Archive for the ‘The Digital Dose’ Category

The Internet Is Finally, Primarily A Content Platform!

Posted on: November 4th, 2011 by No Comments

It used to be the Web’s only real killer app was communications — email. But these days’ people use the Internet for content consumption more than anything else.

Users spend 88% more time consuming content on the Internet each month in 2009 (7 hours) than they did in 2003 (3 hours, 42 minutes), according to a study conducted by the Online Publishers Association’s Internet Activity Index.

Whereas people used to spend 46% of their Internet time communicating in 2003, in 2009, that number is now down to 27%. As indicated in the chart below, content consumption is up to a 42% share from 34%.

The American Press Institute asked 2,400 newspaper executives if their papers “provide access to stories or information such as sports scores, headlines, stock quotes, etc.,” via Twitter, Facebook, Email alerts, Mobile/PDA, YouTube, Kindle, Flickr, e-readers, etc., and told them to “check all that apply.” As the chart below shows, a whopping 24% of all respondents answered “None at this time.” Bizarre.

I guess the saying’s are true Content is King and you can’t teach an old dog new tricks. . . Big shout out to John Demarchi for today’s Dose.

Keep it moving and stop taking yourself so seriously!

Gary R. Lewis

Let’s Make a Deal part1

Posted on: November 4th, 2011 by No Comments

Ken Sonenclar is a managing director at DeSilva + Phillips, LLC, a New York investment bank specializing in media.

This brutal year in M&A is mercifully winding down. The global credit squeeze, deep recession, and shrinking valuations have kept deals in check. But with the economy rebooting and many big media and tech companies sitting on piles of cash, conditions are ripe for striking big deals next year. Here are five deals that would go a long way towards lifting us out of the deal-making doldrums and also help reshape the media sector in important ways.

NSDQ: MSFT) should buy Research in Motion:

Last year, desperate to battle Google (NSDQ: GOOG), Microsoft nearly dropped $45 billion on Yahoo (NSDQ: YHOO). For those old enough to associate 360 with IBM and not Anderson Cooper, this proposed deal recalled the mating dances of Burroughs, NCR, Univac, Control Data and Honeywell (yes, the thermostat company made big computers once upon a time), all while IBM’s only true menace was the Justice Department. But the search race is finished. Google, whose only true menace is also the Justice Department, has lapped the field.

The smartphone/mobile platform race isn’t over yet, but it will be before Redmond can do anything on its own about it. The price for RIM (NSDQ: RIMM) would likely top $40 billion, but at least Microsoft would own a market-leading company with plenty of juice left, not to mention a product that an awful lot of adults would sooner die than live without. If Microsoft can deeply and seamlessly integrate new BlackBerries into Windows and Office, Chairman Steve (Ballmer, that is) will see a million apps bloom. Not only will this trip up Apple’s designs on enterprise-wide iPhone sales, it will pull Apple-like crowds into Microsoft’s new retail outlets. That would be something to yodel about.

Google should buy Clear Channel (NYSE: CCMO) Outdoor:

Google has sought to extend its advertising realm beyond the web, to radio and newspapers, most notably and most miserably. Out-of-home advertising presents a different opportunity. Static billboards and signs are going digital, allowing for continuous refresh and an infinitely more dynamic environment that suits the on-the-go way we live now. Clear Channel is the largest U.S. operator of outdoor advertising, but the company and its parent are choking on nearly $20 billion of LBO debt, perhaps stifling its ability to fund next-gen conversions. Meanwhile, a management shuffle within the controlling family is underway. Google could not only speed the digital build-out, but also introduce auction buying to the staid world of out-of-home.

And things get really interesting when Google’s algorithms start crunching terabytes of real-time data about the soccer mom passing a particular sign and then serve up an ad targeting her and nobody else but her. While this may seem like some futuristic notion, Google is much closer than you think to being able to pull it off. Out-of-home has always at its heart been a real-estate play, but does Google need to buy the signs? An argument could be made against it, but owning certainly sweeps aside potential pockets of resistance. And, because out-of-home is an advertising-only environment (i.e. content-free), the company avoids the political squabbles it hates. Plus, it gets to do no evil outdoors.

