FutureTech Business

5 Ways for Publishers to Gain Revenue and Customer Loyalty

By Eleanor Haas

"Navigating Search” was the title the SIIA gave yesterday’s Brown Bag Lunch, moderated by Diane Burley, a digital media consultant and advisor to Nstein Technologies.  We learned about new directions being pioneered by global publishers with millions of assets.  “New Ways to Deliver Meaning – not Just Online Content” might more accurately have described the program.  The payoff for publishers is significant.  It’s all about revenue and customer loyalty.

1.     Focus on the visitor first and only then on the information and how it is presented.  Understand visitor needs, interests and learning styles. Respect three key stages through which the visitor passes - first, processing the information, then making decisions about it and then executing decisions based on it.  Understand how sensory clues can be used to guide the visitor and how the visitor’s memory and inferences can support the information-gathering process

2.     Use wayfinding principles to organize digital space.  Wayfinding, a process used for centuries by navigators, and more recently by architects and other designers, describes how people intuitively orient themselves to a space and navigate from place to place. In general, people focus on a destination and follow what appears to them to be the best path.  Architects and other designers assess wayfinding options as a basis for improving the functionality of a particular environment and making the space more comfortable for visitors.

Paths, edges, nodes, landmarks and districts – the terms used by designers to describe spatial features for this purpose – were first coined by Kevin Lynch in his book "Image of the City" (1960) to help designers describe and think about how people experience space.   The same concepts are relevant to locating online content so that users can avoid the avalanche of irrelevant information delivered by keyword search, discover what they want and move on.

3.     Think beyond the home page to treat each website page as the potential landing page it is.  Google drives more and more traffic to pages beyond the home page, and these pages have too often been neglected in the past and therefore failed to deliver a superior visitor experience by reason of their design. 

4.     Connect multiple databases in ways that speed comprehensive search.  Enable visitors to come up with closer to 100 percent of the information needed for a decision, not just the usual 40 percent to 60 percent.  This can require smart connectors that enable a federated search across 6,000 databases, for example – using technology such as that offered by MuseGlobal.  Smart connectors add value for the publisher as well as the visitor.  For the publisher, they can increase revenue by an order of magnitude by speeding time to market for new products and significantly reducing the cost of support.

5.     Use text mining to organize and categorize vast amounts of both structured and unstructured information.  This permits publishers to cross-promote use of their content by enabling people interested in Topic A to quickly find related Topic B – with the help of technology such as that offered by Nstein technologies.  Content maps, which are beginning to replace traditional site maps, facilitate this by displaying the taxonomy of concepts within each subject or theme area.  The goal is to make it easy for visitors to infer additional knowledge about a piece of initial information – an inference that, in turn, becomes a new piece of information. 

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Shifting Realms for King Content: Three Views

By Eleanor Haas

Is content still king?  Yes and no.  Depends who’s talking and how they’re defining content.  Michael Wolff, magazine columnist and best-selling-author, stated unequivocally at the recent SIIA Summit that traditional news organizations – newspapers and broadcast news alike - are finished.  He gave them 18 months at the outside.  His solution was to abandon print and to found Newser, an online news destination.  At Newser, machines aggregate news, humans edit it down to what’s important and then they present it in lively online formats with links to original sources.

Not so, countered Vivek Shah, head of the News Business Unit at Time, Inc. Print journalism lives.  Newsgathering as a way of creating value is disappearing, he said, but voice and personality matter.  It’s all about points of view.

Content lives and so do newspapers, said Arturo Duran, CEO, Impremedia Digital, a portfolio of Hispanic periodicals, at an SIIA Summit preview session on digital publishing. Newspapers have an important role to play.  But they need to redefine themselves as local; they have to own their cities’ local listings and news.  Readers trust the name. Newspapers also need to reinvent their antiquated infrastructure in terms of cost and processes and be ready to deliver content to any platform.

High-End Computing for General Purposes Becomes an Eco-Friendly Possibility

By Eleanor Haas

How quickly both information technology and social values are advancing! Bringing supercomputing capabilities down to a general-purpose level where they can serve consumers, not just advanced scientists – as a new IBM product does - is a giant leap forward in our ability to access, analyze and manage massive amounts of information efficiently and cost-effectively. But that alone is no longer sufficient. Today our society requires that this be done in ways that minimize climate change effects. Greentech is not just a fad. It’s here to stay.

