Media and a Strong Culture of Experimentation

Sometimes you read something that says it all. A group of sentences that you wish you had come up with (but sadly did not).   Yesterday I came across one of those gems while reading an interview with Amy O’Leary, recently with the New York Times and now with Upworthy. Here is the link to the whole piece, but read this first.

No one has really figured out the secret to mastering what it means to be a media organization in the digital age. So the critical thing is that places like The New York Times dive head first into a strong culture of experimentation. And by that I don’t mean throwing everything to the wall and seeing what sticks. I mean rigorous, studied experimentation, where new ideas are tried with excitement and with ease and are studied to learn what works and what doesn’t. I mean that taking risks and trying new things are celebrated even when they may seem, at the outset, like a failure. And that the definition of success for a new idea should be whether or not we learned anything from it, not whether or not it became the future of media.”

The entire world of media can learn a lot from this paragraph.

By this, I mean anyone who writes journalism, creates a TV show, produces a movie, posts on YouTube, creates on Instagram, produces a radio show, a podcast, writes a book or makes music.

That large group that includes everyone who creates media intended for any audience in our digital age.

As Amy points out, we all should engage in “rigorous, studied experimentation”.

Maybe easier said than done, but doable nonetheless.

Posted in Audience, Distribution, Innovation, Internet, Old Media, Television | Tagged , , , , , , , | 2 Comments

What Taylor Swift Gets Right

Taylor Swift’s new album opened big last week and everyone is talking about how she pulled her music off Spotify.

As usual most people are looking in the wrong direction.

Many argue that the web and streaming services don’t pay enough money or they hurt musical artists or how terrible things have gotten since the Internet arrived.  So we hear the same old story about how our lives were just better when we had CDs.

This is the direction that Ben Sisario initially takes in his New York Times piece.

Then something remarkable happens. He finally gets to the real story about why Taylor Swift is successful and many other musical artists are not.  Put simply—Taylor Swift gets the social web.  She understands the world we live in today and doesn’t waste time thinking about yesterday.  She acts boldly and aggressively to reach her fans where and how they live within today’s media environment.

Sisario and his editors made a classic journalistic error.  They buried the lede. The important stuff comes when Sisario wraps it up with,

“… the most effective piece of promotion may have been Ms. Swift’s own deft command of social media. On Twitter and Instagram, she excels as an authentic personality who establishes direct connections with her audience by doing things like reposting images of fans holding copies of her album, said Matt Britton, chief executive of MRY, a youth marketing agency that is part of the Publicis Groupe, the global advertising giant.

“She has been able to take one person and spread herself out into millions of itty-bitty pieces of Taylor Swift and touch as many people as possible,” Mr. Britton said. “When you do that, you generate a kind of advocacy and excitement that no level of advertising could.”

That kind of engagement may inspire just as much loyalty in her fans as her music does, a valuable lesson for the music industry at large.

Claire Thompson, a 30-year-old entertainment lawyer in Los Angeles, said that she pre-ordered “1989” from iTunes as soon as it was available, and that it was the first album she could remember buying since Beyoncé’s self-titled album last year. She also said that she follows Ms. Swift closely on Instagram and likes the way “she pops up like all my other friends do — Dana’s at the Giants game, Taylor’s at the Knicks game.”

“It makes you as a fan feel like you’re a part of her life,” she added. “We all feel that if we met her, we would be friends. You feel connected to her. It’s nice to feel that.”

So you want to be successful as a musical artist in today’s world?

Make fans a part of your life, become an authentic personality who establishes a direct connection to your audience and generate a kind of advocacy and excitement that no level of advertising can.

And quit pining for the good old days.

Posted in Innovation, Internet, Social Media | Tagged , , , , , , , , | 5 Comments

Film in the Future and Fan Uploaded Content

I recently did a radio interview with Spark, hosted by Nora Young, on CBC Radio One.

If you live in Canada you can hear it today at 1PM NT or you can hear it now on the Spark blog under Film in the Future.

She is a great interviewer and they did a splendid editing job (which made me sound smarter).

Nora also did a compelling interview with Lewis Ball of Broadband TV about how Hollywood is dealing with Fan Uploaded Content

Posted in Distribution, Hollywood, Innovation, Internet, Social Media | Tagged , , , | Leave a comment

Will Hollywood learn from The Fault in Our Stars?

