it’s measurability and adaptability suggest that advertisers will shift more of their total spend to online in this tough economy. And that can't be good news for the newspaper and television industries.

Who is Your Customer?

Who is your customer?  Is it the consumer or the advertiser?

Ad-supported content products must continously ask themselves this question. Is their primary focus creating a great user experience or in creating content optimized for advertising? 
Saul Hansell at the New York Times (via Michael Parekh ) takes a look at this issue in a blog post about Zillow. Hansell is disillusioned by the typical pattern that occurs with new sites. Initially, they focus on the customer, then over time become more and more advertiser-driven, reducing the quality of the customer experience. Or, as he put it:

There has been a sadly predictable transition as idealism morphs into the cruel realities of running a business. The comparison shopping engines, like ComputerESP (bought by CNet’s Shopper.com) and BizRate (now part of ShopZilla), stopped displaying things in the order that most favored consumers with the lowest prices or whatever else the consumer wanted first. Instead, they tried to find ways to favor advertisers, like listing paying customers first or simply ignoring sites that didn’t pay for access.

This balance between the needs of consumers and the needs of advertisers is not something that newly emerged on the web. It's been there for decades in trade press, directories (where a logo or preferred positioning is sold to listees) and even in the conference industry.

Zillow, is trying to break that pattern, by keeping their products consumer-focused. Other mortgage shopping sites, such as Lending Tree, are lead-generation engines.  You can get quotes from multiple sources, but only by agreeing to have your contact details shared with lenders, who follow up with various levels of aggressive sales efforts. In the Zillow system, consumers remain anonymous. You can get quotes from multiple lenders who receive the key information needed to provide a quote (zip code, rough credit score, etc) but without the need to provide their identity. Consumers can send questions back to lenders, with Zillow as the intermediary, thereby remaining anonymous until they decide they wish to contact the lender directly.

I've always believe that if you create a great user experience, you'll attract consumers and make your site attractive to advertisers. At the same time, I know of many products - websites, magazines, conferences and more, which started by focusing on the needs of their target consumer, but later compromised the  user experience by letting the advertiser drive all of their decisions.  Zillow's Rich Barton seems to understand the need to avoid the temptation; let's hope they keep that approach even if they're missing their revenue targets.

Google Goes Old Media

Lost in yesterday's announcement of the EU approval of Google's acquisition of DoubleClick was the news that the post-merger integration process will come with something associated with old media mergers: layoffs.

Posted to the official Google Blog were Eric Schmidt's comments:

As with most mergers, there may be reductions in headcount. We expect these to take place in the U.S. and possibly in other regions as well. We know that DoubleClick is built on the strength of its people. For this reason we’ll strive to minimize the impact of this process on all of our clients and employees.

At one level this comes as no surprise. This was not a small bolt-on acquisition. DoubleClick has more than 800 employees and there is bound to be some overlap between the two companies. At the same time, it's another signal that Google is no longer on the same growth curve that it was a few years ago. As they integrate this acquisition and with pressure on their stock price, it will be interesting to see if the Google corporate culture begins to change.

Content Industry Themes for 2008

It’s been a busy January.  Most years, I’ve posted my themes & predictions by New Year’s day.  This year, it’s almost February and I’m just getting this out. 

First, a quick look back at my predictions for 2007:

1. Growth in vertical search – didn’t really happen
2. Changes in web advertising models and metrics as page views become less important due to AJAX and UGC.  This one was a big issue and Nielsen/NetRatings dropped use of page view by mid-year.
3. Further consolidation in the industry/heavy M&A: record-setting year.
4. Rollup of blogging tools: Most of the companies I mentioned in this paragraph (Feedburner, MyBlogLog, Last.fm) were acquired; just not by the same company.
5. MySpace jumps the shark: While Facebook had the stronger growth during 2007, MySpace continued with steady growth.  The predicted slowdown didn’t happen.
6. RSS Gains Adoption: sort of, but not really
7. Widgets gain prominence: Thanks to Facebook, widgets skyrocketed in 2007.
8. Drop in newspaper readership accelerates: OK, sort of like predicting that the sky will be blue, so I’m not taking too much credit for this one.

I score that five out of eight, slightly better than my usual 50%. 

Let’s take a look at what 2008 might have in store.

The economy will hang heavily over all business, especially during the first half of the year.
Both b2b and b2c content businesses are likely to see revenue declines.  On the b2b side, the first thing that goes in a week economy is the peripheral user.  When asked, most business leaders will tell you that the bulk of their customers are “core users”.  In reality, for most businesses, it’s probably half that.  So, half of your users have been paying for subscriptions but can’t quantify the value you provide.  2008 may be the year that many of those casual users choose not to renew.

That creates opportunity, of course, for new business models.  Advertising-supported or freemium businesses may be well-positioned to take users away from long-established paid content providers.  Providers like ZoomInfo may not be as good as the incumbents they replace, but for free, they may be good enough.

