Entertainment-as-a-Service

I just got back from a really fun (and delicious) lunch with Peter of Pantless Knights, who is in LA working on a hilarious new video, and one of the main things we discussed was the idea of Entertainment-as-a-Service. The term is a reference to the concept of Software-as-a-Service (SaaS), which is a business model generally contrasted with the conventional packaged or ’shrinkwrap’ software model. Essentially, SaaS is a subscription business and packaged software is a retail business.

The entertainment industry is a retail business. Books, movies, tv shows, music are almost universally sold as one-off purchases. But, those things are just the packaging and the people selling them to you are just middle-men. The business of entertainment (not to be confused with the entertainment *industry*) is fundamentally a marketplace of attention between fans and content creators — fans have a finite supply of attention for which content creators are competing. So, then what is the entertainment industry? To use a very relevant analogy, it is the collection of intermediary businesses (i.e. publishers, studios, networks, labels) that have been acting like investment bankers, taking the raw materials of talent and creativity and packaging them up in a form they know how to sell (i.e. retail) and commanding a big slice of profit along the way. Entertainment doesn’t want to be a retail business, and that is the fundamental essence of the disruption the Internet has unleashed on the entertainment industry.

[Clarification: For the sake of this discussion, I'm using the term 'content creator' to represent those who add unique creative talent to the production process. As my dad pointed out, content creation is rarely a solo effort (most notably in film production, which can involve hundreds of individual contributors) to which studios, networks, labels, and publishers often contribute substantial value. But as those contributions are opaque and thus interchangeable as far as the consumer is concerned, I am excluding those who make them from the class I refer to as 'content creators' in this post. Otherwise said, even though the sound engineer plays a crucial role in creating the album, no one buys it based on *who* the sound engineer was.]

When you think about what elements of the entertainment business technology has really undermined, it’s nothing more than the packaging — the time slots and release dates and viewing windows and region codes that are artificial constructs of these middle-men trying to slice-and-dice the content into as many tranches as possible to squeeze out every last cent of profit. Just like the investment bankers and their CDOs fragmented and obscured the connections between investors and their investments, so have the studios, networks, publishers, and labels introduced complexity into the connections between content creators and their audiences. While that complexity, and the companies who created it, may have been a necessity in an era of technologically inferior marketing and distribution systems, they are simply market inefficiencies in the Internet age.

So, what is the difference between retail and subscription when it comes to entertainment? In a recent post on my personal blog about SaaS vs shrinkwrap software, I wrote:

The business model of packaged software invites feature bloat, because it’s upgrade driven and you need to continually find ways to justify why Thingamajig 2009 Pro Edition™ is so much better than Thingamajig 2008 Pro Edition™. Software as a Service businesses have a much different (and arguably greater) challenge, they need to continue to create value for their customers month after month….So, you end up with a much more customer-centric product…and a vendor who is truly interested in addressing your customer needs.

The first priority of a retail business is to maximize sales, building brand loyalty and repeat business may be means to that end but they always take a back-seat to whatever else will drive more sales. Whereas in a subscription business, customer retention (and thus customer satisfaction) is always top priority, even above new customer acquisition. So if a studio believes they can get a lot of people to see a crappy movie by spending more on marketing and less on quality, they will (and do, again, and again, and again…). Because all you’re buying from them is the packaging, they know you aren’t really paying attention to whether it’s a Fox or Warner Brothers or Paramount film (do you buy your cereal based on who made the box it comes in?). But, a director would rather disown a bad film than endorse the studio releasing something that doesn’t meet his standards and his fans’ expectations. This is because the director knows that his relationship with his fans is a subscription business, and if he disappoints them he will be unable to continue exchanging his content for their attention in the future. The studios understand this too — they don’t give Tom Cruise $25M (plus a cut of the gross) per movie because his acting skills bring $25M of quality to the screen, they do it because he has more than $25M in ticket, DVD, and merchandise sales worth of fans. 

Entertainment is naturally a subscription business, and the Internet returns it to its natural state. The content creators who thrive online are those who understand this and focus on the ongoing satisfaction of their customers (see Ze Frank, Michael Buckley, Chris Leavins). The level of customer satisfaction these creators deliver is really only possible on the Internet because they can go direct-to-consumer without need of the middle-men and their packaging. These creators publish in all forms — video, photos, blogging, micro-blogging, music. They do not see themselves constrained by the legacy dividing lines of the entertainment industry, their goal is to entertain their audience by any and all means available. There is no distinction for them between primary and ancillary content, they are 360° entertainment brands. The other thing that has made these creators so successful online is their direct interaction with their customers. The best your most engaged fans can do offline is give you their personal attention (and the money that comes with it) and try to recruit others to do so as well. But online, they can interact with you and become part of the show. Empowering your customers is the surest way to make them even more engaged. As I wrote in another recent post on my personal blog:

Bringing your customers into the product development process has the dual benefits of helping you build better and more customer-centric products and making your customers your most passionate sales people (because after all, it’s their product too).

