When (and Why) Did I Start Paying for CBS?

The broadcast TV business model has always been very simple.  Convince a large number of people to view your show at the same time and advertisers will pay a lot for the right to get their attention.

This is how TV was introduced in the 50’s and this is how all the networks still want you to behave in 2014.  Yet, human behavior has been radically changed by the quickening arrival of a fully connected world where video is often available to every screen, any time, anywhere. 

But how are the TV networks reacting to this change? Let’s take CBS as an example.

I grew up watching CBS.  I always saw the CBS evening news and Walter Cronkite was a regular presence in my life, even while in college. We used to call him “Uncle Walt”, as he felt like he was a member of the family. 60 Minutes was a regular weekly habit and so were CBS sports and prime time programs. Then along came the Internet.  Old habits die hard, but they do often die.

Today, I never watch the CBS evening news. Why?  Because by that time of the day I have already found out online what happened and don’t need to spend my time being told what I already know.  60 Minutes has faded away.  And then there is primetime programming. 

I am down to one show on CBS–The Good Wife. I never watch it when it is broadcast.  To do so, means I would have to take a full hour of my time and submit myself to an externally imposed schedule.  Who does that anymore? I watch it later on my DVR.  I see it when it suits me and it takes only 44 minutes as I speed through the commercials. I call this a double win.

However, a week ago, I made a mistake.  During football season, the starting times for The Good Wife often get pushed if games run over their time slot and you have to set your DVR to record the following show as well. I forgot to do so.  As a result I was able to see every part of the show, except for the last 5 minutes, which is of course when all the stories in the episode reveal their endings.  I can’t miss that!

Frantically I searched for the episode elsewhere.  First, I located it on the VOD channel that my cable company provides—but the controls that allow you to fast forward were disabled.  I could not give up another hour.  So I went to CBS.com and located the episode and sped through to the last few minutes.  Then I was force fed five commercials in a row before I could see the end of the show.  This was the least, best alternative, so I took it.  So the best CBS could do for me, was to exchange five commercials for five minutes of video.  CBS no longer felt like a loving member of my family.

And this is the problem–CBS does not care about your user experience.  They just want to maintain the old broadcast business model, come hell or high water.  Our habits have changed, but they refuse to recognize our new reality.

At a time where people are gaining greater control over their media experiences–CBS (as well as other networks) want to pull it back.  At a time when viewership of individual TV shows continues its long decline, one would think that networks would envelop their viewers with love. Instead, they withhold it and box us into an old paradigm.

Your response could be–yes, but if you don’t watch the commercials–how is CBS going to get paid for its programming? 

I am glad you asked.

Last fall, Time Warner Cable and CBS had a little spat and CBS won.  TWC now pays CBS $2 per month for each subscriber–for the right to carry CBS.  Actually it means that I pay the $2.  (Not that I have any say in the matter.) And this fee will probably go up every year.

So I pay CBS $24 per year for The Good Wife, a few football games and a couple of awards shows.  CBS has entered into a new relationship with me. It has become a pay TV subscription service—that coincidently comes with ads. That should give those of us who pay this fee the right to skip commercials when we watch CBS programming.

Why should I expect that?

I subscribe to Amazon Prime, HBO and Netflix.  I watch their programming whenever I want, on any device I want, without any commercial interruption.  They have all adapted to my new habits.

Once CBS morphed into a subscription service these services became its new competition.  That’s right–CBS competes with the Internet. It is time for CBS to create a user experience that caters to our new behaviors, our new habits. It is the only way it will successfully compete.

Perhaps it could even learn to love me again.

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Will Half of TV Melt Away?

Television shows have always worked as a binding agent in American culture since they exploded onto the scene in the 1950’s.  Gathering around the tube to witness a live event or a popular show on the night when a new episode appeared helped to unify our society then and still captures our imagination today.

In the past few years the Internet has created a new set of consumer behaviors that is quite different than the mass media behaviors we take for granted.  Moreover, these behaviors seem poised to radically disrupt television. 

Analysts tend to believe that one such behavior referred to as “cord cutting”, helps us understand where TV is headed.  They follow the numbers closely to see how many people are giving up their cable or satellite subscriptions and use them as a proxy for understanding the next phase in TV.  This approach presupposes that as more people cut the cord, the more TV is doomed and conversely, the more people that keep their subscriptions, the more TV will keep its dominance.  Though mildly interesting as a parlor game, does it really tell us what we need to know?

Tim Wu, in a recent article titled Netflix’ s War on Mass Culture gives us a much better handle on the shifts in our vast media ecosystem.

He writes, (with bold emphasis from me);

“Netflix’s gambit…is to replace the traditional TV model with one dictated by the behaviors and values of the Internet generation. Instead of feeding a collective identity with broadly appealing content, the streamers imagine a culture united by shared tastes rather than arbitrary time slots….

