Archive for December, 2007

I read something the other day that totally boggled my mind. In a NY Times article from Dec 22, it was reported that the World Trade Organization ruled that “the Caribbean nation of Antigua won the right to violate copyright protections on goods like films and music from the United States — an award worth up to $21 million — as part of a dispute between the countries over online gambling.”

Huh? Am I reading that correctly? Is it April fool’s day?

How can the WTO hold jurisdiction over the intellectual property rights of private entities and use these assets to fulfill a ruling against the government of the country of origin?

And furthermore – in the day and age of rampant digital piracy, questionable valuations of these assets and an entertainment industry in flux as to how to generate revenue from the new digital distribution platforms, what were they thinking??? Apparently this is the second such ruling in modern history, but I can’t seem to find info on that first instance.

A little background here…after the proliferation of online casinos in the ’90’s and early ’00’s, the US government banned online gambling, and in 2006 subsequently even made it illegal for US banks to collect gambling bets over the internet. There are a few gray areas, such as horse racing, which is the hook that Antigua is trying to hang it’s hat on here. In 2003 Antigua, a country ripe with offshore casinos making millions from online gambling, petitioned the WTO to get involved under the premise of a violation of “free trade treaties”. The WTO ruled against the US back in 2003, and again under appeal in 2004. In 2005 the WTO gave the US a year to comply, but the US claims that it is doing nothing wrong and is already in compliance. Oh and by the way – you gotta love international politics – apparently the US has brokered agreements with larger nations in Europe and Asia while leaving out the smaller nations like Antigua that rely on these revenues. Currently the online gambling industry plays a major role in the health of Antigua’s economy. In fact, the countries of Antigua and Barbuda claim a loss of $3.4 billion per year due to the actions of the US. This sort of leverage-play reminds me of stories told to me by an interesting friend who works on the nuclear proliferation committee at the UN and in Geneva. The goal of the task force is to help negotiate the elimination and destruction of nuclear weapons around the world everywhere around the world except the US. The only problem is that the US looks at ourselves as exempt. Of course we are allowed to be different…of course. However, there are over 150 members of the WTO and until they all agree otherwise, the actions taken by the US have been deemed illegal. But I digress…

Why is this such a big deal? The US accounts for a significant portion of the global online gambling revenues, estimated in the $20 billion mark – yes that’s right, $20 billion – search and social media eat your heart out.

But this brings me back to my main point and question. How can the WTO hold jurisdiction over the intellectual property developed by private entities of a country, and use these assets to fulfill a ruling against the government of that country?

If you dig up the first instance of intellectual property rights being used by the WTO to fulfill legal obligations of one country to another, please post it as a comment! I’m really taken back by this ruling!

Advertisements

I just received an alert from CNN Money that the FTC approved the Doubleclick/Google deal 4-1. It was FTC Commissioner Pamela Jones Harbour who objected to the merger and stated ‘because I make alternate predictions about where this market is heading, and the transformative role the combined Google/DoubleClick will play if the proposed acquisition is consummated.’  Not a great statement to have on record from the commissioner, but the only voice of opposition (thankfully). Now we have to wait and hope that the European Union antitrust authorities don’t delay the merger further. The EU historically has not been very lenient to large US based technology companies, hopefully this won’t become an issue.

But one has to wonder – if the EU antitrust authorities still has a chip on their shoulders about Microsoft, and Microsoft has been one of the most vocal opponents of the Google/Doubleclick merger,  maybe that lessens the potential of resistance and delays? Meanwhile, Microsoft has already integrated aQuantive into their fold, a smart move. “DoubleGoo” will have to catch up once approved globally. Then again, both Google and Doubleclick out-position MSN and Atlas respectively. So the gap has the potential of closing a bit. Either way, I anticipate the ramifications of these deals from a marketer’s standpoint. As such, I simply look forward to the innovation that will emerge from some of the industry consolidation and mega competition.

Stories are hitting the web (including this one on WSJ) regarding developers’ frustration with Google’s new mobile platform, Android. As Google goes for the mobile jugular, the operating system, the early release of Android for developer review may have been a little too early and over ambitious. Google doesn’t have many check marks in the failure column , and this is a big initiative – a massive mobile land grab. You can bet that development resources are being properly applied to Android.

I find myself quietly cheering Google on in the quest to break the mobile mold and help make the experience that much more competitive, innovative and therefore, simply… better for the consumer and marketer alike.

No way Google’s mobile efforts will go the way of Orkut, Google’s social network, which was a failure in the US, but oddly massively popular beyond belief in Brazil. Although social networking seems to be the next ubiquitous activity after search and email, Google didn’t launch nor support Orkut with the zest that comes with the potential of dominating the mobile OS. With this comes the inherent involvement in powering mobile activities that require the utility of search and other useful products that Google knows very well. This is about making the mobile web experience better by streamlining internet based activities and experiences for consumers, it’s about standardizing and broadening the ecosystem beyond just the carriers as gatekeepers, it’s about bringing relevancy to consumers’ mobile lifestyles. Google knows this game.

If only it were that simple.

