Media and Telecom Face Similar Problems

It recently has seemed to me that were are some parallels between the U.S. airline industry and the telecom industry; as well as some similarities between the telecom and media industries.

Airlines are capital intensive businesses subject to periodic over-capacity issues, tend to be heavily regulated, though not as heavily as they once were. Both now are heavily competitive, and both have stranded capacity issues.

Airlines cannot sell seats once a plane has departed, and telecom providers often cannot sell services to locations they have spend quite significant sums of money to "wire up for service."Media, on the other hand, has seemed relevant simply because it is a business subject to disruption by new digital delivery systems, much as telecom itself is subject to disruption from over-the-top application providers.

This bit of data is not, I am suggesting, a forecast for the telecom industry. It is rather a factual look at some problems that arguably predate the Internet. Click on the image for a larger view. Classified advertising has taken the brunt of the shrinkage as online alternatives such as Craigslist have created alternatives. But you also can see the shrinkage, roughly in half, of display ad revenues as well.

The comparison that has struck me as germane is that as newspapers are losing revenue and share in their legacy business, so telecom service providers are losing share in their legacy core business of voice. The difference is that, up to this point, telecom service providers have been much more successful at replacing lost revenues with new revenues.

Where long distance once was the revenue mainstay, mobility has taken that role as long distance simply "dried up." Newspapers have yet to make even the first step. Meanwhile, telcos have added video and broadband access service revenues as well, and seem to be taking the first meaningful steps into banking, promotion and location services.

The newspaper example is instructive only because it seems to be an industry that has not been able to innovate, compared to telcos.

Possible Future AT&T Ad Synergies

T-Mobile Online Display Ad Spending
Annual in Millions, 2006-2010
2006	2007	2008	2009	2010
$35m	$29m	$39.3m	$37.4m	$53.8m
Data provided by Kantar Media, 2011

We are a year away from knowing if the AT&T purchase of T-Mobile USA will be approved by the Department of Justice and the Federal Communications Commission. Assuming the deal does pass muster, there will be all sorts of synergies for the new company: lower backhaul costs in some cases; less overhead; fewer retail stores to support; fewer employees and less advertising than the two firms had been spending.

In T-Mobile USA's case, there is perhaps $54 million that will not be spent after AT&T becomes the new owner. In total, AT&T expects to save about $40 billion.

E-Books 9% of Total Books Sales in January 2011

E-book sales in January 2011 represented about nine percent of total book sales, according to the Association of American Publishers, and have increased "annually and significantly in all nine years of tracking the category," the AAP says.

E-book net sales increased by 115.8 percent over January 2010 (from $32.4 million to $69.9 million).

January 2011 Stats Press Release

AT&T, T-Mobile USA Deal: Video

Does Technology Have to Be Tailored for Older Users?

Some people think technology has to be tailored for older users. Others might think the issue is overblown, since many surveys now show that older users want the same features that younger users enjoy, even if usage rates might be lower.

The argument for different approaches usually is based on technology reluctance or physical issues. It often is assumed that devices optimized for older users need to feature more prominent buttons with bigger letters and numbers, for example, with stripped-down functionality. There are some cases where that might be the case.

But there is a growing body of evidence that, in fact, users in every age demographic are starting to appreciate new technology, and do use it. Not everybody, in every age demographic, is likely to be as enamored of some innovations as others are. But there are few applications you can think of that "only" younger users appreciate. Over time, in fact, application and technology adoption trends tend to normalize across the entire age range, or across the vast portion of it.

That isn't to say there are not differences in intensity of use; obviously there are such differences. But usage across age ranges tends to be a matter of degree, not a matter of adoption.

Does Technology Have to Be Tailored for Older Users?

1996 All Over Again?

We are roughly 16 years past the "Internet" explosion of 1996, the subsequent investment bubble and roughly 10 years past the "Internet meltdown" of 2001. But things are stirring, suggesting we are about to enter yet another big wave of Internet innovation, with the likely over-investment typical of a bubble.

Some might note that in January 2011 Goldman Sachs valued Facebook at $50 billion. Some 30 to 90 days later it is being valued at $60 billion, while similarly rich valuations are bandied about for firms without a sustainable revenue model, at least not yet.

Kleiner Perkins Caulfield Byers partner Mary Meeker has been noting for a couple of years that the "next wave" of computing is upon us, with a new roster of leading companies likely to rise as well.

The point is that 2011 seems to be a sort of "1996" moment, when a wave of investment, and over-investment, occurs. But if it "feels" to you like there is quite a lot of innovation occurring, you are right. There is.