Ted Turner should buy back CNN and fold in The New York Times:

Ted Turner is bored. CNN is squeezed between the jingoists at Fox News and the pinkos at MSNBC. The New York Times (NYSE: NYT) needs to spread its cost base while reasserting its editorial might. A ménage a trois made in heaven? The problem with most potential acquirers of the Times is that they dilute the brand merely by association. Not so with CNN-founder Turner, a legitimate, new-wave press baron who knows that great reporting can still turn a buck and has said recently that he is embarrassed by the increase in fluff on CNN. The Times already has its reporters Twittering, filing video via satellite, and filling the Sunday talk shows.

Times/CNN would be the Tiffany of world news organizations, even if Turner’s environmentalism had him ditch the Times’ print edition before the economics forced him to. Does Jeff Bewkes care about owning the best news network? Probably a lot less than Bill Paley did, which wasn’t much, so it’s merely an issue of price. As for the Sulzbergers, Turner’s offer would have to be rich enough to turn the family’s collective head, but this year’s near-death experience probably slashed their expectations, and Turner is probably the best custodian for this public trust that will come along. Turner may have a harder time prying loose another Time Warner (NYSE: TWX) property he lost but reportedly covets: the Cartoon Network, his apparent Rosebud.

CBS (NYSE: CBS) should buy Meredith:

Both by acquisition and savvy management, NBC has grabbed an enviable position in media for women. Yes, they overpaid and haven’t done much to leverage iVillage, but it remains a vital web property. Meanwhile, NBC has won big female audiences with quirky programming on Bravo and Oxygen. The peacock network’s lead is hardly unassailable, but rival CBS needs to buy its way into a competitive position. Meredith (NYSE: MDP) is a superbly run company that demonstrates magazines have not all been consigned to the old-media dustbin. Their roster of brands remains robust, though some are as old as Methuselah. (The company also owns 13 broadcast stations, including CBS affiliates in Phoenix, Atlanta, and Hartford, though whether CBS would keep them is an open question under FCC rules.)

Taken as a group, Meredith’s magazine titles span all the stages of a woman’s life that advertisers care about. In addition, the company has made some thoughtful web acquisitions in content and social media, has extensively licensed its brands, and has acquired a stable of marketing-services firms that make money on their own but also position their clients Meredith’s advertisers to spend, spend, spend. Extracting real value, though, will require CBS to extend these franchises across their web and broadcast/cable operations. As a whole and in parts, Meredith is a solid performer, like CBS, and the two should grow old and generate cash together.

(Fill in the blank) should buy LinkedIn:

By building as relentlessly as the Tholians, LinkedIn has outdistanced every other online business network. All web communities are ephemeral until the switching costs grow too daunting or the network effects render them too useful. LinkedIn has passed both those markers, and it’s hard to imagine any contender knocking the six-year-old company off its perch. It has taken people awhile to feel comfortable navigating the sometimes-murky waters of business social media or social business media: Where is the line between the personal and professional? (Thanks, but no pictures of your Kenyan safari.) Is it OK to keep your resume permanently posted (Apparently so.)

The guiding hand of management comes into play when necessary, but LinkedIn’s members 50 million and growing now drive the community. And because it is useful in so many ways as the ultimate networking tool; as a remarkably diverse source of functional information; as a medium that fosters just enough personal interchange (Facebook is there if you need more); as a decent advertising platform many buyers would love to own this high-value, global community. Might LinkedIn go public instead? Sure, and an IPO filing may serve as a stalking horse to prod a bid from McGraw Hill (already an investor) or Reed Elsevier (NYSE: RUK) or Dow Jones/News Corp (NYSE: NWS). Or Corporate Executive Board or even Monster Worldwide (NSDQ: MNST). Or from all of them.

Any deals that you think could make life interesting please share?

As I always say, Keep it moving and stop taking yourself so seriously!

Gary R. Lewis

Yahoo! should merge with CBS Corp. (NYSE: CBS) or Viacom (NYSE: VIA), or buy Brightcove:

Posted on: November 4th, 2011 by No Comments

At some point Yahoo and/or its investors will come to the realization that the status quo, even if done better, is just not going to result in anything interesting. They’ll get restless for results and consider something more transformative. And, considering the brand media direction the company continues to go down, I think a mega convergence play is the way this thing will play out. How ironic would it be if Yahoo and Viacom teamed up shortly after Time Warner (NYSE: TWX) finally de-couples itself from AOL! If the convergence play doesn’t work out, then Yahoo should consider buying Brightcove.