In June of 2012 I wrote Another Crack in the Mass Media Wall, a post that detailed how Lionsgate effectively used social media for the first time to get a huge opening weekend for The Hunger Games.

It is worth noting that two years later Hollywood decided to follow up on its own innovation with the release of The Fault in Our Stars.

As described in How “The Fault in Our Stars” Movie became a Social Media Supernova, Fox effectively reached its audience with a well planned social media campaign before the movie opened.

“Other movies have done [social media outreach] in places,” George Dewey, Fox’s senior vice-president for domestic digital marketing, tells Yahoo Movies. “We’re doing it across the board. I think the combination of the passion that pre-existed the movie with the decision to involve fans every single step of the way is why you see so much conversation about The Fault in Our Stars now.”

Dewey goes on to comment.

“In general, treating fans as part of the campaign as opposed to the audience for the campaign is the future of how movies will market.”

This view expressed by Dewey is still a minority one within the Hollywood marketing and distribution machine.  Most in Hollywood still believe that the audience is simply there to receive the campaign—not be part of it. This dominant point of view clings to the old mass media model of “we create, you simply consume”, where all control rests with the media company and gives no control or “emotional ownership” to the audience.  But we live in a new connected world. 

This past weekend showed that the marketing strategy employed by Fox and Mr. Dewey was “spot on”. 

The studio projected that the movie would hit $29 million at the North American box office.

But something bigger happened. As detailed in the New York Times,

The Fault in Our Stars took in a spectacular $48.2 million at North American theaters between Thursday night and Sunday, and it did so with nary a billboard in sight and no weeks long television ad barrage. In fact, 20th Century Fox spent less than $30 million on marketing, or half of what studios typically spend to introduce a summer film.”

It is important to mention that the movie was made for $12 million—paltry by Hollywood standards.

So Fox effectively cut their marketing spend in half  (thus saving $30 million), by not buying many ads (on that old fashioned one way mass media channel called TV) and instead reached out to fans directly on the Tumblrs, Pinterests, Facebooks and Twitters of the world (all built on that new fangled two way network called the Internet.)

They went directly to potential fans, invited them in and created an ongoing conversation.  They allowed them to converse with the “movie” and converse with each other about the movie.

And note that @realjohngreen, the book’s author and a social media force in his own right, was a big part of this conversation.

Will Hollywood bosses ignore the lessons from this success?  Will they insist that this is just a “one off” that cannot be repeated?   Will Mr. Dewey be praised for his work but also be told that this is really not the future of how movie marketing will work?

Very likely, if history is any guide.

Most industries would be thrilled to find a model that creates their product for less money, gets it into the market it at a reduced cost and still attracts a large number of consumers.  Most industries would work hard to see how they might replicate this model for future products.

They would have R&D units within their companies whose only purpose is to figure out the new connected world we live in.  They would experiment and innovate.

But this is the movie business we are talking about. Change is slow and not actively pursued. Instead of two years between innovations, it should be two months, two weeks or two days.

Can Hollywood learn a new trick that it can repeat, improve and execute consistently over time?

It should. After all, the new world is staring them in the face.  On at least two occasions it has also contributed massively to Hollywood’s bottom line.

But maybe it is just an old dog. 

And learning new tricks is just not its thing.

Update, June 23: A excellent piece today by Kathleen Toohill of Full Screen gives further detail on the social media campaign waged by Fox and John Green. Here it is: Getting Gen C to the Box Office [Infographic]. Read it!

Posted in Distribution, Hollywood, Innovation, Internet, Marketing | Tagged , , , , , , , , | 12 Comments

The Comcast Tax and Broadband Shell Game

Cable companies operate two distinct lines of business.

Traditionally they bundle and resell linear TV networks.  The cable company feeds these networks into our homes and provides the interface that lists the content for our selection.  The cable company pays each network a fee for each subscriber.  The consumer pays a monthly fee to the cable company.

The cable companies also provide high speed Internet access, known as broadband.  With this service, they do not pay any content providers for their channels nor do they provide a guide to the content that flows through the pipes.  They move the bits requested by the consumer as well as those bits she sends back out to the Internet.  And the consumer pays a monthly fee to the cable company.

