Martin T. Focazio

One of my favorite all time books is “The Innovators Dilemma” by Clayton Christensen. In a theme that should be well known by now, the premise of the book is that emergent “good enough” technologies threaten established business models and disrupt markets. The examples in the book are many, and the story plays out the same – an innovation that’s not “as good” as the leading solution, but cheaper or able to deliver unique features – is derides as “lower quality” or “not robust enough” than existing solutions…then the marketplace leaves the incumbent in droves for the “less good” solution, which becomes better and better until it IS better than the current offering and then is on the way to being the market leader.

The internet is “worse” than the networks it displaced.

Digital cameras were “worse” than film.

Facebook is “worse” than the Internet at large, it seems that the cycle never ends.

And so I turn to streaming access to media “over the top” (meaning it bypasses the cable box by going “over the top” of it via the Internet).

Over and over again, I read derisive commentary from within the pay television industry about how services like Netflix and Hulu are “poor substitutes” for a cable TV subscription, and how the “video quality can’t compare” and so on. It all sounds so familiar. OTT services are “good enough” for people for whom video media consumption is an elective activity, not a constant presence in their life.

This past Sunday, the Superbowl was presented as a live stream via NBC Sports via their nifty Sunday Night Football silverlight “app.” I submit that this was a turning point for OTT services, because the OTT application used by NBC Sports was actually better than the live TV experience.  Not only was I able to pick the shots from several difference camera angles or scenes, I had full control over the experience, from pausing to sharing sections to seeing social media commentary, statistics and more. It was wonderful, engaging and, for “linear programming” (that’s industry speak for live television), it hit all the right marks.

So I’ll suggest that the year 2012 is the year that “shows” become “apps” and the best programming will find itself needing to be surrounded by the best overall user experience of concurrent, high-density information delivery as well as great interactivity.

This is the year where OTT moves from “good enough” to “better.”

In so many ways, the disconnect between the digital world and the analog world is never more clearly defined than when a client with a long-standing business engages a digital media agency to help them do something good for their business online like increase sales and decrease costs.

The one big secret that digital media agencies almost never reveal is that all of the very top players in the online space (Amazon, eBay, Netflix, Facebook, etc…) generally design, build and maintain the vast majority of their own software and user experiences from the ground up and think “online first and only” for all of their activities.

The one big secret clients keep from their digital media agencies is that the online initiatives have virtually no ongoing operational responsibility for maintaining and managing the site systems & content.

Over the next weeks, I’l be posting a series of items that explore the digital agency/client relationship and how it can be improved.

Please add. in the comments, your opinions about what drives you nuts about your clients  (from the agency side) and if you’re a client with a digital media agency, what drives you nuts about your agency.  I’ll keep identities private as requested (all comments are moderated, so they won’t automatically show up).

Editorial Note: For most of 2011, I avoided blogging because of concerns that what I posted here would be construed as reflecting the position of my employer, and by extension,  my opinions on the business of media and entertainment in general would be assumed to be what I think of our clients and their business specifically.  

In short, my personally held views as well as my household’s approach to accessing media and entertainment content (I have not had pay television service since 1992) was not congruent with the business model of many of my clients, who are in the business of selling subscription packages to television service.  

However, in the last quarter of 2011, I experienced a bit of an epiphany, and realized that my “contrarian” views on the media and entertainment business were in fact relevant and useful to my clients , and in hearing my clients speak at public events and in shareholder communications, I began to see hints of awareness of the changes I’ve been espousing, and I see that in important ways in the media and entertainment industry at large there’s an agreement with my own views of the future of how people discover, select, buy and use media and entertainment products.  So I’m unleashing the full Marty here, now and in the future, because I’ve been keeping this stuff bottled up for a while and there’s a great deal to share.  In this post I’m going out outline some of my thoughts, and then I’ll be keeping this blog going with field notes at the collision of Media and eCommerce. 

Is this guy the biggest threat to the “traditional” media and entertainment business? I think so. 

Here’s why. At the beginning of November Rovio announced that they hit the 500,000,000 download mark for Angry Birds. In the announcement was this tidbit:

“Angry Birds Fans around the world have so far played a total of 200,000 years of Angry Birds, with 300 million minutes of playing time daily. “

That’s a huge number – and that’s time people aren’t watching (or more accurately paying attention to) television.  The real effects of this lack of attention – and the attendant lack of interest in programming bundles – are going to become apparent and widespread in 2012. Television has already been surpassed as the medium of choice – the battle is over, the Internet won – it’s just that the television beast is so big it does not realize that the internet has infected the entire ecosystem.