Online, people are far more loyal to their interests and obsessions than an externally imposed schedule. While they may end up seeing the same stuff as other viewers, it happens incrementally, through recommendation algorithms and personal endorsements relayed over Twitter feeds, Facebook posts, and e-mails. New content is like snowfall, some of it melting away, some of it sticking and gradually accumulating.”

This is why Netflix is not concerned about releasing all the episodes of a TV series simultaneously.  If a customer is interested in the new Ricky Gervais series on Netflix she will see it on her own schedule, determining the time she watches as well as the number of episodes.  They are either interested in Rick Gervais or they are not and they become interested in his show because they have seen his work or because someone within their social graph has said they must see this show. So the show either melts away or sticks and accumulates.

How does Netflix predict whether or not a new show will “stick and accumulate”?   

As Wu points out, they are a tech company that collects massive amounts of data from their customers.  Based on prior viewing history, they can see how many might like a Rick Gervais show. Netflix, in its short history, has a much clearer sense of its customers and their “interests and obsessions” than all the broadcast and cable networks have gained during their entire existence. Mass media networks simply do not “know” their customers as well as Netflix, as they exist on pre-Internet platforms and know their viewers only as a mass–not as a collection of individuals with particular tastes.

Netflix can discover the many different fan configurations that exist within their large subscriber base. It does not matter if most Netflix subscribers hate or are indifferent to Rick Gervais, as long as there is a large enough number who love him to justify a financial bet on his series.  In other words, the series does not have to please the masses to be financially successful.

So Netflix can ignore the masses and concentrate solely on the fans. Does this mean that each show they put on will be successful?  Probably not, but it certainly increases the odds, especially when you factor in that Netflix makes it easy for consumers to get the show whenever they want, on any screen they want—at a very low cost—and need I add, without those pesky things called commercials.

Television networks do not have that luxury. For their programming they are forced to appeal to the masses and continue a pre—Internet model of entertainment at a time when the “behaviors and values of the Internet generation” are dictating a new model.  And I would argue that the “Internet generation” is now becoming almost everyone from under 5 years to over 70 years in age.

Wu’s argument suggests that TV will eventually be split in half.  One half will be live events, (sports, award shows, breaking news, talent shows) and the other will be scripted or reality series that are shot and edited long before they air.

The live shows will continue to attract large audiences by appealing to the masses and will continue to attract very high ad rates from big brands that want to reach many people at once.  In other words, television as we classically know it.

A different future potentially awaits scripted series. No doubt, scripted series will continue to exist on TV for some period of time.  However, as each year passes, fewer people will watch a series when it airs (if at all) and will instead record it on their DVR’s to watch on their own time—thus skipping the commercials. As a result, the ad rates for these shows will plummet.  As they fall, the economic model that supports their creation will collapse. Appointment television for scripted series will wither and die.

In this future scenario the networks will grapple with both an existential and financial crisis that will cut to the core of their identity.

They might ask a few questions. Do we keep only live event programming on our linear channels and dump our scripted programming all together?  Do we split off scripted programming from our linear channels and provide them just as Netflix does today—streaming them all at once? Do we become just like Netflix and start a subscription service for our scripted shows?  Or are we too late to become like Netflix and should we just produce series for Netflix to distribute?

None of these questions are easily answered. 

But they will not go away as the great TV meltdown unfolds.


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Old, New and “Really Old” Media

One of the challenges in grappling with our current media environment, where old style mass media and new style Internet media collide and call each other out, is understanding how it is changing.  Generally we try to see how it is different from last year or five years ago, or if we are really digging in—a decade or two ago.  This is considered the long view.

But perhaps we need to look at a much longer time frame, so we can really get at the underlying dynamics of how our media shapes us and how we, in turn, shape it. And the longer view we take, the more we see that there are no easy answers as to how the media world is being transformed.

Take, for example, Tom Standage’s whimsically titled book, Writing On The Wall— Social Media, The First 2,000 Years.  He takes us on a tour of the highlights from the past 2,000 plus years of Western Civilization to make the point that information has traveled along social networks for a very long time.  With his examples, he makes a very convincing case.  For several thousand years, we have found ways to communicate with each other and publish, share, and comment on each other’s ideas—long before we used the term “social network” and publishing, sharing and commenting was something you did on Twitter, Facebook or YouTube.

He also makes a very important point about the mass media that we inherited from the 19th century and which still dominates our media landscape. Standage argues that we should see mass media as a temporary blip in the course of human history.