(Public investors) should buy LinkedIn:

Ken, I’ll fill in the blank to this riddle Public investors should buy LinkedIn, in my opinion, not McGraw Hill, News Corp., Reed Elsevier (NYSE: RUK) or Monster Worldwide (NSDQ: MNST). There are a few reasons I think an IPO of LinkedIn is the path of least resistance and of greatest upside. First, I don’t think any of those potential strategic buyers (including News Corp (NYSE: NWS). have either the financial resources or financial stomach to pay the valuation that LinkedIn’s investors expect to see. Second, as you so eloquently state, LinkedIn has outdistanced every other online business network. All web communities are ephemeral until the switching costs grow too daunting or the network effects render them too useful. LinkedIn has passed both those markers, and it’s hard to imagine any contender knocking the six-year-old company off its perch.

LinkedIn is a great business with a lot of future upside from a variety of revenue streams, low customer acquisition costs, and high entry barriers. I think public investors will better value the future upside here than any logical strategic would. In an economy where growth has evaporated for so many companies and sectors, investors are hungry for new growth products. They’re willing to pay premiums for high growth stories with a long runway ahead. I think LinkedIn, along with a handful of others companies in this sector (e.g., Facebook, Gilt Groupe, etc.), are poised to reap valuations in the public markets just not possible from the logical strategies you’ve indentified.

Ted Turner should run for governor of Montana, not buy back CNN and fold in The New York Times:

: Ken, I don’t disagree that Ted Turner is probably bored. But surely he’s not also stupid. What billionaire in his/her right mind, other than Sam Zell, would intentionally put themselves through such grief by trying to turn around a newspaper company (even one as great as the NY Times) in this day and age Mr. Turner would be far wiser running for governor of one of the most beautiful and isolated states in the union (Montana) during the upcoming 2012 election (note: liberal Democrats seem to currently rule this state).

Disclosure: Needham & Company, LLC makes a market in the following companies mentioned in this article: WebMD, IAC/InterActiveCorp, Research in Motion (NSDQ: RIMM), Netflix and Yahoo. Needham & Company has not nor does it expect to receive investment banking fees for any of the companies mentioned herein. The author does not have a financial interest in the securities of any of the companies mentioned above.

As I always say, Keep it moving and stop taking yourself so seriously!

Gary R. Lewis

Let’s Make a Deal part 2

Posted on: November 4th, 2011 by No Comments

Many of you replied and enjoyed my last Digital Dose well Mark May who is a principal and senior internet and digital media research analyst at Needham & Company, LLC, a full-service growth-company investment bank. Wrote the following reply! I am in the process of putting together Five Deals that I would like to see in the urban space so stay tuned! Ken Sonenclar’s Leading Voices piece from yesterday titled Five Media Deals I’d Like To See Happen In 2010 was thoroughly thought-provoking. Here are the thoughts from Mark May around M&A targets for next year. I guess you could call it a rebuttal to Ken’s piece.

Microsoft (NSDQ: MSFT) should buy WebMD (NSDQ: WBMD) and/or IAC/InterActiveCorp’s, not Research in Motion:

Ken, it’s certainly true that Microsoft is in a desperate battle with Google (NSDQ: GOOG). It couldn’t close an all-out acquisition of Yahoo (NSDQ: YHOO) last year, but it’s still trying to complete a definitive agreement to, at least, run its search business. But we don’t think Microsoft is done.

Microsoft still needs to broaden its footprint in the online media space in order to become more relevant with advertisers, thus driving up the value of its audience and leads. We think WebMD fits the bill for four main reasons. First, WebMD brings with it a large, and largely unduplicated, audience of about 60 million monthly unique users and about 6 billion pageviews a year. Second, WebMD has a dominant position and we believe controls more than 25 percent of the spend in its vertical. With the acquisition, Microsoft would be the go-to channel online for not only pharmaceutical advertisers but also for the increasing number of consumer/CPG health, wellness and fitness-related advertisers on the WebMD Health Network.

Thirdly, WebMD would enhance Microsoft’s efforts in the enterprise space (e.g., large employers, and hospitals and physicians offices) as WebMD already generates about 20 percent of its sales through the licensing of private portals to these groups. Moreover, WebMD is well-positioned to potentially be a central hub for consumer’s electronic medical records. And, fourthly, WebMD’s financial performance has been, and should continue to be, phenomenal. We’re not aware of any media company online or off that has managed to grow its advertising revenue about 20 percent in each quarter during the downturn. And, with EBITDA margins of more than 20 percent and free-cash-flow margins of more than 15 percent, WebMD is a highly profitable business model. Ken, don’t you think WebMD is just what the doctor ordered for Microsoft? also makes a ton of sense for Microsoft, which clearly wants to increase its market share in search, and IACI?s Barry Diller has recently openly said he’s a seller. Moreover, Microsoft probably wouldn’t have to pay a big premium because the only other strategic buyer Google would probably be out of the bidding due to antitrust concerns.

