February 2011

What Makes a Hit Consumer Internet Service

Over the past few days, there has been a heated debate about Quora, a year-old startup, that offers a more sophisticated version of Yahoo Answers’ question-and-answer platform. Quora has found success with early adopters because of its high-fidelity content, but it’s also grappling with the arrival of the masses, which are going to drown out those signals with noise. This dichotomy is one of the toughest challenges for not only Quora, but for any other Internet service with dreams of mega-success.

Let’s face it: Today, success on the consumer Internet essentially equates with scale. Unless you have scale — which is nothing more than a nerdy euphemism for massive mainstream adoption — you don't have much of a chance of becoming a major Internet company. Our systems of monetization on the Internet all hark back to old media — television and print. The concept of audiences and cost-per-thousand impressions are the terminology used by media companies of yore. The other monetization models involve subscriptions, where people pay for a service or information, and what is known as e-commerce, where you buy goods such as books, clothes and shoes. You need to be Internet scale to fit the current monetization models — advertising and subscriptions — and make meaningful revenues worthy of a large company.

Will the Music Industry Ever Learn From Its Mistakes?

The music industry has endured more than its fair share of trouble over the past decade, through Napsterization, the collapse of CD sales, the rise of iTunes and more. But few labels have been more affected than EMI, one of the “big four” labels which was taken over by U.S. finance titan Citigroup Feb 1.

The deal wasn't even worth much in cash terms -- Citigroup simply called in the debt EMI owed it, wrote it down by $3.5 billion and took control. EMI’s sad story shows that it’s suffering the same problems as the wider music business: It went into the networked era as a huge and well-known brand with a roster of big name artists and ownership of incredible catalogue of recordings. It was home to acts like the Beatles and Coldplay, and was the owner of iconic brands like Parlophone and Virgin. Yet despite its natural advantages it had built up over the years, it fell to pieces in the face of changing consumer behavior and aggressive new distribution models enabled by the Internet. Outpaced, outgunned and outmaneuvered, it has now handed its success over to the likes of Apple and its future to a bank that’s trying to hawk it to the highest bidder.

Surveys say: IPTV’s future could at last be on solid ground

MRG Research, which has long closely tracked the IPTV market, has a new report that projects the global base of IPTV subscribers to grow from about 44 million last year, to more than 111 million by 2014, representing a compound annual growth rate of about 26 percent. The research comes around the same time as a report from India’s RNCOS Industry Research that predicted global IPTV subscribers to number more than 106 million by 2014, with a CAGR of about 24 percent.

Introducing the Android Market website

Google launched the Android Market website, allowing visitors to browse and search for great apps from their web browsers. Google also showcased the latest Android release built from the ground up for tablets. Honeycomb has a completely redesigned user interface, with more interactive notifications and widgets, improved multi-tasking, and the latest and greatest Google Mobile services optimized for tablets. Google showed off pre-release applications optimized for Honeycomb.

Apple’s In-App Rules: ‘Betrayed’ European Publishers Convene A Summit

Publishers in Europe are up in arms over Apple’s decision to reject Sony’s Reader app.

They say Apple has left them “confused” with their charging policies, and are now gearing up to meet in London later this month to plan what to do next. Grzegorz Piechota, the European president of the International Newsmedia Marketing Association -- which represents some 5,000 members in 80 countries worldwide -- told us that the INMA will be meeting with the European Online Publishers Association and the magazine association FIPP in a invitation-only roundtable on February 17 in London, to compare notes on Apple’s new subscription charging rules.

Heritage Foundation: abolish net neutrality, gut FCC powers

The Heritage Foundation has issued a report urging Congress to review 20 "unnecessary and harmful regulations" that the group says should be clipped as soon as possible. Three of the 20 are administered by the Federal Communications Commission network neutrality/open Internet rules, media ownership rules, and merger review authority. "This regulatory tide must be reversed," Heritage's Dianne Katz concludes. "Policymakers should not just prevent harmful new regulations, but must repeal costly and unnecessary rules already on the books."

Court Rejects Effort To Have Comcast Panel Hear Verizon Challenge

The US District Court of Appeals for the District of Columbia turned down Verizon's request to have the same panel that ruled in favor of Comcast's challenge to the Federal Communications Commission's network neutrality enforcement action take up Verizon's lawsuit against the agency's latest action on the issue. The court denied Verizon's request without explanation. The court has not taken any action on the merits of Verizon's challenge to the FCC network neutrality order.

"We're pleased with the Court's swift action and look forward to the dismissal of the other part of Verizon's request," Public Knowledge said.

Public Knowledge rebrands 'the nuclear option'

After industry spent months calling broadband reclassification "the nuclear option," Public Knowledge (PK) is using the same term to describe a proposed repeal of network neutrality rules.

Reclassification was seen as a stricter option for the Federal Communications Commission (FCC) to take in comparison to passing broadband regulations only. After the FCC chose the less severe approach, House Republicans still said they will try to repeal these regulations. PK's director of government affairs Ernesto Falcon writes:"Opponents to an open Internet have made clear that despite the support from AT&T and the cable industry, they intend to invoke the nuclear option known as the Congressional Review Act (CRA). They have stated, despite significant corporate support (and significant dissent from public interest groups) that the Federal Communications Commission’s open Internet rules resemble George Orwell’s 1984 Big Brother." In contrast, network neutrality opponents do not see the CRA attempt as excessively aggressive. House Republicans argue that they are just fighting an action the FCC took without any congressional directive to do so. They have panned the FCC's process as opaque and say the regulations will stifle innovation and investment.

Digital Divide: Segregation Is Alive and Well in Social Media

[Commentary] As marketers continue to drop traditional ethnic media and scramble to create the "ultimate cross-cultural digital experience and platform," one should take note of America's behavior on the web. Youth are everywhere on the web. But ethnic Internet users, both younger and older, are "congregating in spaces where there are people like them, or where they feel comfortable bringing people like them," says Ebele Mora, a millennial, and Chief Financial Officer of TUV Media.

Most multicultural and LGBT groups seek places on the web beyond cross-cultural lifestyles in an effort to connect with others from their own culture or sexual orientation. Congregating provides the opportunity for these segments to engage in shared experiences related to their culture, lifestyle, and music. Importantly, given that society penalizes those who openly discuss racial issues, these spaces provide a refuge for honest conversations that affect their communities. One black Gen Y Facebooker confessed that she frequently, temporarily blocks her white Facebook friends -- and prays they don't notice -- so that she can have open, honest discussions with her black friends. Marketers need to be careful about abandoning ethnic strategies in the digital space. The opportunity is to understand what these ethnic digital platforms are and who, how where and when these consumers are showing up so that brands can better connect and engage them.

Tribune lenders drop competing bankruptcy plan

A group of lenders has withdrawn its plan for reorganizing newspaper owner Tribune Co, leaving two proposals for ending the company's two-year stay in bankruptcy.

The group known as the Bridge Lenders agreed to withdraw its plan and support Tribune's proposal, which is based on a settlement among lenders JPMorgan Chase & Co and hedge funds Oak Tree Capital Management and Angelo, Gordon & Co. The Bridge Lenders agreed to accept $64.5 million in cash as well as attorney fees and their share of distributions from trusts that will pursue legal claims.

Benton

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