1996 All Over Again? - Thoughts on Carrier Evolution - Carrier Evolution

Mobile Companies Now "Disruptors," Not the "Disrupted"

If you ask just about any executive in the telecom or cable industries what "disruption" means in the business, and what it looks like, you will undoubtedly find that people talk about competition from new contestants. "Disruption" normally is seen as something that "happens to" telecom or cable providers.

But that's only half the story, and probably not the more-interesting part of the story. In recent days, we have seen some significant potential changes in the wireless part of the business that illustrate a whole new aspect of "disruption." And that difference is that some initiatives in the communications business now are aimed at disruption of another existing business.

True, one might argue that telcos getting into the IPTV or video entertainment, or cable companies getting into voice and data services, also were disruptions.

But there's something more than that going on now, in some other parts of the business. The best examples so far are mobile banking and mobile payments. In both cases, mobile operators are not simply seeking incremental, "line extension" sorts of growth, but seeking to establish leading positions in new businesses that means mobile service providers are the "disruptors," not the "disrupted."

That's a huge change.

Mobile Companies Now "Disruptors," Not the "Disrupted" - Thoughts on Carrier Evolution - Carrier Evolution:

Take a Photo, Pay a Bill, Danish Bank Says

Danish Danske Bank now lets consumers snap a photo of their bill and then simply click to pay.

The downloadable app is available for Android, iPhone, iPod Touch and iPad.

The app also supports funds transfer and bill payments.

That's one example of how mobile-enabled processes can be different from either online or physical processes.

Snap a photo of a bill, then click to pay - Springwise

25% of U.S. Immigrants Use Smartphone Owners Use PC or Mobile Video Calling

About 24 percent of U.S. immigrants who use smartphones, and polled on behalf of Rebtel, say they have used a video calling service on either their PC or mobile phone, representing approximately five million Americans.

Rebtel's results were based on 1,340 responses from immigrants residing in the United States, which represent a consumer segment of approximately 38 million consumers.

1 out of 4 U.S. Immigrant Smartphone Owners Use PC or Mobile Video Calling, According to New Survey from Rebtel

Twitter is 5

Google’s YouTube Revenues Will Pass $1 Billion In 2012

YouTube’s gross revenues hit $825 million in 2010, and will reach $1.3 billion in 2011 and $1.7 billion in 2012, according to Citi analyst Mark Mahaney. After stripping out revenue share, the net revenue contribution Google will get to keep from YouTube is estimated to go from $544 million last year to $1.1 billion in 2012.

Mahaney also tracks ads on Youtube’s Topp 100 videos. Currently, 81 percent of YouTube’s Top 100 videos show ads, compared to about 60 percent a year ago.

It wouldn’t take much for local search advertising to become another billion-dollar business for Google. Using an estimate of $16.6 billion for the total local online advertising market in the U.S in 2012, Mahaney estimates Google needs to capture 10 percent of that market to add $1.3 billion in incremental net revenue.

Those are important revenue figures for one reason: Firms the size of Google need new market opportunities generating a billion dollars a year to be worth chasing. That same logic holds for telcos, Cisco and lots of other large firms.

Citi: Google’s YouTube Revenues Will Pass $1 Billion In 2012 (And So Could Local)

Year of Uncertainty for T-Mobile USA

The year-long period before regulatory and antitrust review of the proposed AT&T purchase of T-Mobile USA can be completed will likely have repercussions for lots of suppliers to each firm, even before anything else happens. At CTIA, for example, all T-Mobile USA personnel reportedly have withdrawn from all public appearances and are not making any statements.

At other levels, one wonders what other marketing steps T-Mobile USA will, or won't be taking, even before it is clear that the deal is cleared, or clearly fails. If the deal does ultimately not pass muster, T-Mobile USA will gain the advantages of a breakup fee and spectrum, but might have lost a full year when it took the foot off the pedal as far as marketing and other programs directly affecting its customer base.

One wonders whether the ad campaigns comparing AT&T and Verizon to "PCs," with T-Mobile USA cast as "Apple," will last much longer. And, of course, many suppliers to T-Mobile USA have to consider the likelihood that they will not be retained by AT&T once the change of ownership actually occurs. But even before that happens, it is possible many other ramifications will occur, and most of them will be negative for T-Mobile USA if the deal ultimately is rejected.