Google should buy Netflix (NSDQ: NFLX) and/or eBay, not Clear Channel:

Ken, I appreciate out-of-the-box thinking, but an acquisition of Clear Channel (NYSE: CCMO) by Google would be a step in the wrong direction, in my view. First, the price tag (possibly as much as $25 billion, including debt assumption) would be rich for a company with significantly declining revenue and EBIT, and for one that would require significant capital investment to upgrade its infrastructure to digital. Moreover, I don’t see digital outdoor as a good place for leveraging Google’s ad targeting and optimization chops, as the concepts for bringing that to the outdoor space are futuristic at best, in my opinion.

Instead, I think Google should buy Netflix and/or eBay (NSDQ: EBAY). With Netflix, I see six main reasons for the deal: 1) Netflix would seriously expand the reach of YouTube into the mainstream media realm; 2) Google’s CEO Eric Schmidt has increasingly been talking about playing a bigger role in developing mechanisms for consumer for-pay models for premium content. Netflix is one of the leaders, if not the leader, in the for-pay (subscription) online premium content space; 3) Netflix helps extend Google’s reach into the living room; 4) Netflix could either be a primary platform for, or an excellent addition to, an App Store-like offering from Google (Android Market); 5) the ability to leverage Netflix user purchase patterns and preferences (the queue). Netflix would add rich targeting data to Google’s opt-in profile database; and, 6) Google likes to buy industry leaders, and Netflix fits that bill.

In the same way that YouTube gave Google the leading vertical search site for videos, eBay’s Marketplace would give Google the leading vertical search site for products. Google has certainly tried over the years to develop such an offering, but its initial efforts (e.g., Froogle) failed. Its more recent initiatives, like Google Merchant Center (e.g., Google Commerce Search, Product Search Marketplace, etc.) point to continued interest and innovation in this area, but the ultimate success of these efforts remains uncertain. At the same time that Google continues to try to build a vertical product search offering, eBay Marketplace seems to be struggling to improve its search and graphical user interface experiences, and to streamline and optimize its pricing and monetization strategies.

Google could help eBay in this regard. If the fit between Google and eBay Marketplace isn?t so obvious to you, certainly the fit between Google and PayPal is. Closed loop marketing is the Holy Grail for Google. Since Google Checkout has largely failed to close the last mile gap of the marketing loop for Google, and Google Analytics has thin penetration at the largest sites, owning PayPal might be the best way of optimizing conversion rates by completing the marketing loop. The big question with a Google/eBay marriage, in my view, is not the strategic rationale, but rather how the antitrust regulators would respond.

Scripps Networks Interactive (NYSE: SNIshould buy

Ken didn’t talk about either Scripps or Kayak, but I felt compelled to at least come up with one original idea. Following on the heels of Scripps acquisition of a controlling stake in Travel Channel, Scripps should buy First, it’s one of the few sizable independent online travel sites out there that has a rock-solid audience, brand and monetization model. Second, we think the optimal monetization model for content media assets is a combination of advertising and transaction-related revenue. The closer you can get to the transaction, the more value you can extract. The assets would add just that element not only to the Travel Channel but to several other of Scripps lifestyle media properties.

And, thirdly, as has become clear from the recent moves by Microsoft/Bing and Google, generic search-results lists are being replaced in certain circumstances (e.g., entertainment, travel, etc.) by richer vertical search experiences. That’s because the customer experience is better and conversion rates tend to improve. I’m not current on Kayak’s more recent financials or the thinking of its board/investors, but I’m guessing Kayak’s perceived valuation is at least $500 million. The valuation could be a stumbling block for Scripps, particularly considering it just assumed more debt as part of the Travel Channel deal, but the strategic logic still makes sense to me.

What’s Cracking On Your Block?

Posted on: November 4th, 2011 by No Comments

Like it or not, hyperlocal is one of the buzzphrases in online news these days, and the site of the moment is Founded two years ago, it was sold to MSNBC Interactive $$$$$. Unlike other sites that provide their own local news, EveryBlock, which operates in 15 U.S. cities, automatically aggregates information from a wide list of municipal sources (e.g. 911 dispatches and land-use records) as well as news sites.