The new IBM iDataPlex line of server products does both. It seems to me to represent an historic break-through: It enables cloud computing that supports Web 2.0 applications as well as the high performance computing (HPC) requirements of life science researchers, engineers, petroleum exploration, financial services, and government and academic research. But perhaps the most important attribute of the new hardware design is that it requires 40 percent less electrical power to run than alternatives with comparable computing power and can eliminate air conditioning when outfitted with a water-cooled wall.

As Web sites evolve, they add features that impose new demands on the infrastructure and challenge performance standards critical to the user experience. Web 2.0 applications empower users to do a great deal more than just retrieve information. Now users can activate interactive features inherent in Web 1.0 at a higher level and exercise new degrees of control over data, even add value to applications as they use them. These new capabilities drive enterprises to scale capacity in a secure, reliable and cost-effective way in order to deliver a satisfactory user experience. Cloud computing is one of the most important new concepts that is emerging to make this possible.

Cloud computing is computing done at a remote location, which is to say, out in the clouds. It is computing on a massive scale in terms of both computing power and the range of computing tasks.

Supercomputers were mainframes invented to enable advanced scientists to handle enormously complex calculations. Then Google and others started locating the data storage and processing power of supercomputers on vast banks of computer servers in remote data centers – Google called these distant servers “the cloud” - instead of on mainframe computers or a network of multiple processors on the Google campus. And Amazon and others started providing cloud computing services - remote computing services, also called web services - delivered over the Internet. And so cloud computing was born.

Cloud computing is hugely important but still nascent. A recent report by Forrester Research said in its executive summary that: "Cloud computing is a new IT outsourcing model that doesn't yet meet the criteria of enterprise IT and isn't supported by most of the key corporate vendors.  It's wildly popular with startups, exactly fits the way small businesses like to buy things, and has the potential to completely upend IT as we know it.”

Cloud computing represents a fundamental shift in how we handle information, according to BusinessWeek, because it enables companies to write their own programs to run on a cloud provider’s servers. Irving Wladawsky-Berger, Chairman Emeritus, IBM Academy of Technology and Visiting Professor of Engineering Systems, MIT, sees two major factors that make cloud computing qualitatively different from all IT concepts to date: One is massive scalability. The other is the much higher quality of experience it can provide for users. “As with the Web in the mid-‘90s, every enterprise will have to develop its own cloud-like capabilities, or work closely with partners that do.” he writes on his blog.

But cloud computing can be no more than a vision until something is done about the data centers on which it relies. In general, today’s data centers can be described as massive, sprawling and pushing the limits of power and space available to them. Many have grown through mergers and acquisitions, with different departments having their own servers and a proliferation of small and mid-size servers. As a result, they are inefficient, expensive to operate and have high energy requirements. Worse, they cannot be scaled effectively.

The new IBM iDataPlex system represents a solution, a basis for the data center of the future. It reduces the cost per server by approximately 20 percent to 25 per cent by using off-the-shelf components and open source software, fits 138 percent more servers in the same floor space and, best of all, as we said, requires 40 percent less power to run. It is intended both for enterprise cloud computing initiatives and clouds designed to host Web 2.0 applications.

Not a lot of iDataPlex systems will be sold. The target universe contains only 1,000 prospects, each valued at upwards of $20 million, and each system will be custom-built. But it’s already clear that cloud computing builds on itself, as large companies become suppliers for smaller ones. And IBM has the pieces in place to help customers acquire new data centers conveniently. IBM Global Financing will offer them lending and leasing opportunities, IBM Global Asset Recovery Services can manage the disposal of equipment in accordance with environmental regulations, and IBM will team with third party technology companies to drive a product ecosystem around iDataPlex..

That’s smart of IBM because iDataPlex has the markings of a hot product. According to Forrester, “Cloud computing . . . has all the earmarks of a disruptive innovation: It is enterprise technology packaged to best fit the needs of small businesses and start-ups – not the enterprise.” An eco-friendly cloud computing system.  What a thought!

What do you think about all this?  Where do you see it going?

Some Resources:

http://www-03.ibm.com/press/us/en/pressrelease/23991.wss

http://www-03.ibm.com/systems/x/hardware/idataplex/index.html

                                                                                                                                                  

PDF documents
	Pund-IT Research Report: IBM System x iDataPlex – Enabling Web 2.0 with Internet-Scale Solutions (133 KB)
	Cabot Partners White Paper: IBM System x iDataPlex: The Newest Economical Workhorse in the Computing Cloud for Next Generation HPC Data Centers (1 MB)

The Consumer is King - Not Content After All!