As he writes (with my bold emphasis),

“In the years since the Internet became widespread, it has been commonplace to draw a distinction between “new” based on digital technologies and the “old” media that came before it.  But old media, it is now apparent, was something of a historical anomaly.  It began in 1833 with the launch of the New York Sun, with its innovative mass-media model based on amassing a large audience and then selling their attention to advertisers.  Look back before 1833 to the centuries before the era of old media began, however—to what could be termed the era of “really old” media—and the media environment, based on distribution of information from person to person along social networks, has many similarities with today’s world.  In many respects twenty-first-century Internet media has more in common with seventeenth-century pamphlets or eighteenth-century coffee houses than with nineteenth-century newspapers or twentieth-century radio and television.  New media is very different from old media, in short, but has much in common with “really old” media.  The intervening old–media era was a temporary state of affairs, rather than the natural order of things.  After this brief interlude–what might be called a mass-media parenthesis—media is now returning to something similar to its preindustrial form.”

These are provocative words.  To label old media as a “historical anomaly”, a “temporary state of affairs”, or even a “parenthesis” is certainly a challenge to the current mass media industry.  I also suspect that Bob Iger of Disney or Leslie Moonves of CBS are not quaking in their boots as they collect their many millions of dollars in annual compensation.  Being referred to, as a “temporary state of affairs”, will hardly ruin their day.

Yet, I also think Standage’s point is fundamentally correct. We are in a period of rapid media change and by gazing backward into our history, we can find in “really old” media a guide to our future.  As the cost of content creation and distribution continues to plunge, a modern Thomas Paine can write a “pamphlet” (though it may be a video) and get it to the whole planet very cheaply—even less than the cost of the printing and distribution of Paine’s work.

This does bring us back to an earlier media form that is fundamentally harder to control, harder to monetize and harder to predict.  When Thomas Paine wrote Common Sense, he had no idea that it would circulate so quickly and would be read aloud to so many.  He did not have a carefully crafted marketing plan with a projected ROI attached. Common Sense was spread, shared and commented on through the social networks of its time because people responded enthusiastically to it and they propelled it forward.

Through this process it fueled an emerging colonial consensus that a new country should be created. 

This does not mean that every “pamphlet” today will start a revolution.  But it does mean that such creations have a chance to make a large impact even when a media company with large marketing dollars is not behind them.

We can also learn another lesson by looking at “really old” media. Its pervasive existence over many years, in many countries and widely diverse cultures, shows us that when given the opportunity, people will consistently use their social networks to avidly spread information. It is just natural for us to act this way. 

The creation of mass media in the 19th century and its acceleration during the 20th century replaced–even suppressed that opportunity.  When the social web emerged during the early days of the 21st century, people throughout the world literally jumped at this new (or “really old”) opportunity.

Perhaps the lesson of history is that for human beings, who are inherently social, this is the natural order of things.

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Is ESPN worth what we are forced to pay?

Recently The New York Times revealed how much the typical cable operator (TWC or Comcast) pays per month for ESPN.  For each subscriber the operator pays $5.54 for ESPN and .70 for ESPN 2–a grand total of $6.24 per month.  This adds up to a lot of money that ESPN takes in every month from the operators.

Of course, we pay for this (with a small markup from our cable operator no doubt) as part of our basic cable bill each month.  Let’s assume that we pay at least $6.50 per month for the privilege of watching ESPN (and ESPN 2).  We pay, of course, whether we watch it or not. This is done without our consent–because if we want basic cable–we must take ESPN (and ESPN 2).

We are also forced to watch ads when we watch ESPN. It is not enough to take our money without our consent.  We have to give some of the time we paid for back to advertisers so they may hawk their wares with commercials as well as sponsorship opportunities within the shows themselves.

Think of this example broadly as the “3 strikes” of cable television.  They are,

1. The fee I pay is hidden–because the price for ESPN is never revealed to me on my cable bill or contract.

2. I am forced to pay–I have never been asked if I want ESPN–I must take it.

3. Advertisers take time from my viewing (that I have paid for).

I understand that networks have to make money in order to license and create their programming.  But I am in favor of a clear consumer proposition.

Here are two propositions that I like.

1. If you want to give me programming for free then I will watch advertising.  This makes sense because I am giving (or lending) my attention to your advertisers (who in turn are paying you for my attention) in exchange for your programming.

2. If you want me to pay for programming I am happy to do so if–the price is right and I  get to decide whether or not to buy it. This makes sense because I am exchanging my money for your programming and it is a transaction transparent to you and me.

So either I give you my attention, which you monetize thru an advertiser or I give you my money, which means you monetize me directly.  Simple, right?

This does not seem too much to ask. Surely this is Customer Service 101.

Unfortunately over time these two very clear propositions have become mixed in with each other and also become hidden, which creates a bad situation for consumers but a very profitable one for media companies.

ESPN is just one example of how today’s media world is too muddled for its own good and shows how a media company can extract maximum dollars from its customer. The questions remains though, does it provide maximum value to its customer?