It strives to better answer the question: What’s happening in my neighborhood? But does it? In the wake of the sale, I decided to give the site a run-through to see whether I could rely on it as a primary source of news about my work neighborhood, Manhattan, New York. I guess back in the day if some of my old college buddies winded up missing from the night club Nell’s back in the day, we could have checked and see if they were arrested. Visitors to EveryBlock are asked to select their city and then to type in their neighborhood or ZIP code. They are then greeted with a long list of updates ostensibly from their neighborhood, grouped in categories, such as locations mentioned in the media, 911 dispatches, restaurant inspections, and even photos uploaded on Flickr. There’s also a spiffy map to visualize where the entries have taken place.

In a blog post when it announced the sale to MSNBC Interactive, EveryBlock conceded that it is still a work in progress. It said its current incarnation is only about 5 percent of what we want to do with it. And it’s obviously not easy to provide complete neighborhood news without reporters on the ground or even editors sifting through the updates that are automatically generated.

But the bottom line is that in its current state, EveryBlock works better as an add-on a place I might want to turn to if I’ve already seen the local headlines for my neighborhood. Perhaps that’s why the MSNBC Interactive acquisition is so important, since the company has indicated that it will couple EveryBlock updates with the local sections of

Have you used EveryBlock? What do you think? It seemed like the rap game (The Diplomats) where thinking like this in 2006 according to I guess they ran out of money???

Keep it moving and stop taking yourself so seriously!

Gary R. Lewis

A Double Dose for the Sport of It

Posted on: November 4th, 2011 by No Comments

To all my sports fans out there! I decided to give you a double dose today! I am a passionate sports fan and love this time of year. NFL and College Football starts this weekend, the cold fronts are working their way to New York and Baseball in October is always fun when the Yankees are kicking ass (sorry Red Sox Fans). There were two things that caught my attention in the world of sports a merger and a move to embrace social networking while laying down some rules and guidelines.

Story #6 The Merger:

The difficult media landscape is encouraging more content companies to start sharing content. Today’s partnership comes from and Sports Illustrated. The two will mix and distribute each other’s content across their online properties, as well as in Sports Illustrated magazine. The deal also includes CBS Interactive’s high school sports site MaxPreps, which will be prominently placed on’s High School section front. Unlike ESPN (), which can do this all vertically, CBS (NYSE: CBS) Sports lacks a magazine and SI can use the cross-pollination with a major sports TV site. While the sites will share content, for the most part, the ad revenue will stay with the respective sites, multiple sources told paidContent. The two companies may eventually consider building a more formal revenue structure to the partnership, a source familiar with the arrangement said, adding that the focus of this deal right now is more about driving traffic to each site.

MaxPreps replaces high school and college sports network Takkle as the power behind the magazine’s Faces in the Crowd franchise, which showcases up-and-coming sports stars, both in print and digital, Sports Business Journal noted (sub. req.). In turn, Sports Illustrated writers, including David Feherty and Seth Davis, will be syndicated across Release As for Takkle, the partnership with Sports Illustrated was likely doomed after two strokes: the first was when the site was sold to Alloy Media back in February; the second was when it lost its main backer, Jeff Price, who resigned as SI Digital’s president in April.

Story #6A The Rules & Guidelines According to the NFL (They always seem to get it right):

Add the National Football League to the list of sports orgs laying out specific guidelines for social media. The NFL sent a memo detaining its policy to clubs Monday afternoon and released a statement (published below) focusing on Game Day rules. Key points:

The use of social media by NFL game officials and officiating department personnel is prohibited at any time. Players, coaches and football operations personnel can use social media or networking sites (Twitter, Facebook, etc.) up to 90 minutes before kickoff and following post-game media interviews. No use during the game or halftime; that includes any representatives using his personal social media accounts. (Interpretation: A friend or agent could tweet under his or her own name but not as the player or coach.)

