Inspire

Business and Revenue Models for Online Media: Options

Great post on the Long Tail blog by Chris Anderson, Fred Wilson and Michael Cader on the business or revenue model options for online media properties. With strong relevance for offline media/events and digital marketing as well. Below the business model options.

I would like to see the category 'research / metadata ' included here as most advertisers are quite interested in the metadata / research within (social) media companies. This goed beyond the stated "Sales of User Information" below as it includes all the information/comments/widgets a user associates with a topic, brand and/or product. These insights can be used for trendwatching, emergent co-marketing & partnering deals and new business development.

"1. CPM ads ("cost per thousand views"; banner ads online and regular ads in print, TV and radio)
2. CPC ads ("cost per click"; think Google ads)
3. CPT ads ("cost per transaction)
4. Lead generation (you pay for qualified names of potential customers)
5. Subscription revenues
6. Affiliate revenues (think: Amazon Associates)
7. Rental of subscriber lists
8. Sale of information (selling data about users--aggregate/statistical or individual--to third parties)
9. Licensing of brand (people pay to use a media brand as implied endorsement)
10. Licensing of content (syndication)
11. Getting the users to create something of value for free and applying any of the above to monetize it. (Like Digg or Reddit but also Open Source Marketing in broader terms)
12. Upgraded service/content (ed: aka "freemium")
13. Alternate output (pdf; print/print-on-demand; customized Shared Book style; etc.)
14. Custom services/feeds
15. Live events
16. "Souvenirs"/"Merchandise"
17. Co-branded spinoff
18. Cost Per Install (popular with top Facebook apps who can help others get installs)
19. E-commerce (selling stuff directly on your website)
20. Sponsorships (ads of some sort that are sold based on time, not on the number of impressions)
21. Listings (paying a time based amount to list something like a job or real estate on your website)
22. Paid Inclusion (a form of CPC advertising where an advertiser pays to be included in a search result)
23. Streaming Audio Advertising (like radio advertising delivered in the audio stream after a certain amount of audio content has been delivered)
24. Streaming Video Advertising (like streaming audio but in video)
25. API Fees (charging third parties to access your API)"

Kevin Kelly on the Evolution of Value Creation and Business Models on the Web (Better Than Free)

Better Than Free is a new blog post by Kevin Kelly with a lot of buzz on the web this week. It is about the evolution of business models and value creation on the web. Important piece of thinking, especially for all those involved in the digital content/entertainment business. In my view this post resonates with the attention economy and the emerging business models within social networks/platforms (recommendtions, social economy). Additionally, people pay in my view increasingly for experiences (physical and social) and context and less for the content itself. Both are relatively scarce.

"When copies are super abundant, they become worthless. When copies are super abundant, stuff which can't be copied becomes scarce and valuable. Well, what can't be copied?

There are a number of qualities that can't be copied. Consider "trust." Trust cannot be copied. You can't purchase it. Trust must be earned, over time. It cannot be downloaded. Or faked. Or counterfeited (at least for long). If everything else is equal, you'll always prefer to deal with someone you can trust. So trust is an intangible that has increasing value in a copy saturated world.

There are a number of other qualities similar to trust that are difficult to copy, and thus become valuable in this network economy. I think the best way to examine them is not from the eye of the producer, manufacturer, or creator, but from the eye of the user. We can start with a simple user question: why would we ever pay for anything that we could get for free? From my study of the network economy I see roughly eight categories of intangible value that we buy when we pay for something that could be free.

There are 8 key value drivers : Immediacy, Personalization, Interpretation/Support, Authenticity, Accessibility, Embodiment, Patronage and Findability"

Book Recommendation: Theory U from C. Otto Scharmer from MIT

I am reading a remarkable, high-impact, deep, original, inspiring and profound book from MIT called Theory U written by C. Otto Scharmer. It is difficult to summarize this outstanding book due to its enormous richness but in my view and experience it is in the league of the works from Jared Diamond, Kevin Kelly and Howard Rheingold. It is a spiritual, personal and business journey combined. Very special indeed. And it resonates with an incredible amount of my own experiences and observations, especially within my intensive Twitter community as a transformative, open ended journey since March this year.

I just can't stop reading it, every page is so full with ideas. Some hints on topics: blind spots, growth, spirituality, innovation, creativity, leadership, change management, web 2.0, globalization, communities, learning, smart mobs, evolution of organizations, democracy, capitalism, open source, emergence, complexity and many examples from private life, politics (Iraq) and business.