This cobbled together cable delivery system that includes cable networks and broadcast networks does not understand that its end user is the person who pays the bills.

That person is not the cable operator.  It is us– those millions who watch and pay for the content and are given very little choice about what we watch, how we watch and if or how we pay.

Let us look at the latest dispute between CBS and Time Warner Cable.  Allegedly CBS wants to increase its subscriber fee from .66 to $2 per month. So we have a company that is granted free spectrum by the US taxpayers that provides us with ads on all of its programs (and which means we grant them our attention in exchange for free viewing) and wants to charge us $24 per year to watch their programming.

Why should I pay more for a network that used to be completely free? Are they providing me with special programming that is better than what they had before?  Are they reducing the number of ads they run because I pay more upfront? Are they providing additional value to me? The answer is no.

As a TWC subscriber I have not been able to watch CBS for the past three weeks.

Funny thing is, I have not missed it.

Perhaps because I am spending a lot more time on Netflix.  You know, that service that tells me how much they cost, ($7.99 per month), that creates great original programming and whose entire content library is available to me any time I want, on any device I want–with no ads!

I think they call that providing maximum value to your customer.

CBS and ESPN ought to take note.

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Want an Audience? Listen Carefully

There have been several excellent pieces that have dissected the Obama campaign’s effective use of digital technology.  Jon Ward added to this collection with his Republican Party Path Back From 2012 Election Requires Shift In Culture, Not Just Tactics.

While reading his post I came across a new term, “micro-listening”.

Ward writes about Harper Reed, the CTO of the Obama campaign,

“In June 2011, about one month after taking the job on the Obama campaign — his first job on any political campaign ever — Reed went to Foo Camp, an annual get-together of the technorati organized by Tim O’Reilly, founder of O’Reilly Media and an influential advocate for open source technology.

I called Reed to find out more about what he learned. He told me that at one session, he asked for input from others.

“I sat there and I basically said, ‘I’m the CTO for Obama’s reelection campaign, and I want to know what you guys think we should be focusing on,’” Reed said.

O’Reilly sat across from him and said, Reed recalled, “You hear a lot about micro-targeting in campaigns. I want to suggest that there should be more micro-listening.”

“That really resonated with me,” Reed said. “How do I activate those people to tell me more?’”

It is fascinating to read that Tim O’Reilly suggested the term “micro-listening”.  O’Reilly is a very smart man when it comes to understanding the evolution of web technology. He coined the phrase, “architecture of participation” to describe the social web.

The term, micro-targeting, is used by many who work in the world of Big Data– that area that promises that if brands can gather enough data points about each consumer, they can more effectively sell their wares because now they can craft the perfectly tailored sales pitch.

The “micro-listening” approach turns the micro-targeting strategy on its head.

Instead of pushing out the perfect message to get the consumer to say yes, it aspires to create a relationship by building trust.

It believes that someone is more likely to trust your message when you have allowed them to tell you what they think and care about. Only then will they join you, either to give you their vote (as with a campaign),  and/or their money (as with a campaign or a product).

The listening approach is more sophisticated and nuanced. It takes more time and effort because there is a lot of back and forth.

It is also more finely tuned to a networked society where consumers and citizens comment and share within their social networks.  As Tim O’Reilly would say, they are operating within an “architecture of participation”.

The micro-targeting approach still relies on a mass media model that pumps out a singular message to large numbers of people.  It refines the model slightly by making adjustments to the content of the  message or the form in which it is delivered. But it is clearly not interested in what the consumer has to say.  Listening is not part of the equation.

Ward goes on to quote another member of the Obama campaign staff.

“The biggest thing is listening and not just barking at [voters]. People don’t want to know our 10 point plan,” Jeremy Bird, the 34-year-old organizer who oversaw the Obama campaign’s field operation, told me. “They want to know that we’re listening to them, and that last time we talked to them, and they told us their son was an Iraq war vet, we listened to that and therefore we’re going to talk to them about that and not come at them like political marketers.”

“That was just huge for us. People stopped thinking of us as political marketers once they knew we were listening to them.”

The Obama campaign used technology to reinforce the human touch of their ground campaign.  They were able to harness the power of their campaign workers and volunteers by letting them know who they had to reach, how to reach them and finally, how to listen.

What Can We Learn From All This?

Anyone who wants to reach consumers with a value proposition, be they a big brand or an indie artist can learn from the Obama campaign.  Each company who says “buy my soap” or record label who says “listen to my music” or indie film maker who says “watch my movie” can emulate this strategy.

They each have to ask themselves the question that Harper Reed asked early in the campaign,  “How do I activate those people to tell me more?”

So how do you take advantage of digital technology in our networked  society and get people to buy what you are selling?