So, the Internet enables these creators to spend more time listening to their fans and creating new content they’ll enjoy while outsourcing the marketing to the community for free. This is the exact opposite of the offline retail model in which the studio takes money out of production budgets to put it into marketing campaigns. The ability to establish deeper relationships with their fans also allows online content creators to attain higher average attention per customer (ARPU) than is possible in the retail world, thereby making it easier to build more value by going deeper with a smaller audience. 

To be clear, I’m not trying to say the only business model for content on the Internet is a recurring subscription fee. The ’subscription business’ to which I’m referring is more the theoretical exchange of value between content creators and their fans, which can and will take many forms — including selling packaged goods. I’m also not saying that the online entertainment market is solely the domain of Internet-only content creators. In fact, I believe the Internet is most powerful as an entertainment marketplace when the quality and reputation of a historically offline content creator is freed of the constraints of the legacy packaged goods business model. Take for example Josh Freese, who gets extra points for using this freedom precisely to illustrate the absurdity of the conventional retail approach.

And now, I leave you with the profound product of the coming entertainment revolution:

P.S. Hat tips to Ian Rogers for the marketplace of attention thinking and Umair Haque for the marketing vs quality dichotomy.

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February 22, 2009 | Jonathan | Tags: , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , | 17 Comments »

10 Smart Brands using Social Media

I just read a great post over on Mashable, that I wanted to share here:

Presenting: 10 of the Smartest Big Brands in Social Media

While this is ostensibly a post about large national/global brands, I found the underlying lessons from these examples to be potentially useful to *anyone* seeking to use social media to build brand equity. You should definitely go read the original post for the full details on each campaign, but here’s my take on the important lessons from each one:

  1. Blendtec Blends it on YouTube – Creativity is king; advertising is just content someone is willing to pay for you to watch, it doesn’t *have* to be annoying and uninteresting
  2. Burger King and the Sacrifice Facebook Application – People like to have fun
  3. Starbucks Asks for Your Advice – Making your customers feel like they’re part of the process builds brand loyalty through a sense of co-ownership
  4. Sun Microsystems and the CEO Blog – Kill them with transparency (a variation on my dad’s old adage: ‘kill them with kindness’); disarm your critics by giving them a voice and answering them back
  5. IBM With Lots of Blogs – Content == Authority; as long as it’s quality content (and on-brand), more *is* better on the Internet — it gives you higher search engine ranking and it doesn’t hurt to be the first thing a prospective customer finds when they do research on your area of interest/expertise (what do you think this blog is all about? ;-) )
  6. Zappos on Twitter – A company (not just a brand) can have a personality in the Internet age, and it is defined by its employees; being accessible and relatable reminds your customers that there are real people behind your brand, and that tends to make them like you more (unless those real people really suck :-) )
  7. Comcast on Twitter too – Empower your community manager to address customers needs; Frank from Comcast doesn’t just spew marketing platitudes into the Twittersphere, he actually helps customers in need (Corollary: if you have an unempowered community manager fronting for your brand, he/she is bound to get slaughtered and likely do more harm to brand equity than good)
  8. Ford and Social Media PR – Bad press doesn’t go away on the Internet; it’s not like the conventional media world in which all you need to do is weather *this* news cycle — that disparaging blog post will be popping up in searches for your brand for the rest of your life and beyond, so you’d better get out there and address it
  9. Graco Uses Pictures on Flickr – *Every* customer should be writing a testimonial; make it so easy and fun for your customers to show their brand loyalty that it’s a no-brainer for them
  10. Dell Doing it Everywhere – Social media isn’t media; this isn’t an ad buy you make selectively based on demographics and vertical content, it’s a horizontal platform for customer engagement comprised of many different elements — you may not have the time or resources to be everywhere, but take the time to craft a campaign in which the whole is greater than the sum of the parts

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February 7, 2009 | Jonathan | Tags: , , , , , , , , , , | 2 Comments »

Suggest to Techmeme button for WordPress

As noted in the (several updates to the) original post, the javascript code I wrote for the ‘Suggest to Techmeme’ button won’t work when inserted into posts on self-hosted instances of WordPress (unless you have the Exec-PHP plugin installed, like I do on my personal blog). There is already a very popular plugin for adding sharing calls to action to your blog posts called Sociable, and it happens to be very easily extensible.

So, I just created a custom version of the Sociable plugin that includes ‘Techmeme’ as an option (you can see it in action on my personal blog — it’s under the Share This widget at the bottom of each post). For those of you running self-hosted WordPress blogs, just download my version of the plugin here and install and activate it as you would any normal plugin. Then, go into Settings>Sociable and check ‘Techmeme’. That’s it!