By Eleanor Haas

A decade ago, the cry was “Content is King” as we tried to make sense of digital  technologies that were changing everything about how we received and used information, did business and related to one another.

Now technology has not only enabled new kinds of media unimaginable even ten years ago but has empowered consumers in ways that enable them to control the information they receive, once the exclusive province of publishers. Most serious of all, technology has transformed so much so fast that today’s adults are no longer competent to forecast what happens next. As Strauss Zelnick, founder, ZelnickMedia, pointed out at yesterday’s digital breakfast, our media habits today are those we formed by the time we were 16.  Look to the 16-year-olds for what’s cool and try to understand how they use and experience media.

Listening to media business leaders discuss the future of digital entertainment – and digital “entertainment” now encompasses all digital “content,” another startling convergence – right after reading Chris Anderson’s piece on “Free!” as the future of business models throws light across the full spectrum of the media universe and related business models. The business leaders spoke at a GothamMediaVentures event sponsored by Frankfurt Kurnit Klein & Selz. They were Ellie Hirschhorn, Chief Digital Officer, Simon & Schuster; Andrew Lack, Chairman, Sony BMG Music Entertainment, and Strauss Zelnick. Richard Hofstetter, a Frankfurt Kurnit partner, drive the discussion with probing questions.

Digital Business Models

Hofstetter described the digital platform as a source of new opportunities for monetizing consumer relationships and for bringing customers to media brands – i.e., supporting the traditional entertainment business model of advertising, subscription and pay-per-view or pay-to-use. This is certainly true. In many ways we are, in Zelnick’s words, moving increasingly away from a paying economy to an advertising economy. But that is only part of the story.

Anderson takes the story to another level, talking about radical new business models enabled by low-cost digital distribution, such as free video content online while theaters make money from concessions and sales of a premium movie-going experience. Google is free to consumers, he says – and generates revenue from advertisers who want to reach those consumers.

“Technology is giving companies greater flexibility in how broadly they can define their markets, allowing them more freedom to give away products or services to one set of customers while selling to another set,” he writes, adding that “anything that touches digital networks quickly feels the effect of falling costs.” Web technology is all about scale, he explains, and transistors, which he calls “the atomic units of computation,” are now close enough to costless that storage, bandwidth and processing power are being offered free by companies like YouTube and Google, and IT developers can afford to focus on delighting computer users, not just on running algorithms efficiently. As a result, we have increasingly sophisticated user interfaces, new forms of digital entertainment and a flood of new ways to make “free” part of business models.

The New Economics of “Free”

Attention and reputation are the new scarcities, not money, writes Anderson, and it’s to acquire these that “free” exists for the sake of a business model. It’s a seismic shift in our values as society.

Anderson clusters variations on the theme in six categories:

• “Freemium” – the subscription model – a free basic version,      supported by premium versions with more features.
• Ad-supported – free content, services, software, etc., paid for online by ad banners, text ads, affiliate ads, site sponsorships, search results inclusions, paid listings, lead generation, product placements and paid personal connections on social networks.
• Cross-subsidies – giving away one product (razor) in order to sell another (blades).
• Zero marginal cost – a de facto business model: the product becomes free because distribution costs nothing. Example: online music.
• Labor exchange – the user creates value for the publisher by supplying information and gets free access to Web sites and services.
• Gift economy – beyond money to altruism and sharing now that zero-cost distribution makes this economically viable – Wikipedia, open source software and UGC, for example.

New Business Models for Digital Music

Looking back, Zelnick says “we (the record industry) drove people to piracy.” How? By not having the technology to support peer-to-peer sharing except for free and by so fearing what had happened to the film industry with VCR rentals – retailers made money but not film studios – that the music industry would not allow retailers to make money with digital music.

Anderson’s point about cost-free distribution supports this. Consumers saw what was possible and acted on it. The record industry lacked the access software and the strategy to take action.

Now new business models have emerged that make online music economically viable with multiple revenue streams, including two of

Anderson

’s categories: ad-supported and paid premium subscriptions.

· Entertainment content download sales are booming at both iTunes and Napster.