The policy also lays out social media use rules for media applying longstanding policies prohibiting play-by-play descriptions of NFL games in progress to Twitter and the like so that the accredited organization’s game coverage cannot be used as a substitute for, or otherwise approximate, authorized play-by-play accounts. NFL spokesman Brian McCarthy, one of the league’s official tweeters (@NFLprguy), told paidContent the rules are meant to keep the focus on the game and preserve the rights of credentialed media. It’s also meant to protect competitive information during a game but it’s not as draconian as the International Tennis Association Tennis Integrity Unit’s effort to stop U.S. Open tweeting by players. See full NFL Statement at

6. I think that the CBS Sports and was a good solution to fix the problem they had? They spent a lot of money on Takkle upfront and I did not understand that move at the time. Technology is like any other business. You Have To Drive The Business!! If you follow you will always be playing catch up.

6A. Maybe I will twitter all the NFL superstars with twitter accounts (1 minute before the 90 minute NFL rule) looking for a response for shit’s and giggles?

Keep it moving and stop taking yourself so seriously!

Gary R. Lewis

Twitter Cuts SMS Deal With Indian Telecom and Launches Mobile Service in Japanese With Banner Ads

Posted on: November 4th, 2011 by No Comments

by Matthew Creamer @ Advertising Age

India has roughly 457 million mobile subscribers, a massive population that, despite a fondness for SMS, hasn’t been able to receive Twitter updates via text. That all changed this week when Bharti Airtel, India’s largest mobile provider, inked a deal with the massively popular microblogging service that will allow subscribers to send Tweets at the usual text rates and receive them for free.

As Twitter co-founder Biz Stone put it on the company blog, “Bharti Airtel is offering people in every city, every village, every remote taluk and even the smallest panchayat the opportunity to connect to Twitter and enjoy the open exchange of information with no added fees.” Mr. Stone added that “organic growth has been unusually strong there.”

The impact on the Twitter-verse’s geographic composition wasn’t lost on the telecom. “India is likely to become the largest market for Twitter very soon and this service should be a huge catalyst,” Atul Bindal, president-mobile services, Bharti Airtel told The Times of India, which reported that India is currently Twitter’s third-largest market. The subcontinent joins the U.S., Canada, New Zealand and the U.K. as markets with full SMS service.

Meanwhile, Twitter made an announcement in Japan, a juicy market full of tech-savvy consumers armed with advanced mobile technology that’s nonetheless been tough to crack for U.S.-based social networks like Facebook. Twitter is trying to change that story with a new Japanese-language mobile platform co-developed by Digital Garage. It’s the first such version developed in a language other than English and will work with Japan’s telecoms. Until now, Japanese users could use third-party platforms like The other interesting thing about the Japan news, according to the AP, is that Twitter’s new offering will play with monetization efforts it hasn’t tried in the U.S., such as banners ads.

According to this AP story, Twitter has been gaining a foothold in Japan as more celebrities buy in, helping to quadruple traffic between January and June.

Of course, it doesn’t take more than a glance to see Twitter’s international appeal as its list of trending topics often have a foreign flavor. Recent ones included calls to visit Indonesia and to help support victims of the recent typhoon in the Philippines.

One of Twitter’s biggest moments came when those protesting the results of Iran’s election, faced with government censorship, used Twitter to communicate with each other. Twitter users the world over changed their locations to Tehran, in a possibly ineffective but still symbolic gesture, to help confuse authorities and protect the communications channel for the dissenters.

All this aside, and as the Japan and India news illustrates, there are plenty of roadblocks and challenges for Twitter’s global ambitions, given that consumer technology habits vary around the world. But when you consider that the current growth the service has achieved has been done on the backs of just 80 people, it’s not hard to see Twitter becoming the international language.

As many of you know, one of my portfolio companies at (SAAVN) is the largest distributor of Bollywood music and movies in the world. Think about it for a second they have 457 Million cell phones alone in India! There are 310 Million (total) Americans in the US.

If I was Kanye or Jigga, I would be looking to get my ringtone game together in India? $$$$$$$$$$$$$$$$

Keep it moving and stop taking yourself so seriously!

Gary R. Lewis

How Content Creators Can Benefit from Piracy

Posted on: November 4th, 2011 by No Comments

Alok Kejriwal is a digital entrepreneur based in Mumbai. He is the CEO and co-founder of

Alok says every time I listen to my iPod, I remember Napster.

The record industry treated Napster like the Taliban of Piracy they sued, fought and closed it down. But wasn’t Napster actually iTunes way before iTunes really came on the scene?

What would have happened if the Music Labels, the Virgins, EMIs, etc., had gotten together and invested in Napster or just bought it outright and made it their industry digital music distribution channel? A Sony (NYSE: SNE) walkpod a la iPod would have complemented the business: The music guys cranking out music, and the hardware guys making the stuff to play it on.

