I attended the Digital Media Summit in Hollywood yesterday.
Here’s the pitch from the event web site:
“Hollywood and content producers are faced with a Hobson’s Choice: Make your content available to all for free online - and potentially see your core business cannibalized. Or hold onto copyrighted content tightly…and watch as an amoral generation of youngsters steals it.”
Is it really that dire? I saw an awful lot of head-scratching going on. No one seems to know quite what to do about this whole “social media thing.” Charlene Li gave a great presentation on social media and groundswell, a primer I think many in the room desperately needed. Thanks Charlene!
Waiting for a Hit
The main theme I kept hearing over and over again from many of the industry panelists was that they are still waiting, or trying to figure out a formula for, a hit to happen online. Sandy Grushow of Filmaka stated that the “Seinfeld of the Internet” is going to change everything. I disagree, I think it’s about a conglomerate of niche content. Both the music and film industries are built around hits. It’s their whole business model. This is where the problem starts. The social web is not a hit-making environment. For the first time ever in the history of media, no one is in control. The democratization of content on the social web has put the user at the helm. This means there are no hits, because everybody has different preferences and tastes and there’s an exponential amount of content in just about any format you can think of for them to choose from. People can also make decisions based on what their trusted network of friends and colleagues like and recommend versus an advertisement.
Some Encouraging Tidbits
Chris Stephenson, GM of Global Marketing for the Zune seemed to have some interesting insights. Stephenson says the Zune strategy is to “turn the pirate into the promoter.” I think that’s a step in the right direction. According to York Baur from Zango last year 42% of total ad spend online was spent on search, while search only represented 1.5% of page views. Why, because search works, it’s about context, and advertising mirroring content. Early results in video advertising are encouraging, garnering significantly higher CTRs than banner ads, I think due to this very reason, context and relevance in relation to the main content. Earlier in the day Jarvis Mak of Media Contacts gave a great presentation of the research Media Contacts conducted through ComScore. The figure that stood out to me is that online video consumption grew 17% from Jan 07 to Dec 07.
On the Social Web Lots of Small = BIG
I think the social web can, and should, be looked a as an opportunity. Content for the web can be produced at a lower cost and brought to market more rapidly. There’s less risk involved because the cost to entry is so much lower. Content can be monetized in many ways: it can be leveraged to drive viewership and purchase in the form of branded entertainment, some are starting to see real ad revenue on video properties, and it can be monetized as subscription or pay per view/download. There are also opportunities for monetization that remain unexplored or underutilized. What will amount to a hit online is a series of smaller successes. And these smaller successes ultimately have the power to be much more impactful because they will appeal to a specific group of dedicated fans and evangelists. If you’re new to the space and want a quick and entertaining primer, check out the “Social Media in Plain English” video on YouTube.
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June 11th, 2008 11:59 am
Regarding Hobson’s Choice, I speculate that Hollywood, a town whose gears turn on the film industry (and music as a second), is a few steps behind. In fact, so much so that the entire industry shut down for 100 days in 2007-2008 when studios refused to recognize the internet as a ‘viable platform for profit’ regarding distribution of television content and the writer’s royalties. I see the fear in their eyes that if they charge for their offerings, piracy will strip them of their profits but offering it for free will remove ala carte rewards. Alas, there is at least one solution that has already proven it’s value: advertising & sponsorship opportunities for brands.
For the filmmaker, this concept is daunting. Why? Because, it will force them into unfamiliar territory: a sales role. Advertisers have long embraced audio/video/artistic content to associate their brand with as long as it is a good fit and if you think you’ve got a hit, by all means, the telephone is a two-way street. Brands want to reach audiences in a positive manner that creates a relationship and ultimately brings them up the ladder in your share-of-mind for when you are ready for a purchase decision or to adopt a service.
Just as a point of reference, advertisers spend $90,000+ for (1) :30 spot on Oprah. The reach is there but the frequency is not. Now imagine $90,000 to help UGC with their efforts– or even half of that. The potential for reach and the frequency exist as UGC can get numbers in the millions on various video sharing websites and your brand partner gets 100% share of voice. It’s pretty appealing when you look at it that way.
By pitching their content to brands through sponsorships, integration and cross-promotion, the content creators enter an environment that can monetize their efforts. I’ve always felt that to create an explosive community, you cannot charge end users when they can choose to go somewhere else to get it for free. By partnering with brands who are actively seeking opportunities, someone’s content has the potential to be the missing piece in a campaign or strategy.
I say, “Cheer up Charlie”, don’t be shy and start making meetings and sending examples of your work to contact@company. PR is usually quick to respond when they see something they like. As for ’selling out’, its up to the content’s creator to decide what works and what doesn’t right up front and don’t sign anything that doesn’t fit the message.
June 11th, 2008 12:23 pm
Nice report. Ironically entertainment were pioneers in the advertising space, but now they’re sounding like grumpy old men. Visited a radio summit this year and it was even worse. Hopefully Charlene had a positive effective on the environment. “Seinfeld of the Internet” - hilarious. You’re absolutely right, recommendation drives content distribution, as it should, and as it has for centuries.
June 12th, 2008 4:46 pm
Great post.
However, I do think a note of “utopian” thinking creeps into your post. “For the first time ever in the history of media, no one is in control. The democratization of content on the social web has put the user at the helm.”
I know people who have met with Facebook and they’re making it substantively difficult to get notice unless you use their adsense or had already created a large “network.”
Thus, for the Joe Blow starting out, it may not be quite so open now; breaking threw has always taken hard work, but we need to get to a place where users own/better control their own data, like Doc Searls is working on w/ the VRM.
June 13th, 2008 5:11 pm
Hi Lewis,
Thanks for the comment. I agree, it can still be hard to break through and be heard, for sure. I run a marketing firm, so if I was trying to claim that all you had to do was be awesome I’d be closing up the shop. Being awesome, at least appealing to a specific group is a requisite, beyond that it takes building awareness and igniting and audience’s passions to share your content within their circle of trust.
I’m just saying the model is different now. There’s more room for niche content, and more power in the hands of both the artist and the user. It’s still vital to get the word out, create awareness and give your content “social lube.”