Slowdown in M&A
The second economic impact will likely be a slowdown in M&A.  2007 was a record-setting year for M&A in the content industry.  According to Jordan, Edmiston, there were 838 transactions worth nearly $108 billion, nearly the sum of the prior two years combined.

With lending tight, at least for the first half of the year, it will be harder to do large acquisitions.  On top of this, some of the more active strategic buyers in the past, such as Thomson, Reuters and Dow Jones, will be busy digesting their 2007 deals and may have a lower appetite for new deals. That said, this could finally be the year that Yahoo gets acquired, either by Microsoft or perhaps by private equity.

Yet 2008 will not be all bad for M&A.  For European and Asian acquirers, the weak US dollar makes it seem like everything’s on sale.  While private equity deals may be down a bit this year, cross-border strategic acquisitions will keep the deal flow alive.

A great time for startups
The weak economy could be a good time for startups, however.

It’s never been less expensive to get a content or technology startup off the ground than now.  Hosted technology solutions mean you can buy an off-the-shelf technology infrastructure at a fraction of what it would cost to build it out yourself.  Meanwhile, as legacy businesses see their revenues erode, they’re less likely to test out new revenue models or launch new products.  For nimble startups with low cost structures, this can be a great time to gain a foothold into a market.

The financial markets may also yield opportunities for startups.  Thomson and Reuters will be distracted by the internal politics of combining their two businesses.  At the same time, financial institutions often require multiple sources for key databases.  The consolidation of Reuters and Thomson may leave only a single source, creating opportunities for others to become the alternative supplier.

The other big issue for 2008 will be the Elections.
The hot races in both parties have helped take the sting out of the writers’ strike for the networks.  So far, little election spending has made its way online, but I think that will begin to change as the campaigns move from the retail politics of New Hampshire and Iowa to the broader media campaigns of the national election.  Lehman forecasts that $110 million will be spent by candidates in online advertising.  More important than the advertising dollars could be the continued large roles of blogs and user-generated content as primary sources for political knowledge. 

The elections also create an interesting opportunity for startups.  Mashing up campaign contributions with legislative records or voting results with census data could generate really great websites that the media and public will eat up.  Lots of this information is publicly available, so it’s there for the picking.

Revenue models emerge for social networks
As users spend more and more of their time online using social networks, it’s inevitable that viable business models will emerge.  While 2007 was definitely the year of Facebook, I think it’s likely that the Google-led OpenSocial will be a big player during the second half of 2008.  I had truly expected Facebook to position itself as a solid b2b platform by now, but they’ve shown little interest in doing so.  That should leave a void that can be filled by LinkedIn, who are already the dominant player for business social networking.  If they embrace the “open” aspect of OpenSocial, they could entrench themselves as the players to beat.

The emergence of widgets was one of my themes for 2007.  In 2008, widgets will become more important as users look to get your content "their way".  Visits to traditional destination sites will be down and content providers who don't widgetize their information will see usage drop accordingly.

Video hits b2b
Until now, video has largely been a consumer play.  While some markets will be slow adopters (for multiple reasons I don't see it playing on the financial trading floor), video will start to penetrate the corporate market this year.

So, there they are.  Trends & predictions for 2008.

As always, I welcome your thoughts in the comments.

WSJ to Retain Pay Wall? Not for Long

The big news out of Davos on Thursday was Rupert Murdoch's pronouncement that the Journal would continue to keep at least some content behind the pay wall.  According to Rupert:

The really special things will still be a subscription service, and, sorry to tell you, probably more expensive.

The arguments in favor of doing so are twofold: first, you've got $70 million in subscriber revenue to replace if you kill it; second, that the pay wall creates a higher demographic for selling advertising.

I'm not sure what's driven him in this direction, as all signs pointed to tearing down the pay wall and making the Journal free.  While it's possible they could move forward with a hybrid model, I think that it's already been shown that model does not work.  The Times killed Select and I have tremendous doubts about the FT's current approach where users can get 30 page views per month for free, but must subscribe if they use it more frequently.

I am a current WSJ Online subscriber.  I also get the NY Times delivered in print (I need something to read on the train platform).  A few times a week I will read an FT article.  Of the three, the Times gets the bulk of my page views and it's the only one of the three that I will typically link to. If the Journal keeps large chunks of their content behind the subscription wall, they'll continue to limit the growth of their brand.

So I don't think that's what they're going to do.  If you parse out Murdoch's quote, he doesn't say that the Wall Street Journal will remain a subscription product.  Instead, he says that "the really special things" will be a pay service.  So, what's really special?  Not the business and financial news, most of which is a commodity.  There's no chance that he will put their editorial page commentary behind the pay wall as the Times tried.  Clearly, Murdoch views the Journal editorial page as a means of projecting his views, not bottling them up for a select audience.  So, in re-reading his comments, I think that we're likely to see the majority of the Wall Street Journal become free.  At the same time, I expect them to build out some new capabilities - perhaps tools and data-driven applications, and put a premium price on those. 

What do you think?