Referenced leading authors are among others (be prepared for a long shot): Brian Arthur, Argyris, Senge, Brand, Carr, Castells, Christensen, Coase, Collins and Porras, Dalai Lama, de Geus, Florida, Friedman, Fukuyama, Gladwell, Goethe, Habermas, Hagel, Hamel, Handy, Hawken, Heidegger, von Hippel, Maslow, Minsky, Mintzberg, Morgan, Nietzsche, Nonaka, Peters, Prahalad, Putman, Sen, Sheldrake, Soros, Steiner, Tolle,   Sun Tzu, Varela, Trompenaars, Weick, Wheatley and Wilber. And all combined in a structured and new way...amazing.

Highly recommended ! This clearly is my favorite book of 2007, no doubt about that :-D

The Impact of P2P and Peer Production on our Economy, Society and our Digital Media Future

Just discovered a new inspiring speaker via the blog Smart Mobs called Michel Bauwers. Below his presentation with a 50 minute timeframe on P2P, peer-to-peer networks, communities, co-creation, mass collaboration, open innovation, FabLabs, wikinomics and peer production.

Highly recommended as this is one broad overview of key trends in our economy, society and digital media infrastructure. It is all-encompassing and thought provoking in many many ways. And it is clear. It integrates the views from Yochai Benkler, Lawrence Lessig, Howard Rheingold, Kevin Kelly, Don Tapscott, Henry Jenkins, Neil Gerschenfeld, Chris Anderson, David Weinberger and Alex Steffen in a new way. However, I do miss the impact of biotech and nanotech on his vision of peer production.

My 2 cents concerning this video:
- I do believe that open source, commons-based, non market peer production will grow the coming decades, both in the immaterial as well as material world (using Web/FabLabs).
- I like the distinction between hierarchical systems, decentralised systems and distributed systems and its impact on self organisation and fluidity (reminded me of David Weinbergers' latest book on categorisation). As the world clearly is moving at the speed of light towards to innovation, agility and flexibility, the distributed (web and P2P) model seems to become the dominant model, both organisationally as well as technically.
- I support the idea that the increasing autonomy and empowerment of individuals and their social networks/peers will reverse the power balance. Sources of trust are in peers, no longer in key institutions. Strong institutions with power are relevant and effective in situations where individuals are not empowered (enough), these are increasingly a thing of the past. Indeed, Eamonn Kelly - CEO of Global Business Network - wrote a piece on the impact of the emergence, self organisation, bottom-up culture on global issues. Additionally, Paul Hawken recently made the growing impact of NGOs explicit in this book Blessed Unrest.
- I dig the idea that peer production is about intrinsic motivation, authenticity, love and passion. And that's precisely why these initiatives thrive, both economically as well as ethically. If you self-select a project, YOU are in there with your whole mind and heart, including all your social and ecological values and norms. This means in my view that key improvements in our ecological and social agenda worldwide will be driven by these peer produced projects and not primarily by for-profit organisations (e.g. WiserEarth, WorldChanging etc.).

The Metaverse Roadmap : The Future of Web 3.0, Virtual Worlds, Augmented Reality, MMORPGs, Lifelogging, Google Earth and All Other Key Trends in Digital Media

Finally, the Metaverse Roadmap 2006-2016 has been published with over 72 pages of very valuable content related to all subjects/tags from my blog and even much more. The section on Predictions (9) is just stunning and breathtaking, so much highly interesting insights. The coming months I will pick some topics from this report to give you my perspective on them.

This is probably one of the most important reports on the future of digital media as a whole. It covers all aspects: economic, social, cultural, legal, political, technological and psychological. To me, this Metaverse Roadmap report is the absolute number 1 resource at this moment. It's just incredible. Thanks to all who contributed.

Very highly recommended to all my readers !

Google-DoubleClick Deal: Integrative Analysis of Pros and Cons

Google has acquired DoubleClick. A deal with a big impact in my view. Before I will elaborate on the pros and cons of this deal, I will would like to show some key digital advertising or eMarketing trends. This overview provides a context against which to evaluate this deal.

Overall eMarketing trends (see more in my previous post on the meltdown of mass media boosting demand for eMarketing):

• Migration from CPM to CPC to even CPL and CPA

• Migration of Ad Networks to Ad Exchanges

• Migration to contextual and behavioral targeting and relevancy

• Migration to seamless integration of eMarketing tools in 1 campaign (lower costs, less frequency caps/less waste, tight integration of keywords in banner creatives etc.)