Listen carefully.

Posted in Advertising, Innovation, Internet, Marketing, Social Media | Tagged , , , , , , | 2 Comments

Filmmakers: Gather Your Audience Early and Often

Film festivals have long been powerful tools for indie filmmakers who seek audiences for their films. They serve as launching pads for that elusive big distribution deal that catapults an obscure filmmaker and unknown movie to fame and (sometimes) fortune.  The glare of the festival spotlight often creates magic for all concerned.

Last year’s Sundance festival certainly did that for Benh Zeitlin and his movie, Beasts of the Southern Wild.  A masterful film done on a low budget with unknown actors it has received richly deserved praise and box office success. It shows that the current system of indie development and funding can still support a worthy indie movie and help it reach a large audience.

Unfortunately, however, this kind of story is all too rare. Most of the indie films that go to film festivals do not get a distribution deal nor do they achieve anything close to this level of success.  This has always been the case. By and large,  films that go to Sundance and other well known film festivals never reach an audience beyond the festival.  They remain obscure–even after a major festival showing.

I assume that every film that makes it into a film festival has an audience beyond the festival itself. It just has to be found. And today, getting a distribution deal with a traditional distributor is not the only way to find that audience.

Another Way To Seek An Audience

There is another film that premiered at Sundance a year ago that won praise and found its audience.   And remarkably, this film, Indie Game: The Movie, did so without a traditional distribution deal.  As such, the example of Indie Game: The Movie provides a glimpse into how filmmakers can find an audience using a little bit of the old (getting into a film festival to gain attention) and a little bit of the new (reaching their audience before, during and after production).

Fortunately for the indie film business, Lijan Pajot and James Swirsky created a case study that lays out the details of the journey from the conception of their film through its release.  They have left a treasure trove of data that should inspire other filmmakers who might consider taking a similar path.  I will concentrate on just a couple of their many data points.

Usually a filmmaker uses a film festival to begin the process of gathering an audience.

Pajot and Swirsky did something markedly different.  They gathered an audience while they made their movie, long before they even applied to a festival.

A key vehicle for this gathering of fans was Kickstarter.  They did two campaigns on Kickstarter.  Through these two campaigns they gathered 2,893 supporters who contributed a total of $94,676 toward the film.  In addition to the monies raised, Pajot and Swirsky gathered a significant number of fans with whom they could regularly connect with over the course of the film’s production and release–with Kickstarter updates, tweets and email conversations.

Essentially they followed Kevin Kelly’s 1,000 True Fans Strategy.  By the time they were accepted by Sundance they had close to 3,000 fans in tow.  Importantly they had a fan base with whom they could share their major film festival experience.  You can imagine that their excited group of fans were more than happy to share their involvement with this film.  You can see the tweets: “The movie I supported on Kickstarter got into Sundance!” This in turn gathered a larger audience.

Pajot and Swirsky used the Sundance festival as their midpoint in gathering their audience–not their starting point.

As a result the normal amplification of buzz that festivals provide was even greater as they had a solid base to build on.

This is a scenario that will become increasingly common in the future as more independent filmmakers begin to use the 1,000 fans strategy early in the film making process.  And it will create another situation that Pajot and Swirsky  encountered at the festival.

Direct Distribution

Though they were offered several  traditional distribution deals, they said no to all of them. With their ever increasing fan base in their back pocket, another route was made possible.  They made deals that allowed them to directly distribute their film through a number of digital channels, ranging from Netflix, iTunes to downloads from their own website.  They were also able to get Adobe to underwrite a series of special theatrical screenings around the country.

One more thing to notice as well. As a result of their strategy, they held on to the ownership of their movie, which means that they alone control its future.

Much of their success can be directly traced to a decision they made early in their film making process– to gather their audience long before they entered their first festival.

It will be fascinating to observe which films come to Sundance this year with their fans in tow and take a similar route out.

Posted in Distribution, Independent Film, Innovation, Internet, Marketing, Social Media | Tagged , , , , , , , , , , , | 6 Comments

Zoe Keating, “I want to be paid in data.”

Over two years ago, I wrote a post about Zoe Keating and why she was an artist that other artists (particularly filmmakers) could learn from.  Then she was a leader in using the Internet to distribute and make money from her art–in her case, her music.

Zoe continues to be a leader. She recently posted a piece entitled, What I want from Internet radio, where she says the following.

“I want my data and in 2012 I see absolutely no reason why I shouldn’t own it. It seems like everyone has it, and exploits it…everyone but the creators providing the content that services are built on. I wish I could make this demand: stream my music, but in exchange give me my listener data. But the law doesn’t give me that power. The law only demands I be paid in money, which at this point in my career is not as valuable as information. I’d rather be paid in data.