· MySpace Music, announced less than a week ago, is a joint venture of MySpace with the big labels: Sony BMG Music Entertainment, Universal Music Group and Warner Music Group. For the first time, the most popular digital music community, My Space, is in partnership with leading music companies for purposes of marketing music content in a way that legitimizes downloads and generates multiple revenue streams. This represents a sea change from iTunes because it helps music titles bubble up in peer-to-peer interactions as opposed to being pushed down by large companies’ choice of materials. (The success of the joint venture will depend to some degree on the autonomy granted to partners who are otherwise competitors.)

· Device manufacturers are taking an “all you can eat” approach, loading devices with music so that consumers buy the music with the device.

 

Radiohead and other alternative bands left their record labels, released new albums on their own Web sites and invited downloads for free or whatever consumers wanted to pay. But by then they were already established and could use tours and other vehicles to generate revenue. (Anderson’s cross-subsidy model.)

The value record companies and movie studios deliver is discovering and establishing new artists, who need nurturing and a company behind them even if they no longer need the old distribution of traditional media.

Film Business Continues as Before

New films continue to be distributed and marketed in the traditional manner, and the studios continue to provide the financing. The business has not yet been disrupted because the Internet pipe isn’t fat enough for downloading movies.

Book Publishing has Yet to Adapt

Music, video and social media have been the first three waves of the digital content revolution, which the book publishing industry has sat out, according to Hirschhorn. Storytelling is still in demand, and people still read books. Opportunities are evolving for e-delivery and integrated e-commerce that can provide a rich media reading experience, but it’s early days.

Authors are assets as well as books. Like musicians, they have fan bases. Opportunities exist for them to connect with consumers, build personal brands and franchise and have a voice beyond their books.

What’s different from some digital entertainment businesses is that the book business is not in the ad sales business, looking to build audiences. Publishers want their authors out there broadly, leveraging syndication.

How Do Story-Tellers Get Paid?

One way storytellers get paid is apparently by developing online games.  Zelnick mentioned a new interactive game that contains eight hours of narrative!

Beyond this, however, how they get paid seems to be the $64,000 question. Technology business plans are clear. But content companies are under pressure. The middleman/distributor is in competition with the creative force. TV viewers zap commercials, and networks now give away content for free at sites like Hulu – online streaming video on demand, free snippets of programs. Creators are getting into their own businesses but have to rely on agents and lawyers to fight for the right to do their own exploitation. Will advertisers buy this? Yes, says Lack, advertisers will follow if consumers buy in.

It’s all about what consumers want. And that, in turn, is determined by our habits at 16!

New Directions for News.

TV news has begun cutting news-gathering costs, looking to outside sources. Yesterday, CBS was reported to be in talks with CNN about outsourcing some of its reporting operations. (Whoever thought the heart of the news business would ever be outsourced?)

In addition, citizen journalism has become a reality. CNN introduced ‘iReport” a year ago, soliciting UGC for consideration by CNN editors. Now ireport.com offers unvetted online content from users and bloggers. What happens to credibility with citizen journalism?

Lack characterized blogging aptly: “Blogging is part of grassroots bubble up content – some news, a lot of opinion and junk – a platform trying to find its place.” But, he added, it should not dominate serious news gathering. a lot of established companies have too much baggage for the digital age, he continued. The high cost of their infrastructure is challenged by digital media and will be replaced by some of these, including blogs.

But there’s no need to get news from an existing company. Social networks are rapidly becoming an alternative. Are they being overvalued? Zelnick’s answer to this is a good one: “News Corp. paid $580 million for MySpace and got a good buy – even though the valuation is too high.” Why? Because of the enormous growth potential of interactive entertainment, based in part on the same model as the traditional movie business: give consumers what they want and grow with the demographics.

And the reason for this is what might be termed the new economics of consumer control.  Social networks add a measure of consumer control that has never before existed.  Content bubbles up in peer-to0peer interactions instead of being pushed down by large companies.  Being incontrol transforms the value proposition for consumers.

What’s Next?

 

The next business to be disrupted will be television, and it will be an ugly transition, predicts Lack, but this will take longer than we think – as did the battle between videotape and 35-mm. film, which took decades.

Whither Wikis?

By Eleanor Haas

Wikis, those indispensable reference resources - Web sites where anyone can add or update content - are still “cutting edge social media” after nearly 13 years, “with best practices an evolving target,” says John Blossom, president, Shore Communications, who organized and moderated a panel on the subject at a recent SIIA Brown Bag Lunch.