Some of industry is still at the “denial” or  ”anger” phase of the Kubler-Ross stages of death and dying –  I read defensive articles like this one reported in Media Post, that make the absurd claim that “[L]eisure time spent online still amounts to just 12 minutes a day, or 4% of the five hours total leisure time that people have per day.” and in the same study, they report that the figures “[do] not include social networks in the definition of leisure time. It also excludes computer and console games.”

Ummm…yeah, OK. Well, it’s not hard to get to those numbers that they left out.  Facebook has 800,000,000 active users (logged in in the last 30 days) and they spend anywhere from 14 to 45 minutes a day using Facebook. Facebook alone blows away the “12 minutes a day” balderdash in the study.  Excluding games from the study is like doing a traffic study at a busy intersection and excluding trucks from the count. In 2010, consumers spent 8 hours a week playing video games (console and computer). The gaming business is just over 10 billion dollars a year.

I think that there’s a more important issue at work here, and it’s related to the Reference Price Effect – how a buyer’s price sensitivity for a given product increases the higher the product’s price is relative to perceived adequate alternatives. Television services are being seen in a new context – and the pricing model is questionable to more and more consumers. 

The key is the “perceived alternatives” concept. A copy of Angry Birds – at about US$1.00 – establishes a lower end reference price not just for other games, but any “individually accessed screen-based entertainment items” – and I include episodes of television and rental of movies in that grouping (the sale of movies is largely dead, more on that another time).  The question is where is the upper end of the reference frame? I suspect it’s in the single digits – or will be there soon. Certainly Redbox has set the standard for video rentals at $1.00 a night – and I think that the sheer volume of content being produced is, in purely economic terms “inflationary” – there’s an oversupply of content and as a result, the perceived value of most of the content offered is decreasing.

Note that I said “most of” the content. Not all content. In fact, as TV Critic David Bianculli says that we’re in a time of unprecedented quality of television programming. There are many people who would prefer if they “paid only for the stuff they want to see” and not a “package of crap I don’t want” just to get the stuff I do want. The “A La Carte” (pay for the shows you want) model is seen by consumers as a solution, and the industry claims it would reduce choices and increase costs. Even the usually well-researched Atlantic Monthly goes along with this incorrect story line and makes an argument that buying media by the episode or the season would be “much more expensive” than if the cost of the programming were buried in a bundle with other content. They drag out the “premium content” idea as a justification for charging $40 a season for a TV show, but this is really missing a huge, critical point. “Premium” is a definition created by content owners, not consumers. Consumer might want to see the latest episode of “Breaking Bad” but they don’t need to see it. There’s plenty of other content out there, plenty of games, plenty of people on Facebook. For a growing number of people, the difference between “Breaking Bad” and “Angry Birds” is minimal.  It’s just something to do. But the sellers and distributors of the content urgently need consumers to continue to believe in the “Premium Content” fairy because their whole economic model collapses quickly without good stuff being bundled with a whole bunch of “crap nobody wants”.

Make no mistake – the economic model of bundled distribution (in the form of how Cable companies now do it) is collapsing, right now. It’s a simple number game. In the same period of time where the population increased the raw number of cable TV subscribers decreased.  That’s not just a loss of subscribers, that’s a loss of overall market share. There are countless pseudo-studies that are confirming that the decline is “illusory” – there are the same as the kind of studies that don’t count social media and gaming as “leisure time” activities.

Here’s the problem. At the moment, “Anonymous” and “Pseudonym” are synonymous, if not in reality, in perception for the public at large. If you really want to be anonymous on the Internet, you can, but it’s really, really hard (use TOR networks, proxies, etc.) and, generally, those seeking to be fully anonymous are seen as having “something to hide” – which, I might add is a perfectly valid reason to be anonymous (abuse victims, whistleblowers, etc. have lots of reasons to be anonymous to the outside world).

But it’s vitally important to understand that a pseudonym is NOT “anonymous” – it’s trivially easy to connect the dots from an online “handle” to a specific individual. I’ve done it a number of times for a number of reasons, and I’m not even using particularly sophisticated methods.