One service allows you to navigate and view a predetermined, pre purchased bundle of linear channels. The other service gives you a pipe and access to an infinite array of content.

In its traditional business the cable company is the ultimate gatekeeper. It determines what you can see and what you will pay. 

With broadband, the gatekeeper role disappears.  Cable companies do not determine what you will watch nor do they charge you based on the content you watch.  

Some cable companies would like to change this.

Cable companies feel much more comfortable seeing the world through the lens of their traditional business.  They are working to reshape their broadband business so it looks more and more like their traditional business—a closed system, where they act as a gatekeeper and extract rent at every turn. 

See, for example, the comments made by Brian Roberts, the head of Comcast, at the recent Re/code conference.  As reported on GigaOm,

 “In a series of analogies, Roberts likened his company’s role to that of a postmaster, pointing out that Netflix pays hundreds of millions of dollars to mail DVDs to its customers but now expects to be able to deliver the same content over the Internet for free.”

His analogy is wrong.  Netflix does not want to distribute its bits for free.  He obfuscates the truth about how bits are paid for and how bits travel across the Internet.  He sows confusion while claiming to be clear.  Watch carefully as the shell gets moved.

Netflix pays money (a lot) to third parties in order to transport its bits over the Internet. (Just as it pays the postal service for DVD transport.) These bits are delivered via the Internet directly to the cable companies and other ISPs known as the last mile providers.  They in turn deliver the bits to their subscribers.

Mr. Roberts neglects to mention that broadband subscribers (you and I) pay up front for access to these bits. (Remember that monthly fee!)

Comcast is not satisfied with what we pay for broadband. It would like a little more.

As Mike Masnik puts it,

“What Roberts really wants to do is to get Netflix to pay a second time for Comcast’s customers’ bandwidth, even though they’re already paying for it.”

I believe this is called double dipping.

Mr. Roberts can double dip if he so chooses—but he should call it what it is.

Guess what happens when extra rent is extracted?

The end user pays extra.

Perhaps we should call it the Comcast tax.

UPDATE: John Oliver just did a brilliant and funny piece on his HBO show about net neutrality—it is a must see—here it is. (thanks to Sheri Candler)

Posted in Broadband, Cable, Distribution, Internet | Tagged , , , , , | 2 Comments

Movie Piracy: Surprising Tips from a Hollywood Insider

My recent post, The Movie Studios: Blinded by Piracy, generated many public and private comments.  One very smart one came in an email from a highly placed executive within the movie and television business. He has allowed me to quote him as long as I do not reveal his identity.

He writes,

 “Unlike the vast majority of my colleagues, I believe that the anti-piracy crusade (irrespective of where you stand on the issue morally) is practically futile and akin to “the war on drugs” or stopping people from speeding.  Earlier in my career, like most lawyers brought up in pre-21st century media, I was all gung-ho about enforcement and the sanctity of private property.  Although I still believe that respect for intellectual property laws is foundational for our industry, I am also a pragmatist, and I have come to believe that our biggest problem is ourselves, not the pirates.”

“It is the lack of creative marketing, pricing and windowing schemes that service and entice the customer that give the mainstream entertainment industry its biggest problem.  This is a social phenomenon, not a legal one, and, therefore, needs social solutions.” 

 This is a point that needs to be repeated and restated over and over. 

 Hollywood is radically out of sync with its customers, who now live in a hyper connected world.  These are the people who love movies and TV programs. They want to watch them on every screen they own.

It is Hollywood’s refusal to change its business model and learn how to entice its customers that is the problem.  Not piracy.

A purely legal point of view on piracy prevents Hollywood from finding a solution that brings in these customers.  Another frame is needed.

This Hollywood executive proposes one.

 “I analogize to other social issues such as traffic law violations where researchers have discovered that the answer isn’t changing the law, stricter enforcement or better education but actually better design of roads, intersections, stoplights and street signs to entice people to actually drive more safely. 

 The decision to use pirated content is not made in a vacuum.  It is a complex social transaction like any other in which the user takes into account his or her options and the costs and benefits of each. 

If the industry offered more people more convenience and better pricing and availability schemes, they would not turn as often to illegal content (which is not always easy to find and not always “free” – viruses, hassle, time, bad quality, etc.).  No solution is perfect – a certain percentage will always “cheat” or game the system (just as retail understands that there will always be a certain base level of shoplifting), but such an approach would pave the way for new markets and innovation.