Sprint Gives Developers Direct Access to Location, Messaging, Presence, Payments

Sprint has given four new partners direct access to Sprint's location, messaging, presence, geofencing, payments and additional APIs through one partner platform. The new solution enabler partners, LOC-AID, Neustar, OpenMarket and TechnoCom, will now have direct access to all of Sprint’s application programming interfaces. Sprint says the access is a first among carriers, and will simplify and accelerate the certification and on-boarding process for applications and solutions.

Separately, Sprint also agreed to allow extensive use of Google Voice features on Sprint handsets. What that means is you are one of Sprint’s 50 million U.S. customers, your Sprint phone number is now also a Google Voice number. And If you’re already a Google Voice subscriber, you can use that number on your Sprint phone without the need for any software.

When you make or receive calls, and forward that call to other phones if you’ve chosen those options. Google also takes over the voicemail for the phone, and long distance calls are completed by Google at Google’s very-low international rates. You can sign up here http://www.google.com/googlevoice/sprint/ to be notified of when the feature is available.

All those moves show a new willingness by Sprint to open up its platform for serious application development. Try to imagine another mobile provider of this size allowing Google Voice to replace the carrier's own voice messaging system. It would be unthinkable.

Sprint Community: International CTIA Wireless 2011

How "Social" Has Changed Media, Advertising, Public Relations

"Until recently, the history of digital has been about data, direct response, sales and
commerce," says eConsultancy. One might argue that, until recently, media has been substantially supported by advertising, while public relations has assumed the existing of significant gatekeeper media whose attention has to be won.

One might argue that social media is changing all that, that fragmentation of voices has important implications beyond the "mere" fact of an exploding universe of voices. One might argue that "social" content, adding to a flood of new content, puts more emphasis on reputation, authority, emotion and values, eConsultancy argues, after interviewing scores of brand communications professionals.

"We found general agreement that a company’s reputation and brand identity are increasingly defined by viral ideas rather than media buys, eConsultancy says. That will come as a bombshell for firms that historically have founded their businesses on the notion that advertising was essential to their plans to establish and promote brands. As brand spending on social media increases, the typical result is that advertising starts to dwindle, since social projects are funded out of the budget formerly allocated to "advertising." Of course, that trend has been underway for some time. Many smaller companies and businesses years ago began reallocating budgets from traditional uses to building up their websites, for example.

The upshot is that brand "storytelling" is shifting from traditional means to new channels. And that is going to cause all sorts of shifts in the broader media, advertising and PR landscape.

"Even forward-looking organizations are just coming to grips with the fact that they don’t own their stories," says eConsultancy, "They can tell the original version but can’t control how it evolves, spreads or ends."

"The single greatest need expressed by the executives we interviewed was for a better capability in creating content," says eConsultancy. "They see the necessity for exciting, engaging and often entertaining content which can build and sustain viral momentum."

If none of this strikes you as unusual, that's understandable. People in the media business like to talk about themselves, even when real people don't much care. But these are huge shifts, with important ramifications for the financial health of all companies that traditionally have been part of the media ecosystem.

People sometimes like to debate whether Google is a "media company" or not. Google always denies that, but the existence of the question shows how new things are happening. These days, it is increasingly likely that brands will be operating, to some genuine extent, as "media" in their own right. What will be quite different for existing media is that where advertising has supported "media" in the past, to some growing degree, "commerce" is going to support many new forms of media.

Some have noted in the past that the "business function of a newspaper or magazine or TV network is to aggregate an audience so advertising can be sold." In the future, the "business function" of some new forms of media will be to sell products and services. That's a huge change.

read more here

Is Google a Media Company?

The difference between "indexing," "curating" and "content distribution" or "publishing" can be a subtle thing. Google always insists, rightly, that it is an indexer of content, not a content creator; an organizer of access to content rather than a media company. That's true for the overwhelming part of Google's business. And yet, 96 percent of Google's revenue comes from advertising. What other sorts of businesses make significant and core revenues from advertising? Media companies.

Google is launching a subscription service called One Pass to enable consumers to buy professionally produced news and information across the Web with a single click. Google also is working with the National Basketball Association and National Hockey League to provide sports content for YouTube.

In fact, some would argue YouTube could be what "cable networks" look like, someday.

To be sure, some amount of channel conflict always exists in business. Google wants to be seen as a partner for media companies, so it will keep insisting it is not a media company, but a way for people to discover content. But few large businesses do not have at least some areas of channel conflict. Google seems to be entering that area.

That doesn't mean Google will suddenly change. It still remains primarily a way of indexing and managing access to third party content. Mostly, but not exclusively.

How Google Is Evolving Into a Media Company - NYTimes.com