But the issue I think Google is trying to address with the “only real names” thing is the fact that it is difficult at first to tell if a person is using a trivially easy to deconstruct pseudonym (Prince, Lady Gaga, Robert X. Cringley,  John Cougar…) vs. an in individual who has created a hardened “anonymous” profile that can’t be traced back to an individual. While I think there are plenty of cases where an anonymous persona is a vital part of a free and open society, I am compelled to remind everyone that Google is not – despite its vastness – a free and open society. It is a private corporation, and it can – and does – make the majority of the rules it imposes on users. Although I hate the “take it all or leave it all” terms of service that seems to be the fundamental rules of so many things that are “necessities” these days (Mobile Phone Contracts, Internet Access, etc.), Google has made a clear rule: No pseudonyms, and by extension, no anonymous use of Google+.

A privacy broker is an idea that comes up every few months. Google – or someone – could step up to the massive task of being able to connect – securely and privately – virtual identities to real persons, a connection that can only be revealed under court order or with the consent of an individual with a pseudonym. However, this can never be 100% secure or safe – Google or other companies in the same identity management business may be compromised or compelled to connect online pseudonyms to individuals. Rather than face that possibility, Google (and Facebook), simply make it a policy that they don’t allow access without a true “real world” identity. And we can take it or leave it.

Welcome to the interesting times we all created.

In the agency world, this is what your clients look like in the majority of meetings. Every day there are hours and hours of conference calls and screen sharing presentations. I’m not going to go into the reasons why we and our clients all still use a dedicated voice conference system rather than computer-to-computer audio, suffice it to say that “dialing in” is a habit that is really entrenched and in any given week I’ll dial into anywhere from 10 to 30 conference calls. There are so many services offering conferencing services that its impossible to name them all, but I suspect I’ve used at least 25% of the different services out there.

So it is with no small amount of experience in the area that I can state without equivocation that All Teleconference Services Suck.

It’s not the voice quality – they vary but they are all pretty good. Where they all suck is in basic usability.

Here’s an example. If I want to start a conference call using our newest service at work, I have to dial the following sequence (X’s represent digits, left out of this post for security reasons – we pay for these calls!)

866-614-2162 596 XXX XXXX # * XXXX # 1

That’s 28 distinct keystrokes just to start a call. This company “The Conferencing Center” –  currently wins the award for most insane dialing sequence ever – a sequence so long that the speed-dial slots on my desk phone can’t fit it all in so I can’t even preprogram this sequence to save my sanity.

Here’s what I’d expect from a conferencing system.

10/4

As in:

1. A dial-in number – just a normal 10 digit phone number.

2. A system that recognizes my caller ID string and simply asks me for a 4-digit PIN to start a conference call.
No “conference codes”, no “press 1 to start your call” – just a PIN. Even better would be an option to “Automatically start a conference bridge when I call from this phone.”

3. A 4 digit participant PIN – also with the option to “Automatically Join Conferences when I call from this phone.”

As far as I can tell, such a beast is exceedingly rare. The closest I’ve used is found at one of our clients – they have a mercifully simple, and apparently in-house, conferencing system that uses simple 10/4 dialing, but without a “remember me” functionality.

There’s a simple truth to Social Media, and it is thus:

“Some companies should simply avoid social media.”

Every now and then, a client comes up with an idea that they need a “Social Media Campaign” because they think that they need to be “more engaged” with their customers and “drive awareness” of their products and services.   They hire “Social Media Experts” to help them. Peter Shankman wrote a scathing polemic about these folks, and while I agree with him in every way, what Peter does not suggest – and I do – is that some companies are just not suited to social media. It’s not that they don’t try – but it’s like white people dancing. It’s hard to watch without feeling a mixture of revulsion and pity.

Consider Citigroup. With 200 Million customers in 100 countries, Citigroup is a behemoth of global financial services.

Let’s see their Facebook page:

They have 13,721 “Likes.” In case you can’t do the math in your head, 13,721 people is 0.007% of their customer base.  Ow.

Twitter is even more sad:

When a company with 260,000 employees and 200 Million customers can’t even get 10,000 people to follow them on Twitter,  perhaps Social Media is a game that they can’t play.

I’m picking on Citi because it is so big and obvious, but I’m also picking on them because it’s fairly clear that Citi does poorly in social media because they can’t do well and that is because they haven’t really made a commitment to embed social media in their customer service operations.