The single-minded focus to hold onto today’s market share and today’s pricing schemes is folly that will eventually lead to long term loss.”

 Hollywood believes that its obsession with piracy is good for business.

 In fact it is really bad for business.

 As this insider states so eloquently,

 “I have come to believe that our biggest problem is ourselves, not the pirates.”

Imagine how different Hollywood could be if a major studio head possessed the insight (even courage) to utter such a line.

Hollywood should heed the advice of one of its own insiders as it wrestles with its future.  Perhaps then it can “pave the way for new markets and innovation”.

But will it choose to?


Posted in Hollywood, Innovation | Tagged , , , , , , | 9 Comments

The Movie Studios: Blinded by Piracy

When a bull enters the ring, the matador pulls out a red cape and waves it in front of his eyes.  Predictably the bull goes mad and charges toward the cape.  He leaves all his better instincts behind. 

We all know how the bullfight ends. Not well for the bull.

Replace “bull” with “major movie studios” and replace “red cape” with “piracy” and you have in a nutshell the bind within which the movie studios have placed themselves.

All they can see is the red cape. 

When they need an explanation for any of their myriad woes—bring on the red cape. When they try to think about the opportunities that the Internet might bring them—bring on the red cape.  This obsession with the red cape blinds them to anything new, anything innovative, any thing that might help them invigorate their business.

The red cape was on display recently on the Cannes Panel: Studios Fight Piracy While Indies Embrace Digital Future, reported on by Anne Thompson. The panel featured a lot of back and forth between Ruth Vitale, the executive director of CreativeFuture and Tim League of Alamo Drafthouse about distribution and piracy. One exchange is particularly illuminating.

Vitale, warming to her subject, said that people who download illegally are putting money in the pockets of criminals, the Russian mafia, and felons… That money “could have gone back into making more movies and TV shows,” she said. “They’re in drugs, child prostitution.”

Like I said, the red cape really causes the bull to get a little irrational. Vitale would have us believe that anyone who illegally downloads a movie is funding the drug and child sex trade. Really?

She then goes on to say that filmmakers should stay away from VHX or Vimeo because they do not use DRM that is approved by the studios. 

I guess Joss Whedon and Kevin Spacey did not get the memo.  They are releasing movies that they own on those platforms today.

Fortunately Tim League was on the panel to help calm down the rhetoric and focus on reality.  As Thompson writes:

 League thinks the solution is to “make the experience of going to the movies compelling,” he said, “to engage with young people and get them excited about foreign language films. I admire edgy engaging films and market them to young people, which puts us in the digital space. We worked with BitTorrent to promote ‘The Act of Killing,’ which has new sophisticated product bundles next month with DV extras as a package with a link to where to download the movie in a legal fashion with a credit card. We have email addresses. We’re not sure if we’re promoting to people to pirate it. Sometimes if our films show up on Bittorrent we high five because it means it cares!”

League and Vitale represent two paths within the film industry.

Vitale articulates the studio position.  She believes that piracy is the defining issue of the Internet.  It is the red flag that shapes every approach the studios take towards the Internet and blinds them to any other approach. They believe that they must convince young people to see the error of their ways and swear off piracy.

I say, “good luck with that”.

League represents another approach.  Find out where your audience is and engage with them on their own terms.  Don’t ask them to change—“make the experience of going to movies compelling.”

If this requires the movie studios to change their business model—change it. If this requires the movie studios to engage directly with their customers—engage directly.  If this requires the movie studios to get on BitTorrent–because that is where millions of film fans live—get on.

Vitale heads up an organization that has the name Future in its title.   Yet, it is focused on the past.

League heads up an organization whose name refers to an event deep in the history of the United States.  Yet, it is aimed at the future.

The red cape blinds the bull. The red cape of piracy blinds the movie studios. 

We all know how the bullfight ends.

Posted in Distribution, Hollywood, Independent Film, Innovation | Tagged , , , , , , , , , , , , | 8 Comments

Indie Film needs an Open Internet

Recently I watched the new movie IN YOUR EYES on my large screen TV in HD.  I paid $5 to rent it from Vimeo and stream it on my Apple TV.  The movie was very good and the experience was seamless.