This idealistic view has a long road ahead, complete with many detours, twists and turns. We are just at the first curve, and the major carriers still have 100% control over the “pipes”…for now.

Ok rant over…

226 applications were submitted to the FCC to bid for the airwaves that will have been relinquished by the broadcast industry as it migrates completely to digital signals in 2009. As it turns out 170 of these bids were kicked back as incomplete. Apparently most of the bids come from holding companies and regional telecoms, but there were of course a few noteworthy additions. We all expected the telcoms and others entrenched in the mobile category to bid – Verizon, At&T, Qualcomm, and the like. We also assumed that Google was going to make this play, and they are indeed an approved applicant. Microsoft Co-founder Paul Allen’s Vulcan Capital is in, and some of the broadcast industry bids came from Echo Star and Cox Communications. There were many surprising names on the list as well, including the oil giant Chevron. It’s difficult to imagine the large telcos/wireless companies like Verizon and AT&T being outbid for the largest blocks of the spectrum – they have the most to gain or lose in the deal. But in the evolving wireless ecosystem, who knows. We could use a new major carrier! The US government stands to make up to $10billion in the auction.

What is the 700 Mhz spectrum? A strong analog signal that can go long distances and penetrate walls. Currently used by the broadcast industry, which is mandated to switch to 100% digital signals by 2009, thereby freeing up the 700Mhz spectrum for alternate use. The FCC is managing the auction.

Why is this so interesting? This is the last opportunity for a major player to enter the mobile market. The new media characteristics of openness and connectedness benefits both consumers and marketers. The carriers have been reluctant to give up much of the control they maintain over the pipes, thereby limiting access to consumers. All data communication to mobile subscribers must pass the gatekeepers (read: the carriers), which has been the stifling point of mobile marketing progression in the US to-date. I would say that it’s understandable to maintain control to maximize revenue, but that wall has been crumbling down for some time. More often than not the market will find the next path of least resistance to follow to the holyland of progress and innovation. A more open mobile platform opens a world of possibilities for both consumers and marketers alike. The only ones who have anything to lose are the major carriers. But as they say – the new guard can not assume levels of influence until some of the blood of the old guard is spilled…or something like that.

So as the broadcast industry hands over the 700Mhz spectrum to be used as the next wireless network, the revolution will in fact be televised, only via wireless device.

Attention Web2.0 evangelists and all marketers large and small…The buzz about the potential (or impending) sale of theDigg $300MM? largest social bookmark brand, Digg, has picked up this week as VentureBeat and TechCrunch covered the news of Allen & Company’s engagement to shop the social media darling. Rumors and intuition all lead to Digg being acquired into a complementary portfolio of a large media company, maybe even one of the “big 4” (Google, Microsoft, Yahoo, AOL).

However, if Digg has quietly been on the block for months, with other significant investments and consolidation occurring all around them, what’s wrong? Is the $300million asking price too much? It depends on the strategy of the acquiring company. Many web 2.0 acquisitions are more about the potential value of an additional portfolio component, rather than the actual revenue based valuation as a stand alone entity. As Facebook attempts to grow into their $15 billion valuation, and other recently acquired web2.0 companies prove the value of their respective investments, will venture capitalists and media execs sit back and watch this next round unfold, or will the spending continue? Of course the answer is “yes”, and “yes”. Confused? So are they…

Enabling consumers to share content and experiences is a powerful catalyst for a large media company looking to tap into the social fabric of the internet. Social bookmarking/sharing sites help increase reach beyond the audience initial exposed to specific content, and it allows relevant content to “find its way to new consumers”. Social sharing also presents additional metrics that provide further insight into consumer engagement levels.

The social bookmarking brands have built their brands from the valuable real estate provided by content providers as a footer or side bar of every news item, article or piece of multi-media content. The motivation for content providers to insert this catalyst is obvious. However, to-date there have been no financially lucrative business models that have emergeed from the space. The value is in the collaboration and incorporation into an existing portfolio of media assets.

Just when Venture Capitalists and investors thought that the market stabilized itself back into the box of historic valuation models, the game changed once again (technically it changed a while ago, but it is now at a tipping point of social media consolidation). Welcome to the latest roller coaster ride of web2.0 valuations.

So, what does this mean for media planners/buyers?

The increased usage and popularity of social bookmarking sites and the consolidation of the space will represent new  opportunities as it relates to marketing relevancy and the ability to engage consumers. Social media metrics are increasingly becoming more important indicators of an audience’s reaction to marketing communication of various varieties. As marketing continues to become a relevant part of the consumer experience, the manner is which a consumer is influenced by or responds to marketing will change shape and form, and we need to adjust accordingly. Although I find that social bookmark sites are not in the average media planner’s regular bag-o-tricks just yet, the morphing space will soon be on many more radar screens!

What is a common media key performance indicator equivalent to generating 50,000 friends on MySpace or Facebook?1,000 Digg’s? 5,000 comments on YouTube? An SEO friendly Wikipedia entry? 10,000 widget feeds?