For the first 6 months of 2012, I calculate I had more than 1.5 million listens on Pandora, for which I received $1652.74.  That seems great on the surface and I’m grateful for the extra money, but I want to know:  Do these listeners also own my music?  How many of these listens are on Zoë Keating stations? What other user stations do I pop up in, and sandwiched between what other artists? How many listeners gave me a “thumbs up”? How do I reach them? Do they know I’m performing nearby next month? How can I tell them I have a new album coming out?

The new model says that in the future I’m not supposed to sell music: I’m supposed to sell concert tickets and tshirts. Ok fine, so put me in touch with the people who will buy concert tickets and tshirts (p.s. I’d like the same from on-demand services like Spotify too).

In short, I think I’m solving my obscurity problem…”

If you read tech related blogs, you are constantly bombarded with pronouncements about “Big Data” and how it will play a a big role in the future of big brands and how they market to the consumer.

Zoe shows how individual artists need to also think about how they can wrestle with Big Data as well. Pandora and Spotify collect huge amounts of data from their listeners.  As Zoe points out this data tracks the behavior and location of her fans.  Access to that data is literally gold for Zoe and any other artist as it allows them to create an ongoing connection with their fans that can be monetized in a variety of ways–as she indicates.

What Zoe says about music services is also applicable to every other form of artistic expression and the digital services that sell them– be they films, tv series, web series, audio books, ebooks–the list goes on.  These services have something in addition to money to give artists.  They have the real data about their fans that artists can use to create sustainable businesses over time that support their art.

This is also why every artist needs a central place to interact with their fans that they own and control–be that a blog, a website, a twitter feed, or a facebook page.  If they have this central place they can deal directly with their fans and gather their own Big Data, while also letting their fans know how to find them on iTunes, Amazon, Netflix or Pandora.

At the same time, as Zoe indicates, these third party digital stores need to provide greater value to the artists whose work they sell by providing them with the data they collect while selling their music, films, web series or ebooks.

To repeat, this is a two fold process:

1.  Gather your own data on your own social media/web properties and

2. Get the data collected by others who sell your art.

As Zoe says, this is how you can solve the greatest problem each individual artist has–the problem of obscurity.

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The Memo Deep Inside HBO

Deep inside HBO’s New York offices is a memo that was originally created 5 years ago.  Each year it gets updated with new numbers and projections.  This document is controlled by its corporate strategy group and it lays out the pros and cons of HBO continuing to sell its programming through the large American MSOs (the Comcasts and Time Warner Cables of the world).

Within the pages of this document there is active debate about whether HBO Go should be tethered to the MSOs for sales and promotion or whether HBO Go should become a consumer facing product that is sold directly by HBO to its customers. As each year passes the debate framed by this document becomes more intense.


1. Each year, the cost of creating and delivering HBO Go to its customers (all of whom must have a linear HBO TV subscription though they may or may not use it) continues to decline.

2.  Each year, the MSOs, as HBO’s reseller, continue to take a large share of the $15 monthly subscription fee that HBO charges for its service. (Let’s assume 1/3 to 1/2.)

3.  Each year, it becomes clearer to the corporate strategy folks who run the numbers that HBO is leaving ever larger sums of money on the table because it is unable to sell HBO Go directly to consumers online.  (Assume they lose $5 to $7.50 per month per subscriber to Comcast, etc.) This money would contribute greatly to their bottom line. (It is has grown from tens of millions to hundreds of millions in the past 5 years.) This is not chump change.

Every year the corporate strategy folks lay out these numbers to their bosses at HBO and to their bosses at Time Warner.  And every year the debate rages within HBO.  They ask themselves:  Do we cut HBO Go loose from the requirement that one has to buy a linear HBO subscription from Comcast? Do we grab that larger profit per customer that is waiting for us if we eliminate the middleman?

This is but one instance of the general dilemma that all mass media companies face today. In our larger media world we are moving from distribution networks that are centrally controlled, ie, cable systems and broadcast networks to a distribution network that is based on a distributed architecture–i.e. the Internet.

As this shift to the Internet occurs, mass media companies have the opportunity to deal directly with their customers as they never have. Large creators and publishers of content, like HBO, can now interact with their customers and understand their wants and desires in a completely new manner.  And they can do so at a much lower cost than going over legacy mass media networks.  This cost will only continue to go down as the price of all things digital continues to fall.

Not to mention that HBO has a lower priced competitor that already deals directly with its customers on the Internet.   It is called Netflix.  It is starting to do exactly what HBO does.  It licenses Hollywood content and creates original content that will shortly be on par with HBO.  (House of Cards comes in 2013 and more to follow.)

So HBO, on the one side, is squeezed by competition from the Internet and on the other, held back by legacy middleman agreements through its arrangements with the large cable companies. These debates within HBO would be fascinating drama in themselves.