The idea that you can rent a movie on the Internet and watch it on your TV is still a very new one, especially on a mass scale.  How long have we been doing this? A year? 5 years, tops?

And it is remarkable for those filmmakers who create and sell their movies online using platforms like Vimeo.  In the past, to sell a film to any audience, they had to rely on a series of gatekeepers.  Now they can sell direct–which means they keep a larger part of the revenue.

When I pay $5 to Vimeo, 90% or $4.50 goes back to the filmmaking team responsible for the film.  Traditional gatekeepers take from 30% to 70% of the revenue and hold onto all the information about the customer.

Here is the promise of the Internet.  It reduces the friction and cost within the artistic economy. 

The customer gets direct access to the content easily at a reasonable price.  The creative artist gets to the consumer easily and keeps the lion’s share of the money paid for his/her work.   Both sides win; one through reduced prices and the other, through higher revenue.

Yet all of this is now at risk.

In the coming months the FCC is going to decide where they really stand on the issue of net neutrality.

What is net neutrality? Let’s quote from Wikipedia.

Net neutrality (also network neutrality or Internet neutrality) is the principle that Internet service providers and governments should treat all data on the Internet equally, not discriminating or charging differentially by user, content, site, platform, application, type of attached equipment, and modes of communication.”

If the FCC decides that paid “fast lanes” can be created on the Internet, net neutrality will cease to exist.   Data will not be treated equally. ISP’s will be able to charge whatever they want, without restriction. Discrimination will rule.

When you create a fast lane for web services that can pay more dollars to get their content delivered faster, web based services that don’t (or can’t) pay will watch their services degrade. 

This means that the great experience I had renting and watching IN YOUR EYES would be threatened.  It means that it might be a bad one–not a great one. And why would I rent another independent movie directly from the filmmaker when the experience is so bad?

And this is why net neutrality rules that protect the open Internet are vitally important to any filmmaker.

The Internet will be the major engine of growth for independent film over the next decade and beyond. It will become the main way that most filmmakers will reach their audience and get paid for their work.

This is why all the organizations that support independent filmmakers should support net neutrality.

These film organizations should signal their support by joining together and speaking with one voice about the need for an open Internet.  They should recommend that the FCC stand up for the principles of real net neutrality.

Let’s start the list: Film Independent, Film Society of Lincoln Center, Independent Feature Project , Los Angeles Film Festival, Sundance, San Francisco Film Society, South by South West and the Tribeca Film Festival.

Who else should we add? I am sure I am missing someone important.

And what leader from among these organizations will pull them all together?

Posted in Distribution, Independent Film, Innovation | Tagged , , , , , , , , , , , | 12 Comments

How Cable TV Invented Crowd Funding

We assume that crowd funding first appeared when Kickstarter launched five years ago.

We may be wrong.

You see, the cable television business invented crowd funding a long time ago, when they created the basic cable bundle.

The basic cable bundle is really a work of genius. 

Charge every cable subscriber for each channel that comes with the basic cable bundle even if they never watch it.

So the crowd funds all the channels in basic cable.  We all get to participate.  Think of it as democracy—without the right to vote.

And the genius of the bundle does not stop there.  The subscriber has no idea what they pay for each channel because they are sold on the notion that they get such a great deal with the basic package it does not matter. 

The implied logic is as follows: if each channel was not in the bundle—some channel you really love would be much too expensive and beyond your reach. At least that is the sales pitch.

So the crowd funds the basic cable bundle but has no idea how its money is spent. 

Think of it as “blind” crowd funding.

This plays out in a fascinating way with sports on cable.

It is widely assumed by cable analysts that 50% of your basic cable bill goes to sports related programming, ranging from ESPN to live games from the NBA, NFL, MLB, etc.

Assume your basic cable bill is $60 per month.  Therefore $30 per month goes to support sports programming—whether you watch sports or not.  So that is $360 per year that you spend on sports.

There are approximately 100 million basic cable subscribers in the United States. A pretty large crowd, when you think about it. 

$360 per year x 100 million subscribers equals 36 billion dollars.  Clearly crowd funding can yield large numbers.