A few requests have been made to include URL shortening functionality into the button, and I’ve got a few ideas I’m going to send to Joost, the guy who maintains the Sociable plugin. Maybe we can come up with something cool together. Stay tuned… ;-)

Again, for those of you who missed it:

DOWNLOAD THE WORDPRESS PLUGIN HERE

If you have no idea what this is all about, read up on Techmeme’s new suggest via Twitter functionality on TechCrunch or the Techmeme blog.

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February 4, 2009 | Jonathan | Tags: , , , , , , , , , | 3 Comments »

Suggest to Techmeme Button

If you have a self-hosted WordPress blog, the code below will not work for you. Instead, go here to get the plugin.

Techmeme is an essential news discovery tool for me. It replaced my RSS reader and the totally unmanageable list of blog feeds that came with it years ago, and now I’d estimate that at least 95% of the news I consume is discovered via Techmeme or Twitter. For me, more than Digg or Hacker News or anything else, Techmeme is my social news source.

As such, it was big news to me when Techmeme announced this past Wednesday that they’re now accepting “tips” via Twitter. So much so that I was hoping (and even not so subtly suggesting) some of my Twitter “friends” would submit one of the blog posts I wrote since the feature was announced. But, then I realized  most of my friends didn’t know they could do this — and even if they did, the syntax is irregular (why “tip @techmeme” instead of just “@techmeme”?) and the whole process is a bit complicated.

So, it occurred to me we should have a “Digg It” equivalent embeddable call-to-action for Techmeme submission. Since no one else seemed to have made one yet, I took a stab:

Suggest to?

As you can tell, I’m not a designer or a developer. I’m just a lowly product monkey, and this isn’t meant to be anything more than my version of a working feature spec.

That said, here’s the code:

<div class="techmeme-suggest-button">
<p style="font-family: sans-serif; font-size: small">
<a style="text-decoration: none" title="Suggest to Techmeme via Twitter" href="javascript:var d=document,f='http://twitter.com/home/',l=d.location,e=encodeURIComponent,p='?status=tip%20@Techmeme%20',q=e(l.href)+'%20'+e(d.title);1;try{if(!/^(.*\.)?twitter\.[^.]*$/.test(l.host))throw(0);share_internal_bookmarklet(p)}catch(z){a=function(){if(!window.open(f+p+q,'twitter'))l.href=f+p+q};if(/Firefox/.test(navigator.userAgent))setTimeout(a,0);else{a()}}void(0)">Suggest to <sub><img src="http://thesnowballfactory.com/images/techmemechicklet_16.png" border="0" alt="" /></sub></a><a style="text-decoration: none" title="What's this?" href="http://news.techmeme.com/090128/twitter-tips" target="_blank"><sup>?</sup></a>
</p>
</div>

If you want to use it, just copy and paste it into the bottom of your blog posts (make sure you’re editing in HTML mode). You can change the size and font of the text  by editing <p style="font-family: sans-serif; font-size: small"> (for example, try font-family: serif or font-size: medium). You can also change the size of the Techmeme favicon by switching out techmemechicklet_16.png for techmemechicklet_24.png (24px) or techmemechicklet_32.png (32px).

Lord knows it’s *ugly* (both the code and the design). So, real developers and designers I invite you to please improve upon it. All I ask is for you to post a link to your better version in the comments below, so we can all use it (and I can stop using my crappy one ;-) ).

Update: This blog is hosted on WordPress.com. And I was pretty surprised when I was originally able to embed the javascript for the buttons and it didn’t get stripped out, because I thought you weren’t allowed to run any scripts on WP.com. Well, it turns out you aren’t but they just don’t check for it when you post. At some point in the last 11hrs, the javascript powering the buttons in this post got stripped out (thereby breaking them, to which Russ alerted me). To make them work again, I’ve now just hardcoded the URL’s for them. The example javascript should still work for you (as long as your blog isn’t on WP.com), and you can see the javascript version in action at the bottom of this post on my (self-hosted) personal blog.

Update 2: The post just made the front page of Techmeme thanks to a mention from Gabe and a tip from Rahmin. If that’s not meta, I don’t know what is ;-) . And, it’s super cool to get some love from Gabe — I’m a huge fan of what he and the team have done over at Techmeme.

Update 3: As my buddy Mark just figured out, even self-hosted WordPress chokes on javascript in the body of the post. The only reason I didn’t notice this on my self-hosted WP blog is because I have the (very handy) Exec-PHP plugin installed, which apparently not only executes php in your posts but also js. The elegant solution (other than you also installing Exec-PHP on your self-hosted WP blog) would be to do a php version or maybe even a WP plug-in or template tag. But, frankly I can’t be bothered ;-) . So, I might just make a bookmarklet that generates static HTML for a ‘Submit to Techmeme’ button based on whatever page you’re on, so you can copy and paste it into any post on any publishing platform that supports HTML.

Update 4: Last one, I swear! Just to say there’s now a ‘Submit to Techmeme’ button plugin for WordPress (self-hosted).

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February 2, 2009 | Jonathan | Tags: , , , , , , , , , , , , , , | 7 Comments »