August 28, 2007

Facebook is learning fast

In one of my earlier posts, I had proposed that Facebook should use actual user engagement as a success metric for its applications as opposed to the metric that only captures total number of users who've added the application (and may not be using it at all). Facebook decided to do exactly this. Dave Morin from Facebook notified of their policy change on Facebook's Developers blog on Monday:

This week you'll see us shift our application directory metrics to a focus on user engagement. This will help inform users as they make decisions on which applications to add as well as shift developer focus to engagement rather than total users. More specifics will be available as we roll out these changes this coming week.
Recently, Facebook made two other changes to its Platform in order to prevent questionable tactics used by application developers to promote their applications. Developers will not be allowed to show a different profile to a user's friends than the one the user sees himself. Developers will also be blocked from sending misleading notifications to users in order to promote viral spread of their applications.

It's heartening to see Facebook is learning fast and making quick changes to ensure its evolving Platform continues to provide great experience for both its users and developers.

August 8, 2007

Is Web Video a Threat to TV? - WSJ Discussion

The Wall Street Journal recently organized an online discussion between Steven Starr, co-founder and chairman of Revver, and I. The subject was: "Is Web Video a Threat to TV?"

Below is the link and the text:



The Internet has made it possible for anyone with a video camera to become a filmmaker or YouTube star. But can independent creators make a living off Web video? And will this army of amateurs pose a threat to traditional broadcasters and studios?

Several video-sharing sites, including Revver and Metacafe, are trying to translate Web fame into dollars by sharing advertising revenue with contributors. Even YouTube has adopted a similar program. Traditional broadcasters, meanwhile, are taking steps to capture online viewers (and ad dollars). NBC, for example, is adding social networking features to its flagship site and will debut "Coastal Dreams," a Web-only soap opera, in October.

The Wall Street Journal Online invited Sab Kanaujia, vice president for digital product strategy at NBC Universal, to discuss the future of TV on the Web with Steven Starr, co-founder and chairman of Revver. Their exchange, carried out over email, is below.

* * *

Sab Kanaujia begins: Can independent creators make a living with Web video? I don't think they can in the short term. Current business models online are not attractive enough to make a living or leave your other day job. The CPMs [cost per one thousand ad impressions] paid by online distributors for independent content are not very high compared with those for professionally produced, long-form content, so it requires a lot of views to translate into a decent amount of money. Low CPMs also indicate the appetite of advertisers at this point for content from independent creators. There are of course some exceptions (LonelyGirl15, etc.) where we have seen good, engaging content that has driven a lot of traffic.

Steven Starr responds: Well, it all depends how you define independent creators. Old school independent creators, used to Hollywood economics, should stay home. But successful independent online creators are seeing CPM and [cost-per-click] returns that can exceed $10,000 per month. The promise of an online creator economy is right around the corner, one that supports an entirely new form of creativity quite distinct and separate from traditional TV creation. This is happening in the short-term, with Web video creators not controlled by the linear programming demands of traditional TV. The Web video toolkit is far more interactive; response videos, social networking, mashup technology and the like are changing the parameters of content creation. Web video as a nascent art form, one that promises significant and sustainable revenue as it develops, is close at hand.

Mr. Kanaujia: I agree with the promise of online platform for both content creators (non-linear, timeliness, etc.) and for users (interactivity, more features, etc). But I think business models are still evolving. In the short-term, I think the Web will continue to provide a great vehicle for independent creators to get discovered (zero barriers to entry). And when they do get discovered, many may want to join traditional media -- or not.

Here are two real-life examples: Rocketboom -- Amanda Congdon established herself online. She leveraged her online popularity to get an offer from ABC, which she accepted. Now, she's using that opportunity to marry the digital and traditional worlds by anchoring in addition to doing video blogs on I was recently at Om Malik's Pier Screenings in San Francisco, where one of the creators of LonelyGirl15 spoke. They have thus far not joined a traditional media company amid several such offers that their agency was able to secure for them. They want to maintain total creative control and flexibility with their shows. Also, their storytelling style requires quick turnaround and interactivity -- which does not yet fit the traditional TV platform, with its many other considerations (advance scheduling, advertisers, etc.). Though they've not seen a financial windfall by going alone, they're still sticking to their original plan. These examples provide different paths taken by two successful online independent creators.

Mr. Starr: Using the Web as a discovery platform for old media trolling for talent is 1999 all over again; why take these new media creators and force them into old media formats? If the future of TV on the Web is continuous streaming, everywhere-accessible and ubiquitous, isn't a far more exciting outcome the emergence of an entirely new art form?

In today's Hollywood, over 90% of [Writers Guild of America] and [Directors Guild of America] members are not even close to making a living at their chosen craft. In the high-stakes game of traditional TV, the prospect for an Amanda Congdon or LonelyGirl15 achieving the financial windfall you refer to are incredibly remote, at best. Yet online, where Rocketboom and LonelyGirl15 can take incredible risks with format and genre, can grow their own audience at a fraction of network costs, can enjoy free syndication, hosting, audience-building and ad services at their disposal, an absolute cornucopia of opportunity awaits.