So the basic cable TV “crowd” funnels 36 billion dollars per year into the sports industry. This gets passed through a variety of intermediaries, including (but not limited to) ESPN, the broadcast networks and regional sports networks. This flows through these intermediaries to the sports leagues, individual teams and the players.

This is a beautiful thing for everyone involved.

Except, perhaps for the individual cable subscriber who does not watch any sports.

And they turn out to be a very large part of the crowd.

It is estimated that only 20% of those people who subscribe to basic cable actually watch sports on a regular basis. 

This means that 80% of the cable subscribers in the United States pay $360 per year for programs they do not view. 

Put it another way– US consumers currently spend  $28.8 billion per year on a product they do not use.

No wonder the cable and sports industries love this style of crowd funding.  That is a lot of extra cash.

The logic of the basic cable bundle means that ESPN makes money off the people who are not its customers.  This is also true for each sports league as well as each player. 

I would love to have this crowd funding mechanism for my business.  

Where do I sign up?

It is a recipe for getting rich—which is what sports television, the sports leagues and sports stars have done as a result.  The crowd gives its money through the basic cable subscription and it races up through the funnel to all of them. 

When you read that ESPN is making billions, that Donald Sterling’s Clippers are worth a billion dollars and hear about the latest NBA star signing a multimillion dollar contract—remember this—your $360 per year makes all of this possible—whether or not you watch a single game.  

I would like to thank you on behalf of everyone involved. Know that you an essential partner in this effort and that your contribution is deeply appreciated.

Cable TV perfected crowd funding long before Kickstarter was an idea and sports won big.  And we, the crowd, did not even see it happen.

We should give them some credit for being so sneaky, smart and ahead of the curve, don’t you think?

Posted in Cable, Distribution, Innovation, Uncategorized | Tagged , , , , , , , , | 4 Comments

Pay by the Size of the Screen? Not Likely

This was recently reported by Variety.

“DreamWorks Animation chief Jeffrey Katzenberg thinks the windowing model of feature films will become a “pay by the inch you watch.” During the Entrepreneurial Leadership in the Corporate World panel at the Milken Global Conference in Beverly Hills, Katzenberg explained what he thinks is the future of scheduling and distributing feature films.

“I think the model will change and you won’t pay for the window of availability. A movie will come out and you will have 17 days, that’s exactly three weekends, which is 95% of the revenue for 98% of movies. On the 18th day, these movies will be available everywhere ubiquitously and you will pay for the size. A movie screen will be $15. A 75” TV will be $4.00. A smartphone will be $1.99. That enterprise that will exist throughout the world, when that happens, and it will happen, it will reinvent the enterprise of movies,” he told the crowd.”

Katzenberg is right that the current windowing release model will collapse and movies will be available everywhere ubiquitously either concurrently with a movie’s theatrical release or very soon thereafter. That has already started to happen with independent releases.

He is wrong that people will pay more based on the size of the digital screen.

Mr. Katzenberg needs to understand his own customers.

If you are a subscriber to Netflix you can watch on any screen of any size for the same monthly price.  There is no additional charge to see Netflix on your TV. 

It is more expensive to see a movie in a theater because of the real estate costs associated with owning and maintaining a large physical property.  We also get to experience the movie on a very large screen.  As filmgoers we understand this.

The world of digital is completely different. Here, the costs are much lower and will continue to decline.  A movie studio can deliver me a movie over the Internet more cheaply today than 5 years ago, and will be able to do so more cheaply 5 years from now.  

I decide to watch a movie on my TV, my laptop, my tablet or my smart phone based on a number of different factors just as many other consumers do. Time of day, convenience, whether I am viewing it with others or by myself, the list goes on. 

And I know that the cost of delivering the movie to me on each one of these digital screens is the same for the company that delivers it.

Why should I pay more?

Consumers will not take kindly to any movie studio that decides to charge them more to watch on their TV than on their phone because it will try to break (and therefore ignore) the habits that we have already developed.  Habits we fully embrace. 

Netflix created simplicity for its customers by making sure they could watch on any screen at any time at one price.  They have set the bar for all others—including the movie studios.

If movie studios want to innovate their business model, they must be ahead of the digital curve–not behind it.

As they say, the horse is already out of the barn.

They might as well face it.


Posted in Distribution, Hollywood, Internet | Tagged , , , , , , , , | 3 Comments