These are the new metrics of the social media age. If you are a traditional media planner or buyer (or client) still trying to wrap your head around the comparison of traditional media metrics to digital media metrics – hold on to your hats, you’re in for an interesting ride. It’s difficult enough to explain why digital media not only belongs in the media mix, but on the same master flow chart as all other media, and differently.

Ah, the good ol’ GRP – a proxy metric, essentially used to predict a marketing and/or business outcome based on a specific media weight against a particular broadly defined demographic target. Digital media breaks the mold, and the GRP does not accurately depict digital media impact. Lower frequency is needed to generate advertising impact, engagement and/or response. Likewise, engagement levels are not factored into the GRP calculation.

So as a slough of social actions become part of the engagement measures of digital campaign performance, there are more variables and therefore more differences. Even the most seasoned digital media executives are currently faced with the challenge of measuring, determining and explaining comparative performance differences inclusive of these measures.

Digital media represents a movement up the qualitative media continuum. This continuum goes something like: print (text), radio (audio), black & white television (video), color television (quality multimedia), the Internet (engaging quality multimedia with consumer control).

2008 will be an explosive year for social media and in particular, social networks. There is far more to the social structure of the web than just the social nets. We will rely more and more on the social fabric of the evolving web itself to help good ideas and relevant content and/or brand experiences match interested and appreciative consumers. 

So as many continue to try to fit the square peg of digital media into the round hole of the GRP…the peg just morphed into an octagon.

 First off – apologies to my loyal readers who would have noticed that I haven’t posted for a few weeks while on the road. Those who know me personally know that one of my more interesting projects has nothing to do with digital media, but with marine conservation, particularly shark conservation. I’m working on undercover projects throughout the world, documenting the systematic depletion of the apex predators of the largest ecosystem on earth. The oceans make up almost 80% of our planet. Human arrogance and ignorance has no bounds. Anyway, for now that’s all I can write about the project, as I am trying to keep it somewhat under wraps. I do assume that the underbelly of the world’s poaching and illegal fishing communities are not reading my digital media blog… If you’re interested in more information on this subject feel free to drop me an email anytime. 

Ok – digital media hat back on… 

While on the road I’ve been dying to chime in on the developments with Facebook and the social media dominance that lies ahead of us. Social media has become the next “killer app” after email and search. From a consumer adoption standpoint, we’ve crossed the social media tipping point some time ago. In the UK traffic to social networks has surpassed that of web based email. Even in the US the younger generation of consumers is quickly abandoning email as a primary communication method, as they are communicating within social networks as part of their daily lifestyles.  After the healthy gestation period in consumers’ lifestyles, social media is finally approaching a similar tipping point for marketers. Note that I am referring to the entire ecosystem of social media, not solely social networks. More on that next week, as today I want to focus my thoughts on social networks and Facebook in particular. Facebook has been under our collective microscopes lately. The number two social network is under significant pressure to actualize the ridiculous $15 billion valuation (post-microsoft infusion of $240 million for 1.5% equity) by leveraging the vast vaults of consumer data for marketing programs. The beacon program may have been a little over ambitious, but as a marketer, you gotta’ love the attempt to push the envelope. The public apology from CEO and founder Mark Zucerberg was reminiscent of Doubleclick’s progressive efforts to merge online and offline consumer data back in ’99 and 2000, and their subsequent public apology (they actually took out a full page ad in WSJ to ‘air’ the apology to the business and investor communities). My agency, Mass Transit Interactive, was the digital media lead on the Doubleclick account at the time. We handled all the database building efforts and digital media. There was nothing unethical about it, and it was quite an interesting effort. Doubleclick became a martyr by acquiring the massive consumer database company Abacus and pioneering an approach that has since become commonplace (albeit still questionable) in the direct marketing industry – data appending. May Facebook’s efforts result in the same eventual adoption? Of course major differences exist in the digital media ecosystem today. One consistency however is that consumer privacy and experience issues are still all around us. Consumers have more control than ever before. The backlash against Facebook’s beacon program materialized within the fabric of the social network itself, as MoveOn.org quickly rallied over 50,000 Facebook members to speak out against the program in a Facebook Group. You have to love the irony of that in and of itself. However, generally speaking, all of Facebooks new ad programs are geared towards deeper marketing integration and relevant consumer experiences. Social networks have such rich data on consumers, our interests, and our friends’ interests, hence the potential of the channel. As the dust clears from the recent feather ruffling, we should be able to map this self reported consumer information with hyper relevant marketing. It’s a win-win. 

I do however think that the cries from privacy groups are usually unfounded, and steeped in ignorance of the methodologies and approaches that we employ (beacon program aside, which was a little beyond the normal standards and best practices of the industry). Privacy groups question behavioral targeting and other new technologies that do not actually jeopardize consumer privacy. Of course these technologies create improved consumer experiences as it relates to marketing relevancy. Ironically, a heated issue among privacy groups exists today around Google’s acquisition of none other than … you guessed it – Doubleclick. This is yet another scenario where the ignorance of the ramifications and benefits of the combined entity are jading the views of these groups. With all due respect, I can only hope that the aging members of the congressional and senate committees that hear these cases seek consultation from those in the know.