• Migration of campaigns to platforms (boosting demand for integrated eMarketing solutions)

So what are the pros and cons of this Google-DoubleClick deal for Google ?

Pros:

• Customer base: access to each others clients (verticals and segments included) deepening relationships and increasing retention. Not only websites (DART, AdSense) but also agencies and advertisers.

• Products: a more complete eMarketing portfolio for advertisers (AdWords search ads, buzz marketing, affiliate, rich media, banners etc.) and a more complete eMarketing and measurement solution for site owners. On top of that, the online ad exchange of DoubleClick is very valuable to Google. 

• Pricing: CPCs on AdWords are rising creating a micro-economic saturation point. In effect, this makes traditional eMarketing tools more interesting to advertisers. DoubleClick is the perfect hedge for Google in the middle term.

• Technology: integration of technologies for ad targeting, optimization, Spotlight, Analytics and CheckOut (one interface); as a result ROI based and closed loop marketing is even more effective and efficient. Branding, Search, Analytics and Conversion: a complete solution. Example: integrating banner views and search keywords in 1 campaign -> a prospect might search on Google, click to advertisers' site, doesn't convert to sales, later on targeted banner views to this user to close the deal more effectively (assuming privacy laws allow this...)

• Legal: DoubleClick has 5 interesting eMarketing patents (e.g., user based profiling, optimized ad delivery)

• Competition: edge over Microsoft, Yahoo, AOL and other search and/or eMarketing intermediaries and measurement companies. Also a good move against RightMedia (RMX), now processing $450 million in eMarketing transactions this year.

• Innovation: long term integration with Googles' data centers, Maps/Earth, social networking Orkut, offline media buys (Google print, tv, radio etc.) and Google Base.

• Strategic: lock-in and negotiation power in the whole ecosystem. Higher customer share. Barriers to entry to new web 2.0 ad startups focusing on exploiting unsold inventory of big sites and online advertising exchanges/marketplaces. 

• Data: cross-fertilization of campaigning data from Google and DoubleClick. Sharing learnings on effective creatives, keywords (also used as text in banner creatives), media buying plans, lowering frequency caps for advertisers saving them many due to integration of AdWords with banner views etc. etc.

Cons:

• Strategic and competition: some websites might migrate towards competitive solutions or in-house ad serving solutions due to increased power of Google. And some advertisers might help alternative eMarketing solutions due to (likely) higher prices as negotiation power of Google has increased.

• Legal: regulatory measures due to much monopolistic power and even more so its privacy implications for end users (e.g., the trouble DoubleClick got while integrating offline data from Abacus Direct 7 years back)

I expect Google to continue their buying mode with a focus on :
- Mobile (mobile banners, rich media etc.)
- iTV
- Gamevertising
- Website optimization tools

21st Century Issues and Trends by 100 Thinkers

Prospect Magazine invites 100 thinkers from many fields to give their views on this century in this post. It concerns many views on politics, economics, sociology, environmental issues, religion, technology and science.

Below a quote from Brian Eno which resonates with me as it points out that underlying importance of technology (mainly biotech and IT) on this century.

"Globalists vs nationalists
How prepared are we to allow national governments the freedom to make decisions which may not be in the interests of the rest of the world? With issues such as climate change becoming increasingly urgent, many people will begin arguing for a global system of government with the power to overrule specific national interests.

Communities of geography vs communities of choice
At the same time, some people will feel less and less allegiance to “the nation,” which will become an increasingly nebulous act of faith, and more allegiance to “communities of choice” which exist outside national identities and geographical restraints. We see the beginnings of this in transnational pressure groups such as Greenpeace, MoveOn and Amnesty International, but also in the choices that people now make about where they live, bank their money, get their healthcare and go on holiday.

Real life vs virtual life
Some people will spend more and more of their time in virtual communities such as Second Life. They will claim that their communities represent the logical extension of citizen democracy. They will be ridiculed and opposed by “First Lifers,” who will insist that reality with all its complications always trumps virtual reality, but the second-lifers in turn will insist that they live in a world of their own design and therefore are by definition more creative and free. This division will deepen and intensify, and will develop from just a cultural preference into a choice about how and where people spend their lives.

Life extension for all vs for some
There will be an increasingly agonised division between those who feel that new life-extension technologies should be either available to those who can afford them or available to everyone. Life itself will be the resource over which wars will be fought: the “have nots” will feel that there is a fundamental injustice in the possibility for some people to enjoy conspicuously longer and healthier lives because they happen to be richer."