Wikipedia has proven user-generated content can be very high quality and can be accepted as authoritative and reliable when done right.  As proof of this, social media sites increasingly come out at top of a Google search. What's next?  Video and photos are bound to play a greater role as equipment quality continues to go up and prices to come down.

What the wiki delivers that’s different from a search engine is “a well-packaged story,” said Michael Sha, co-founder and co-CEO of Wikinvest, a new wiki, still in beta. That speaks clearly to their market appeal. Their diversity is an equally clear indicator. The key to their quality control, the primary topic, varies:

• Wikipedia, the granddaddy of them all, was founded in 1995. It achieves quality, said Mark Pelligrini, senior editor/contributor, by enabling quality to evolve in real time through policies requiring verifiable information, a neutral point of view, accuracy on a par with the encyclopedia Britannica and peer review. All the filtering is manual.
• Newsvine, a new kind of news site, does it with an algorithm that causes content to fall away to an archive after 24 hours unless it gets enough votes, said Chris Thomas, top contributor. “Filters catch advertisers and astroturfers – corporations and other vested interests who try to create the appearance of a grassroots net movement,” he continued.            

Content is provided by both professional journalists as well as everyone else to create a comprehensive ecosystem of both subject areas and contributors that mirrors the real world. New user content lives in the “greenhouse,” a purgatory with no live links for search engines to follow. After users prove themselves, their content gains full access.       

• Wikinvest, an investment information site, has “a broad population of people who are knowledgeable about certain areas” of finance – people “passionate on the topic who desire to interact,” Mr. Sha stated. “Filtering tools bring out the best,” he added.  The tools identify the most valuable contributors, those requiring the least review. This wiki can be a great platform for asset managers, positioning them as authorities on investment strategies.

The site consists of objective summaries of companies and of investment areas, or industries, subjective bull or bear commentary on each, and descriptions of the contributors creating the content – already more than 100,000 of them.

Transparency is Wikinvest’s secret of quality control. Every edit can be tracked.

• WikiAnswers, a Q&A community acquired by Answers.com last year, consists of questions and answers, each entered by the same or different contributors, each open to edits by anyone, reported Bruce Smith, Chief Strategic Officer. Over100 supervisors – all with day jobs – control quality in their specific subject areas.

What motivates contributors? Fun – pure enjoyment - is the No. 1 reason, according to a recent MIT study, with which panelists agreed. Contributors are enthusiastic about their subjects and enjoy sharing their knowledge and interacting with like-minded individuals. In addition, they can improve themselves and advance their careers by building a reputation and even driving clients. Newsvine adds one further dimension: it shares advertising revenue with contributors whose content attracts the ads.

But how does free content generate revenue?

• Wikipedia solicits individual and corporate contributions.  It also sells feeds to subscribers, big search engines and cell phone providers. Some people license the database and post a mirror site with advertising. On-site advertising is not feasible because the community reacts “very negatively.”
• Wikinvest will test syndication. If it moves to charging for premium services, these charges would never involve content access. Advertising is a distinct possibility for the future.
• WikiAnswers will monetize with AdSense and with ads when answers can add user value by being on an iPod but, like Wikinvest, will not charge for Web access to content.
• Newsvine carries ads and pays 90 percent of ad revenue to contributors.

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Mayday or Payday?

By Eleanor Haas

Just how far-reaching is the fallout from July’s credit crash? Major financial markets firms took big hits, and two lost their CEOs – Merrill and Citi.  Morgan Stanley just lost a co-president. News commentators wonder aloud whether we’re headed for a recession. In fact, news media are full of gloom and doom. But perhaps their heads are too high up in theoretical clouds to see the reality that the sky has not fallen - smart investors are still making money.

My friend John says his HNI friends (High Net Worth Individuals) are fleeing to the security of mutual funds. My friend Jeff is having success raising a new venture fund.  My friend Arthur is judiciously managing his portfolio of real estate investments, buying or selling, wherever the best advantage lies.  Three different kinds of opportunity for three different kinds of savvy investors.

In other words, financial life goes on. maybe It’s not mayday after all – at least not yet.

Speakers from three private equity funds bore this out last evening in the course of a panel discussion on Exit Strategies and Fundraising in a Changing Environment, which was sponsored by WAVE (Women’s Association of Venture and Private Equity). Opportunities abound for those who know what they’re doing.