Ironically, HBO has to ask the very same question that is asked by many of us who subscribe to cable. 

When do I cut the cord?

Posted in Distribution, Innovation, Internet, Television, Uncategorized | Tagged , , , , , , , | 2 Comments

You Need to Build a Database of Your Followers

Over the past two weeks I have had the chance to meet with some smart filmmakers and discuss how they might better think about and build their audiences.  And today, while catching up with my reading I had the good fortune to read two blog posts that capture what I often try to say–but say it better.

The first was an interview with Thom Powers by Amanda Lin Costa on PBS MediaShift, Thom Powers: For Film Festivals, Twitter Is Mandatory, Apps Are Not.  Thom talks about what filmmakers should be doing to effectively use festivals and promote their movies. He makes a few points about social media and how important it is for filmmakers to acquire a new tool.  A tool, by the way, that is not taught in film school.

“…you have to incorporate social media, with the basics being Twitter, Facebook and YouTube. If a filmmaker isn’t at least covering those three bases, they are a step behind.

It’s also about building a database. It used to be two tools you needed as a filmmaker: a camera and an editing machine. Now there’s a third tool, which is a database of your followers, and not just for one project but as something you’re going to nurture and grow for your career. I think this is a new approach, because the old approach was to think about this as film-to-film.”

Thom suggests that filmmakers need to think beyond their current film and think instead like a company that is continually producing movies and therefore can build up a following over several films.  The database is crucial to that process. It allows you to keep in constant contact with the fans of your current project and the potential fans of your future project.

Then I came across a fascinating post, INDIE GAME: THE MOVIE: THE CASE STUDY , written by Lisanne Pajot and James Swirsky, who are the filmmakers who made Indie Game: The Movie. They did what Thom suggests all filmmakers do and achieved great success. I urge everyone to read all the posts that compose their case study.  (Here is hoping that they come out with an ebook version soon).

There is much to praise about the film and the case study they have created.  I was struck by one section particularly because they highlight just what it takes to pull off what Thom suggests.  Above all, notice that all this audience development and database stuff takes a lot of work–if you want to succeed.   As they write,

“In terms of numbers, here’s what that audience engagement actually meant. Between the 2 filmmakers, over the course of the 33 months of production (and distribution):

10,286 IGTM-related emails were written or replied to
13,783 Tweets were sent off from @indiegamemovie
182 blog posts were made on IndieGameTheMovie.com
88 minutes of extra video web content was published prior to release, resulting in over 1.3 million views.
51 Updates were given to Kickstarter Backers
2,784 emails were support/fan emails personally responded to after the June 12th release.”

You do not have to read between the lines to realize that Lisanne and James spent a lot of time in front of their computers pounding out emails, tweets, blog posts, and updates, often to one audience member at a time. Time not spent doing all the other things filmmakers (and people in general) would prefer to do, like relax, listen to music, maybe see or make a new movie.

But you can bet that as a result they have a very active database of followers who are seeing their current movie and eagerly awaiting what they do next.

And what independent filmmaker would not want to be in their position?

Posted in Distribution, Independent Film, Innovation, Internet, Marketing, Social Media | Tagged , , , , , | 3 Comments

As Social Media Marketing Increases, Will TV Ads Decline?

“What is originality?  To see something that has no name as yet and hence cannot be mentioned although it stares us all in the face.  The way men usually are, it takes a name to make something visible to them.”

                      Friedrich Nietzsche

We know that we are in the midst of a massive media transition as we watch the Internet reshape the world of mass media. We see new forms of entertainment and marketing emerge that use this massive distributed network. These new forms do not treat people as passive mass media consumers. Instead people exist as active “users” who engage with immersive experiences that they have a hand in shaping and guiding.

The traditional lines between marketing, advertising and entertainment blur within these experiences.  This blurring causes even more confusion.  We do not even know what to call these new forms and as a result– they are not yet truly visible to us.  Words like transmedia, story worlds, gamification or spreadable media are used to give these forms definition but they do not seem to capture them completely.  We know a 30 second TV spot when we see it.  But what is all this other stuff?

Understanding The Blur: No Interruptions Please

Fast Company has been diligent at detailing some of these new forms.  Recently they analyzed  The Hunger Games  and Prometheus and how Ignition Interactive employed a variety of techniques to engage with people online in order to persuade them to leave their homes and see these movies in movie theaters. Each piece gives a glimpse into the future of movie marketing and is worth a close read.

In each example, Ignition Interactive created large story worlds that immersed their participants in a variety of media.  These story worlds have game play, various kinds of video and user generated content that is spread across multiple platforms, (Facebook, Twitter and tumblr, among others) and move across multiple screens.  They weave a story that is inspired by the film’s narrative and additional narrative that is created by fans.