The moral here is that piracy needs to be understood before it is fought. Ask me about it: I run a casual-games company that produces 15 games a month and has a library of over 350 games. So far, I know of 8,900 websites that have stolen, or as they politely say, scraped, our games.

Honestly, after the initial shock, I am quite glad about the situation. It proves that what we create is valuable since only valuable things get robbed. And, more importantly, we have leveraged piracy to help us succeed. More on that below.

Recently, I asked a 13-year-old if she would ever walk into a CD store, lift a CD from the shelf and take it home without paying for it. She clearly said that she would not. Yet the same girl was zapping MP3s and singles to her friends across the web. When I explained to her that she was actually stealing she just didn’t get it.

Piracy is the new consumer speak and do and it’s here to stay. Like it or not, piracy or not, music and all forms of entertainment is going to be zapped all over the world without any restrictions. It’s the job of the industry to capitalize on it rather than squander the opportunity away.

This is what’s good about Piracy and the pirates behind it and where value possibly lies: Piracy creates economies of scale. Distribution by agencies and companies is history. Consumers distribute content amongst themselves leading to almost tsunami like waves of consumption and distribution. So, in effect, the cost of digital entertainment is actually reduced, thanks to the non-hired help. Creators can price their wares very aggressively given this new economic dynamic.

Piracy creates democracy. It’s no longer a chance meeting with a music czar or a gaze by a producer at a bar that creates stars today. Digital distribution is so lowest common denominator that anyone with creativity gets noticed and famous. Pirates are the best advertising agents out there. And they come for free. The stars in the making need to partner with this global tide rather than fight it.

Piracy creates innovation. The big gaming-console companies did not succeed in markets like China due to rampant piracy. Their game CDs were copied and sold in the black market. They felt cheated and held back. That created a massive vacuum in the market that was filled by the online game companies that created games that were meant only for the browser that required subscriptions and virtual goods purchases. This was the stepping-stone to games like Farmville and Mafia Wars.

How to win

It’s painful to be robbed of what’s yours. Yet if one thinks beyond the hurt, there may be a bigger opportunity out there.

Upcoming artists now make more money from concerts and live appearances than selling CDs. Pirate marketing is the new currency of value. They tell fans about new bands without spends on ads. Pirates can be the new career launchers. Shouldn’t the big music companies still create a competitor to the iPod and iTunes?

Make everyone in the eco-system win. Our secret sauce to leverage piracy was something called inviziads we placed invisible ads in our games that went with our games when the pirates took them. These ads automatically become visible on pirate websites. The interesting concept is that the content remains pristine. The consumer wins (gets content without paying), the pirates win (become popular thanks to evergreen content) and we win (thanks to the ads in the content).

The next battle starts when the e-book readers like the Kindle begin to get high penetration. Original books, new and old, will begin getting zapped across friends and families. Authors, publishers and booksellers will be on the receiving end of the tsunami they will not be paid in this round. Let‘s see how many of them try and fight the flood and drown vs. those who swim with the tide and survive and win with innovation.

Keep it moving and stop taking yourself so seriously!

Gary R. Lewis

Uncovering Connections on Twitter Could Become Big Business

Posted on: November 4th, 2011 by No Comments


If there’s a hard-to-reach person you want to meet, one of the best ways to do so is through their friends. That’s true in the offline world and the increasingly social nature of the internet may make discovery of the social circles of key influencers a powerful business practice online.

A new class of tools intended to surface influencers and the people they are influenced by are focusing on a hub of rapid, connected conversation that’s wide open for analysis – Twitter. Could analysis of individual behavior on Twitter become a valuable tool for business development and marketing? A growing number of startup companies are making a case that it could.

Last week Twitter announced that it will soon allow users to create lists of friends that they can share with others. It’s an attempt to make user discovery easier and it’s cute, but it looks pretty rudimentary at a time when some companies are building enterprise-scale software for real-time discovery and analysis of circles of Twitter users, their expertise, influence and sentiment on topics.

On the margins of the developing Twitter-as-business tool ecosystem are startups building light-weight influencer discovery and analysis tools. Two of the most interesting yet have launched in the last 24 hours, in fact.