Timing is everything, said Raquel Palmer, a partner with KPS Capital partners, which buys troubled companies and fixes them. “We had nine exits in fourteen months,” she said, “the foreign market is still open. The US is on sale. European and Japanese strategists get good value.”

“The market is open, but selectively, by company and by sponsor” said Linda LaGorga, Managing Director, Financial Sponsors Group, Goldman Sachs, who sees good exits for strong assets in the $50 million EBITDA and above market. “The financing market is volatile. It’s there for some assets, not others. You have to get ready and time it.”

“Strategics were not hurt by the bank pull-back on financing, as private equity funds were,” said Bill Jarrett, Managing Director, Lower Middle Market, Goldsmith Agio Helms/Lazard Middle Market. “We’re more selective. Some industries are out of favor – housing. Service industries are dong well, for companies with good cash flow and EBITDA.”

Services with good cash flow and steady growth, which are not cyclical, sell well in this market, and buyers are out there, agreed Ms. Gorga. Large private equity funds want to buy by the end of 2008, so they play at the lower level, $750 million, look at smaller assets in order to put money to work. PIPES are another way to put equity to work now and be in a good position later.

Niche companies in their segments - often with consolidation - are a good bet. Mr. Jarrett sees “lots of buyers for rollups and synergistic acquisitions. An international component to the transaction can be a deal sweetener – a foreign buyer or an international component of the company.

What private equity buyers have to look at in making an investment is the exit opportunities, so they look for companies with strong market share – a good niche player with a franchise, Ms. Palmer pointed out.

What about valuation, pricing and terms?

• There’s still a backlog of leveraged loans, and this      impacts big buyouts, as does concern about a potential recession and the      volatility of the housing market. Most deals in the $50 million and above market have covenants,      going back to the more traditional deal. Leverage has come down. It’s      2002 all over again. The market      will recover.
• Valuations are down. There’s a shifting of risk – escrows, warrants, liabilities. Sellers may take lower multiples if the      terms remove certain escrow commitments. Seller financing is coming back, which can help bridge the gap      between expectations and valuations.
• The lower middle market depends on smaller banks for      financing. The pullback is at the      high end of the market, not this one, where lending may now be a 3 times      EBITDA as opposed to 3.5 times. Smaller banks are cautious now, but they’re still financing      transactions.

What kinds of deals have you had since the credit crisis began?

• KPS is having “great deal flow” because companies      can’t readily get bailout funds. Two of four companies KPS is looking at are operating in Chapter      11. This makes them easy to clean      up and recapitalize. KPS expects to      see more of this. Investment banks      used to dictate pricing with staple financing, but people are not seeing      these any more.
• The Middle East has huge amounts of money -  multiples of the largest US funds - and offers good ways to sell a company. New lenders are stepping up – new banks are entering the market. Mezzanine funds are key. Goldman has a $9 billion fund that is stepping in and taking a subordinated part of the capital structure.
• Typical deals take six months but now often take longer. On the other hand, a strategic - a domestic strategic – just did a deal at 10 times revenue in two months – with no book. International buyers take longer.

What about buy side opportunities?

• There’s still a lot of liquidity in the market. People will have to put in more equity,      and sellers have to have more reasonable expectations. Private equity funds raise funds to buy      debt and then take on debt to do this. That’s high risk. Many      private equity funds won’t be successful raising funds because they can’t differentiate or create value for investors. Smaller PEs will vanish.
• It’s a good time to buy a business and to buy it      cheaper, and lots of companies in distress is an incentive to buy. Hedge funds are tempted. Their managers know how to run funds but      lack experience with Chapter 11 and restructuring. They’re getting smart about Chapter 11      strategies with distressed companies.
• Seller expectations will come down, i.e., valuations. The credit market will stabilize. 2002 buyers did very well. You just can’t predict the timing of the cycle.
• PEs continue raising a lot of money. This adds to the buy side. Boomers are aging, are concerned about possible increases in the capital gains tax and so want to sell now. Corporate performance is strong. The stock market is off but companies still make acquisitions. Smaller banks will continue to lend.

To quote the French, the more things change, the more they are the same. Those who remember 2002 and other periods like this have the confidence to make wise decisions. Those who know what they’re doing do it right. For them, it’s payday. For the unknowing or under experienced, beware. For them, it could well be mayday.