And yes, the business models are evolving, but it's happening quickly and well. At Revver, we're seeing a 4x and 7x jump in creator revenue just by adding pre-roll [ads] as an option to our Revver creators. It may be the wild west, but the opportunities are historic; there has never been a better time to be a creator, not in the history of media.

I've got a question for you, Sab: How does NBC Universal see its role as a supporter of this new art form?

Mr. Kanaujia: I'm not arguing that traditional media should either force new media creators into old media formats or restrict in any way the tremendous opportunities provided by digital platforms for content creation and distribution. I was just highlighting what is happening today as we evolve towards realizing the full potential of the new medium.

NBCU whole-heartedly supports the new art form. In fact, one of the primary goals of NBCU's Digital Media group is to explore how we can proactively embrace new digital platforms. We've created a Digital Studio that is extending NBCU's history of quality programming into the digital age by producing original programming and interactive experiences that engage consumers across a variety of topics and genres.

We're also exploring how we can creatively marry originally produced online content with our on-air shows. I think democratization of content creation and distribution provided by technology innovation on digital platforms and changing user behaviors would in the long run be a win-win for all stakeholders.

Mr. Starr: NBCU has been quite proactive in extending its brand online; the digital studio sounds promising. But I really don't envy what big media's facing. Consumers are their own programmers; control over the media experience has been ceded.

New media is social, all about connection and inclusion, and the challenge to monetize those connections is starting to be met. Andrew Keen's "The Cult of the Amateur" disputes the disruptive history-in-the-making prospect of all this, and blames new media for a "loss in quality." So maybe it started with cats swinging from chandeliers and frat boy video, but it's evolved in less than a year to budding auteurs like Goodnight Burbank6, Happy Slip7, Studio88 and LoadingReadyRun9, all building audiences, all operating at the forefront of new media. No doubt it's early days, but a year or so from now we may see world-class creativity emerge, and Mr. Keen's dismissal seems shortsighted at best.

The fact is, while new media creators keep bursting out of nowhere, old media has yet to figure out how to truly engage this unique audience. Repurposing TV and film content is not a long-term solution. Social media demands a different expertise. We're in a period akin to the transition from silent to talkies, and it's going to leave a lot of traditional creators and content suppliers behind.

Even more disruptive, social media rejects the cult of the velvet-roped celebrity, demanding far more fan-creator interaction than ever before. This drives the attention of a connection-expecting audience into the hands of the independent creator, not the entity that controls their channel, and empowers creators to control the advertiser relationship themselves. Again, a heady time to be making media, to be building an audience.

Mr. Kanaujia says: All these are examples of Web TV done right. In the long-run, I believe Web TV will co-exist with the traditional media. Forecasts claiming that the new media will swallow traditional TV are grossly overblown. Today, almost half of the total media consumption in the U.S. is on TV -- 47% of 68 hours/week/user (Source: Veronis-Suhler 2006). Rest is split between radio, recorded music, print, Internet, mobile, etc. Future trends also point to the dominance of TV (48% of users' media time in 2010).

For advertisers, the lean-back user experience allowing deep engagement with the long-form content on the TV is undoubtedly the best opportunity to develop brand awareness. Having said that, traditional media would still need to adapt to the growing reality of the new media. Over the past 80+ years, traditional media firms have successfully gone thru many transitions in the industry (from radio to broadcast TV to color TV), and have emerged stronger each time. No reason why they can't succeed the current transformation from traditional to what I call "integrated media," that combines digital platforms to traditional ones.

Talking about integrated media, I think ultimately Web TV will make its way into the living room as well (it has already started; e.g., YouTube/Apple TV, AOL's deal with Sony for their IP connected Bravia TVs). But for Web TV to succeed, it has to leverage the Internet not as a platform, but as a medium that is non-linear, social and interactive. Web content creators will not succeed if they develop their content by copying what has historically been done for the TV. They have to leverage the above three fundamental advantages provided by the Internet. Compelling, storytelling skills will always be critical -- no matter what the screen is (Web/mobile/TV). Advertisers will naturally follow if the execution is done right.

Mr. Starr concludes: I agree in almost every regard. Traditional TV absolutely will adjust and survive, just as there's still a market for books a century after movies were introduced, after TV, after the Web. But I think we're not far off from having most of the advertising dollars spent predominantly on the Web -- and around that corner we'll see most of the fortunes made from storytelling come from Web-based media. There will always be exceptions -- J.K. Rowling will make over a billion dollars from an old-fashioned book series -- but my point is that, in the storytelling and visual arts, the future is moving quickly towards Web-based media. It's just too efficient in gathering a motivated mob for the smart money to go elsewhere.

Serials produced in the creative diaspora already engage repeat audiences that, per episode, number in the millions. A new breed of storytellers are inventing new ways to narrate, new formats, new genres. At the same time, a new breed of audiences are finding new ways to interact, to participate, to engage with these storytellers. It's all happening outside of traditional media auspices, and that's what makes this new art form so unpredictable and so thrilling.

This disruption itself is what drove me to start Revver. I'm absolutely convinced online video is where the creative center of the next decade, and possibly the next quarter century, will reside.