Shining a Light on Webs of Connection

Still one of the most useful tools in this group, if still largely a proof of concept, is Pete Warden’s Mailana. Give Mailana a Twitter username and it will tell you who the top 20 people that user has had reciprocal public conversations with on Twitter – who they are engaging with the most. Want to get into the world of Lewis Shepherd, CTO of Microsoft Institute for Advanced Technology in Governments? (It’s his birthday today, by the way.) Then you might consider joining author Bob Gourley, Purdue University Cyber War Researcher Samuel Liles and Dr. Mark Drapeau in conversation on Twitter. That’s who Shepherd communicates with the most there, according to Mailana.

Friendship Discovery As a Service

It may be a sign of market maturation that some companies are now offering APIs for this kind of functionality and others are integrating it into their core products. Yesterday social media aggregator Seesmic integrated into its web application a feature from Twitter recommendation service Mr.Tweet that surfaces what other users anyone “pays the most attention to” on Twitter. This is really useful – you can discover key people for any influencer you follow with just a few clicks. Did you know that local-blogging guru Lisa Williams is a very close contact of media consultant Amy Gahran? I did because I’ve been following them both for years – but now you can discover that connection programmatically, with a click.

Performance of the new feature integration is spotty and the user experience leaves a lot to be desired – but it’s only been out for 24 hours.

The platform is wide open for analysis and exposing a person’s “social graph” is wildly valuable for discovery, context, relationship building and more. There’s going to be a whole lot more development in this direction.

Influencer Discovery For Sale

Will people pay for this kind of information? If they are smart they will. Popular Twitter shared link tracking service Tweetmeme released its first paid product this morning and is betting it can monetize influencer discovery.

The new Tweetmeme Analytics service does a number of things, but the most useful feature may be what it calls “retweet trees.” Publishers can surface the chain of retweets that passed their links around and see which Twitter users had the biggest impact on a chain of retweets.

Tweetmeme is surfacing other types of data as well and there’s potential for that data to be organized, cross referenced and displayed in a wide variety of ways. Tweetmeme is already performing text analysis of the pages being shared on Twitter, so content type could become another axis point to look at the data around.

All of these services are in early days. If people will in fact pay for them, then they will develop all the more. It’s a greenfield of possible added value. Finding out who is of interest to people of interest to you is a classic business activity, open social networking like Twitter makes that possible in newly interesting and efficient ways.

Keep it moving and stop taking yourself so seriously!

Gary R. Lewis


Posted on: November 4th, 2011 by No Comments

By the way Chicago is out for the Olympic Bid? $48 Million dollars down the drain just to bid on hosting the event!!!! Back to Healthcare? Obama cannot catch a break? Anyway back to the Dose!!!

Here Comes iTunes For Magazines!!!!

Magazine publishers are banding together to create some sort of partnership to fend off future attacks from mobile devices, reports Peter Kafka at Media Memo.

The partnership is being led by Time Inc., with Conde Nast, and Hearst agreeing to participate. Kafka calls it a “Hulu for magazines.”

The idea: The new company, which will operate independently from the publishers that invest in it, will create a digital storefront where consumers can purchase and manage their subscriptions that can be delivered to any device. The pitch: Control a direct relationship with consumers, while gaining leverage with heavyweights like Apple (AAPL) and Amazon (AMZN).

It seems more like an iTunes than a Hulu to me, and it faces many challenges.

Publishers won’t simply put their magazine stories into this partnership. Publishers are aware that people don’t want to pay for web access to print stories. Instead, they want to create all new content that takes advantage of the new devices, which means they have to reinvent themselves.

Publishers have no idea what the devices of the future will look like, either. Apple won’t talk about the tablet it’s supposed to be working on, so these publishers don’t know how they’re going to take advantage of the new medium. That means it will be a few years before they can really exploit the medium. In interim, consumers would have to decide if they’re willing to shell out for content that’s in a beta phase of development.

Further complicating matters, Apple and Kindle have a tight grip on the store fronts to their devices. To get on an iPhone, you need to go through iTunes. To get into a Kindle, you need to go through Amazon’s store. I don’t see why either company wants to cede this ground. If the devices are as powerful and popular as Apple and Amazon think they will be, then they’ll have the control.

If Time, Conde and Hearst aren’t willing to provide content, it only helps startups that will produce all new original material. Again, these publishers plan on starting at square zero, just like anyone else.

Despite the flaws in the plan, I admire the ambition. The magazine business is shrinking.

Standing still isn’t an option. To my fellow magazine junkies pay attention digital is moving fast and steady!!!

Keep it moving and stop taking yourself so seriously!

Gary R. Lewis