The reality is that for Citi, social media is likely best used as an extension of their customer service function – and based on the way they have configured their Twitter account (Open Mon-Fri 9AM to 10PM) there is a clear indicator that they have neither the desire nor the ability to actually use Social Media to engage with their customers. I mean, it’s ALWAYS 9AM to 10PM somewhere on the earth, and to not even mention the time zone of their “digital office hours” really establishes the disconnect. Additionally, every problem resolution leads back to their phone center – not to a digital channel like their own online account center.

If you’re going to move into social media – for any reason – as a company, you have to realize that Social Media is a giant party for everyone’s friends and companies were not invited. That does not mean companies can’t be a part of the party – in a service role. Like the caterer. Or the band. Or the bathroom attendant.  Further, if at all possible you have to deliver your services at the party, not elsewhere.  Imagine if the caterer at the wedding required everyone to go to the building across the street for the meal. Imagine if a company got a request for service via a digital channel and the reply is to “call between the hours of X and Y”.

If your company can’t commit to making it possible for customers to interact digitally 98% of the time for any questions they might have (even if that means pushing them to your own secure web site) then perhaps it is time to rethink your Social Media plans.

Back in 2007, I posted about screen sizes to help settle some questions from the World Wide Web Artists Consortium group about the correct screen size.

I’ve seen the same questions about “what’s a safe width” cropping up again in other places, so I did a little digging into the analytics data I have access to.

My sources are:

1. The American operations of a very large international organization that provides disaster relief services around the world.
2. A national organization for a county that is hosting a major global event in the summer of 2012

So let’s do a very quick look at the data:

So it looks like the age of the wide screen is here. For most of us.

There has been a bunch of commentary about Groupon and how some suggest that it’s headed for disaster. I think that Groupon is just taking advantage of small companies that don’t really understand how to use digital communications effectively. I got into a discussion on Facebook with some people about Groupon and there are three really important things that came out of it.

1. All Companies Need Digital Literacy - the ability to confidently use online tools such as email list managers, Web Sites and Facebook to promote their company and/or communicate with customers efficiently.  I am of the opinion that this competency is as important as the ability to manage company finances and while the founders themselves may not have the confidence or ability to manage their digital media effectively, they need the smarts to know the difference between a steaming digital turd and a useful tool to reach new customers, even if they don’t know exactly how to create digital content.  Groupon is a company that gives the illusion of digital literacy to companies that don’t have it.

2. Digital Does Not Change Math - Let’s do a simple math exam.

• Joe sells apples. He buys the apples for $0.25 each, and sells them for $0.50. How much profit does he make if he sells 1,000 Apples a day?
• Joe’s rent on his Apple stand is $100 a day, and Joe needs to bring home $50 a day to pay for his apartment, food and other living expenses.
• What is the lowest price Joe can sell apples for and still pay his bills? (Hint – it’s not 50% off his current selling price of $0.50!)

Now, along comes Digital Advertising Sales Guy and he says, “Joe, let me tell ya, you gotta increase your volume. How would you like to sell 2,000 apples a day? Huh? That’s would be GREAT, right Joe? We know how to use The Interwebs to get your deal in front of the people who will make your Apple business the envy of the neighborhood – just leave it to us and we’ll have people lined up down the street to buy your apples! We’ll do a deal, you sell the apples at cost, and then people will love to buy your apples and you’ll have a steady stream of new business! – your business will explode!”

I think we can do the math and see how that deal turns out when Joe sells 4,000 apples a day – for a week – and then goes back to selling 1,000 apples a day when the deal expires.

3. Digital Isn’t Magic

Sometimes, you can do stuff online that, to the digital illiterates, seems like magic. Yet, it’s just technology (Arthur C. Clarke was right – “Any sufficiently advanced technology  is indistinguishable from magic.”).

There are times I feel like some guy in an old movie being chased through the jungle by the natives, and when trapped, he whips out his lighter and, to the terror of the pursuer’s, strikes a flame and yells, “I HAVE FIRE!!” – and they cower in terror at his awesome power.

This, I think, is where Groupon is in the marketplace. The “fire” they have is email list management (and a pool of capital) and they are running an arbitrage based business on the backs of their customers, the small business that thinks digital is magic. It’s

Stephen Peer, 1887.

There are families of thought about how best to handle complex software projects, one is the “Waterfall” approach, where you have phases that “hand off” to the next phase and the other is “Agile” where you do stuff (programming, design, whatever)  until you think it’s good enough and then you do it again to make it better, and so on.  Each time you iterate, you have things called “Sprints” which are, as they sound, fast, exhausting and you have to stop to catch your breath at the end.