This approach capitalizes on a massive shift in consumer behavior brought about by technology.  As Steve Coulson, Partner and Creative Director at Campfire put it in a comment on an earlier post of mine;

 “Interruptive advertising, like TV commercials and banner ads will increasingly be filtered by technology like ad blockers and DVRs.  To gain attention and interaction, you need to move to permission marketing tactics, that excite people rather than interrupt them…  The Prometheus campaign emerged on multiple platforms, and spread primarily via social media WOM.  In that sense, these types of campaigns – free creative prequels to paid entertainment experiences – work in the way that a free product sample does to drive awareness.  Try before you buy, coupled with an organic distribution method that does not end when a media buy is finished.”

Evan DeHaven, President/Executive Creative Director of Ignition Interactive, seconds Coulson’s point when he comments;

“Consumers don’t want to be force fed ads anymore and in most mediums we can bypass ads quickly and easily so they have become less and less effective. For instance try naming the last site you saw a banner ad on. This is hard to answer although they are on every website. The reason is we know where they are placed, their shapes and sizes, so our eyes are trained to look around them.

Instead if we bring a story world to the mediums users frequent and allow them numerous and easy entries along with opportunities to participate, your marketing effortlessly becomes pleasurable instead of an annoyance. This pleasure in many cases converts to a purchase and/or share.”

He ends his comment with a sentence in all caps so we can really get the point.


The New World of Movie Marketing

It is clear that in this new world, whose contours we are beginning to see, interruptive advertising such TV or online banner ads will face greater resistance from consumers. With any form of advertising, the film company (or any brand one might argue) has to seduce the viewer with its message.  But the terrain for the seduction has completely changed. The consumer may still want to be “seduced” but she does not want to be “interrupted”.

Does this new method work?  Can a movie company get people to see its movies in theaters without an immense TV ad spend?

In at least one case the answer appears to be yes.

Ronald Grover of  Reuters reports that Lionsgate spent 15 to 20 million dollars less in TV advertising on The Hunger Games because of its successful social media efforts.  This means it cut a 1/3 of its normal spend on TV ads and still achieved a large box office return.  And though their social media campaign was extensive, it cost much less than 20 million dollars.

Fewer dollars were spent to gain an equivalent large box office result that only TV ads would have previously enabled. Put simply, Lionsgate discovered that it did not need to place as many TV ads as it normally did to fill theater seats.

As Greg Verdino, the author of MicroMarketing  notes in a comment,

 “…is it more efficient and/or effective than pumping money into traditional advertising? …signs are starting to point to yes. I’d much rather invest my money (even if it is 7-figures’ worth) in building consumer buy-in and participation, and in creating the kind of social ownership that fills theaters opening weekend – rather than in spray and pray advertising that looks, sounds and feels pretty much the same as everyone else’s.”

What effect would this have if this change in spending were to spread throughout the movie studio system?

In 2011 the movie studios collectively spent $2.9 billion on television advertising to convince people to show up at movie theaters for their new releases.  If every studio cut its TV ad spend by 1/3 as Lionsgate did, that would mean one billion dollars less spent on TV ads on an annualized basis.

Of course this means one billion dollars less in revenue for the broadcast and cable networks that normally show movie advertising to their viewers.  A big drop in revenue, no matter how you slice it.

Will Studios Cut Back TV Ad Spends?

A fascinating paradox is now set up within the larger mass media ecosystem.

The Internet helps the movie business find a new way to connect with its customers at a much lower cost, thus helping the studios’ bottom line. However, by doing so, less money flows to other members of the mass media ecosystem—the broadcast and cable networks–that are often owned by the same companies.  So some large mass media companies will save money in one division–only to see reduced revenue simultaneously in another division.

We might see that some studios do not reduce TV ad budgets even when they can achieve the same result by using less expensive social media campaigns like The Hunger Games. Part of this will be attributable to their strongly held belief (illusion?) that they must always spend big on TV to achieve large box office grosses. After all it is the way of mass media.

In addition, their corporate masters might not allow them to reduce what they spend—after all the company needs that revenue. This could act as a brake on marketing innovation.

However, companies like Lionsgate, who are not owned (yet) by larger entities will benefit by using these new methods—as they already have.

And perhaps, when these new forms finally gain a name and are therefore easier to see, innovation could accelerate and TV ads will no longer be the king of movie marketing.


Note: This is a revision of an earlier post of mine titled Another Crack In The Mass Media Wall.  Thanks to everyone who commented on that post, especially those whose comments contributed to this piece.

Posted in Advertising, Distribution, Hollywood, Innovation, Internet, Marketing, Movie Theaters, Social Media | Tagged , , , , , , , , , , | 4 Comments