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Advertising is dead! Long live advertising!

By Eleanor Haas

As everybody knows, paid media advertising is declining in effectiveness. Why? Because audiences have too many options. They have more and more media to choose among. They are deluged with messages – to the point of information overload. They have found ways to skip TV ads.  And they are captivated by new kinds of media, such as You Tube and Facebook.

Three technology-enabled alternatives to the status quo were discussed this morning by a panel sponsored by the law firm Frankfurt Kurnit Klein & Selz. The focus was on who owns creative content and how these ideas are paid for. What the new accepted practices will be will have to evolve over time. But clearly, advertising is undergoing a metamorphosis.

The challenge is what it has always been: how to come up with a compelling creative concept that will make the cash register ring for a product. Technology has added a new twist. Aren’t ads simply a form of content? Can’t they be interactive games or songs? How does user-generated content figure in this as opposed to ads created by professionals?

But once ads become content, the creative brains behind them take on an importance greater than that of a hired hand, something comparable to that of a star screen writer or songwriter. That’s when you get into serious questions of intellectual property ownership and compensation.

One new direction comes from OpenAd.net, which calls itself “the world's first online marketplace for buying and selling advertising, marketing and design ideas.” OpenAd wants to democratize the ad businesses by enabling students, professional free-lancers and ad agencies to compete side by side. In addition, it wants to give creatives a chance to benefit financially from really great ideas that work.

Creatives all over the world who have registered with OpenAd create ads in response to briefs from ad agencies or advertisers. Buyers who have enrolled as OpenAd members get access to diverse creative approaches and can license these ideas as they use them. Creatives are compensated proportionate to the value the buyer perceives in their ideas - as expressed in frequency of use - as opposed to the traditional one-time fee based on time and materials.

Grey Worldwide has been pioneering another new direction for at least five years: creating ad content as branded entertainment. It’s also helping brands get ownership of songs they use as well as using songs as key branding tools. The agency becomes the brand’s A&R consultant, proposing artists and songs as well as their interaction with the brand. In one ad, for example, Rihanna plugs both her own album and Cover Girl products in a format reminiscent of MTV. In another the Black Eyed Peas chant hip hop lyrics owned by Dr. Pepper to promote sales of Dr. Pepper soft drinks.

GO Film, a production company, collaborated with McCann Erickson to produce two music videos by Christopher Guest that pitch Intel processors through original songs that incorporate technical terms specified by Intel. The videos, which were posted on various techie and non-techie Web sites, are designed to deliver pure entertainment value as a basis for an enhanced brand image. One video tells a story about a soft-rock singer – representing Intel software – and a hard-rock singer – representing Intel hardware – and the pleasure they bring their audience of office workers.

Advertising is still a message controlled by a sponsor who is identified and who pays for distribution. But the nature of the message is taking on radical new dimensions, dimensions that at times seem to erase the line between entertainment and advertising.  The times they are a'changing!

 

 

Intel Positions Its New Chip as Eco-Responsible

By Eleanor Haas

“Eco-friendly” comes first in Intel’s description of its new 45 nanometer processors – “eco-friendly, faster and `cooler’” is the phrase. That’s good news for environmentally conscious customers and good business for Intel.

On technical achievement alone, the new processors are impressive enough for Intel Co-Founder Gordon Moore to call this the biggest transistor advancements in 40 years. Breakthroughs in manufacturing and materials boost performance, lower power consumption and open the door to future products that are even smaller and more cost-effective.

What makes the new chips faster is Intel’s new manufacturing process, which makes it easier to squeeze increasing numbers of electronic brains on a chip by shrinking circuitry dimensions to 45 manometers from 65 manometers – a nanometer is a billionth of a meter. The new processors are said to have nearly twice the transistor density of previous chips built on the company’s 65 nm technology. This brings the number of transistors up to 820 million for quad-core processors that use the new formula.

What makes the new chips `cooler’ and therefore more eco-friendly is Intel’s all-new transistor formula, which reduces electricity leakage – something that has become an increasingly serious issue as parts of tiny switches have become smaller and smaller.

Increasing energy efficiency has become key to IT product design not only because of the environmental benefits but because of cost savings for users. In addition, environmental friendliness has been mandated by regulatory bodies around the world.

Whatever the motivation, it’s good to see environmental considerations the No. 1 selling point.