Since interactive development involves lots of software, both of these approaches crop up all the time in digital media agencies.

Neither of them actually suits the reality of what interactive digital media is all about.

First of all, with the Waterfall approach, you need firm specifications under your control, and you need to be able to hit certain marker dates and bundle up each phase of the project to be passed on from one functional discipline to the next. The problem with interactive development is that many – sometimes most – of the specifications are not actually under your control at all. Adobe pops out a new version of Flash. Facebook adds and removes tabs. API’s change for 3rd party systems. Terms and conditions change. Much of the platform ecosystem you’re using is unstable and complex, yet you need to work in it anyway.  I’m prone to remind folks that if you ride a waterfall, you end up smashed on rocks at the bottom.

In the case of Agile, one of the core principles of real agile development is you don’t know exactly what you’re doing, or when you’ll be done, you’re just working to “realize the idea” or “solve the problem” and you don’t have a set specification, you don’t have aset delivery date and you don’t even have a firm understanding of the approach it will take to get to a point where the project is “done.” As messy as this sounds, Agile has some really good applications, especially when you’re inventing something completely new. On the other hand, getting funding for a project with no milestones and no delivery day is damn hard.

Inevitably, you start to see hybrids with names like “Agile Waterfalls” and “Sprints within Swimlanes” and the nomenclature gets more and more complex as you attempt to define something as a project with an end in another way.

I’ll propose that interactive development has a fundamentally different requirement – there is no “end” date. Interactive digital media – all of it – is an ongoing process that starts but never ends (unless you go out of business).

There is no “that’s it” name for the methods of planning and development that work in interactive development, it’s not as clean and simple as “Agile” or “Waterfall” and it never will be.

It’s more like parenting.

Each time you think you’ve got it figured out, your kids come up with some new way to befuddle and confuse you. (Overheard at work, a Dad on phone with sobbing 4 year old: “WHY would you put the FISH in the TOILET and FLUSH IT if it WASN’T DEAD?!…..No, I can’t get it back….Put your mother on the phone.” ).

Each time you have interactive development figured out, consumers latch on to something you didn’t plan for – and can’t deal with quickly. So, just like parenting, you can read all the books you like and follow all of the “tired and true” methods – but in the end, the site you create is unique and the product of the combination of things your company or organization needs to do to get it built.

Mobile development is very different than desktop development, and iOS development – from a user experience perspective – is very different from the process of developing for Android.

In short: It’s easier to build a user experience that is consistent – in fact identical – across the iOS universe.

The reasons are simple – with iOS, you have the following device matrix:

Yes, there are variations in the OS, and phones can be running older OS, but as a developer, with iOS you have:

- Only three different screen resolutions
- A relatively narrow range of hardware variation (primarily related to on-board memory)
-  About 3 OS versions (about because there are variations within the major releases)
- And – hugely important – a large suite of OS-native user interaction “widgets” (buttons, scroll bars, etc.)

I tried to make a similar matrix of Android devices, but after a look at a Wikipedia page listing of Android devices, it seems futile to try. There are lots of them.  What’s also interesting to note is that there are also six versions of Android active  in the marketplace, and each version brings a substantially different suite of functions and features:

Release:Name

1.5: Cupcake
1.6: Donut
2.0/2.1:    Éclair
2.2:   Froyo
2.3:   Gingerbread
3.0:   Honeycomb

What’s more, unlike iOS, with Android, the basic interaction models – the way you use and experience the operating system – can be (and often is) modified by manufacturers.

For example, HTC created a user interface (UI) called HTC Sense that is layers on top of the Android operating system. The goal is to create a consistent HTC user experience across devices AND operating systems – HTC Sense is also used on Windows Mobile.

Motorola took a similar tack with their implementation of the Motoblur UI layers over Android version 2.1, Samsung put the Touchwiz UI over Android 1.6 and Sprint created the Sprint ID UI layer, which also runs on Samsung devices.

The end results of this impact your client communications and setting expectations before the project begins:

1. You can be generally “Android Compatible” and put your app into the Android Marketplace – BUT the UX will not be consistent across all devices.

2. You can develop (at extra cost) “Device Optimized” UX in addition to the “baseline” UX.

There’s a great comparison of various UX implementations comparing iOS to Android here, if you want to dig into it some more.