Free Digital Marketing Outlook Report 2007

It is really amazing sometimes what kinds of information is accessable and downloadable from the web for free. Here is one more example: Digital Marketing Outlook 2007 by Avenue A and Razorfish. Highly recommended again (I know...I use those two words a lot but hey....the web is marvelous place/activity and it seems to outpace my expectations again and again). This thorough and complete report by some of the leading companies in the eMarketing and website/platform space encompasses the following subjects: search 2.0, viral, e-mail, creatives, analytics, ROI marketing, cross media planning and integration, branding, mobile marketing, engagement, RSS, widgets, SEO and different emerging websites/concepts.

Bob Garfield on Digital Media, Ad Agencies, Advertisers and the Accelerating Meltdown of Old Media

This post by Bob Garfield on AdAge is recommended for all traditional media owners, marketers, advertisers and ad agencies. It is quite a read but it shows that the current meltdown of traditional media due to rise of digital media is accellerating. It deepens the thoughts of Joseph Jaffe, Doc Searls and David Weinberger, Chris Anderson, Henry Jenkins, John Battelle, Kevin Kelly, Don Tapscott and puts them in the light of actual financial and commercial facts and trends in the advertising space.

Marketing, branding and communications will become more about

• Values (practice what you preach)
• Open Source Marketing (the mass innovates for you)
• Proof, sharing evidence and information (instead of propaganda)
• Permission-based, opt-in, pull conversations (instead of push broadcast messages)
• Contextual, behavioral relevancy
• Social networks/viral effects (instead of market mechanisms)
• Platforms (instead of campaigns)
• Innovation and Excellence (instead of promotion)
• Coalitions (instead of fully homegrown solutions)

""People are interested in what they are interested in," he says. "The magical part of social networking like Ning is the people [specific category] advertisers are interested in are magically coming together." And they're trackable all the way down to the individual user, so why waste anyone's time with what co-founder Gina Bianchini calls "undifferentiated aspirational messages"? As for how you serve the information once you've gotten the audience's attention, the digital tools for doing so get ever more impressive.

One particular eye-opener, from Vancouver, Canada, is VideoClix, a hypervideo application that lets the user roll over any part of the image -- a car in the background, for instance -- and click for information about make, model and so on. A second click directs the user to the manufacturer, retailer or whatever. It's like VH1's old "Pop-Up Video" show, only the user alone controls what to pop up. Thus, it exploits the online third dimension, beyond audio and video: info-depth. "It's a layer of information," says founder Babak Maghfourian, "that people will demand.""

On Sustainability, Ecology, Environmental Impact, Green Business, Transparency and Choice

The Institute For The Future (IFTF) - one of my favorite sources for deep views on our future - has a post on Green Business which I totally agree with. I would like to add two intertwining trends that reinforce the two trends stated below from this post from IFTF:

1. Increasingly, companies define themselves by clear values. Corporate identity is more important for all stakeholders, especially employees and customers. These values are more authentic, practiced and embedded relative to previous similar branding and positioning claims. Ecology, sustainability and green business are a key theme right now due to Al Gore, Clinton, IPCC, Stern and many others. During the last World Economic Forum in Davos sustainability was by far the number one topic for the decision makers in the world (Evidence by this great post by Peter Schwartz on Edge.org). Its both sound economic sense as well as humanitarian/ecologically/spiritually driven.
2. Increasingly, consumers and customers use mobile devices scanning products realtime for their environmental impact by means of barcodes, RFID tags, QR codes and other tags.

"The critical thing here is the proliferation of both knowledge about the environmental impacts of goods and services, and the growth of choices in how to deal with those impacts. And all the indicators are that consumers will have more of both in the future.

Now, however, consumers are slowly getting access to more information about the energy required to produce or transport goods, and the environmental impacts of goods and services. As an article on labeling notes, just as food products are labeled with calorie and nutritional information, consumer products are beginning to bear details about their environmental impact, like the amount of greenhouse gases produced in making, transporting and selling them. The evolution of the concepts of "food miles" and "carbon footprint" don't just represent a growing general awareness of environmental impacts of agriculture, industry, and modern life in general; they also reflect an attempt to make sense of information that wasn't easily available in the past.

Where the choice used to be buy or don't buy, other options are emerging. Utilities are starting to offer access to green power, subsidies for installing solar panels, or rebates for conserving energy. Expedia offers travlers the chance to buy carbon offsets with their airline tickets (and doubtless some airline will soon claim to be greener than competitors, thanks to their modern fleet of planes, in-flight trash reduction efforts, etc.). Terrapass offers drivers the option of zeroing out their car's emissions."