All Content Online, but Ad and Fee Models Don't Work: That's a Problem

It's hard to say which prediction is more far reaching: that all content will be online in 10 years; that portions of the advertising business are shrinking; that for-fee and ad-supported content models have not worked well; or that nobody but Google seems able to make money from digital content.

But Microsoft CEO Steve Ballmer argues all are true. And all are related trends. If all content is online, and if much content is ad-funded, then less ad funding or lower rates means less available professionally-produced content.

If ad support does not support the online equivalent of offline channels, then new revenue models have to be created, or less content will be made available.

One might argue this is "just a traditional media" problem. But it's a problem for users who want online access to virtually all the offline content they now enjoy, for telecom service providers who must supply the additional bandwidth and for all the media-related industries that depend on advertising as a business model.

Of Ballmer's predictions, the least controversial is that a shift away from offline media and towards online formats is underway. The global advertising economy--at least the portion that has been allocated for traditional media--has been permanently "reset" at a lower level, Ballmer warns.

So traditional broadcast and print media will have to plan their business models around a smaller share of the advertising market, as revenues continue to move to digital outlets, Ballmer argues.

"I don't think we are in a recession, I think we have reset," he said. "A recession implies recovery [to pre-recession levels] and for planning purposes I don't think we will. We have reset and won't rebound and re-grow."

Few likely would contest the trend towards online content, or the fact that few companies aside from Google and the Wall Street Journal have managed to create interesting ad-supported or fee-supported online businesses.

Most would be comfortable with the notion that traditional content and social media are blending, in many cases. There might be some dispute over the mix, the amount or the timing, but the direction is clear enough.

The big problem for consumers and producers is the inability to create widespread online content business models based on fees or advertising. That's the biggest challenge.

http://www.guardian.co.uk/media/2009/jun/24/microsoft-steve-ballmer-cannes

What Will Drive Consumer Demand for 50 Mbps Service?

While next-generation broadband speeds will increase dramatically to 50 Mbps, 100 Mbps, or even 1,000 Mbps, just seven percent of European online households will pay more for higher speed, says Forrester Research analyst Ian Fogg.

"Next-gen broadband will not be such an easy sell, as there's little pent-up speed dissatisfaction," at least not yet, says Fogg.

Evidence from the U.S. market tends to confirm that thesis. Not many consumers seem inclined to buy 50 Mbps service where it is available. Aside from the higher cost, there is no new application that compels such purchases, with the possible exception of households where are multiple users who tend to be online at the same time, sharing a connection and using high-bandwidth applications frequently.

Put simply, email drove dial-up access and the Web drove broadband access. It isn't yet clear whether video will prove to be the application that drives demand for higher-speed connections, but most people seem to think it will be.

Fogg is right: the next wave of high-speed access adoption will be driven by a compelling new application, just as dial-up and lower-speed broadband was driven by the graphically-rich Web.

Best Buy Hopes to be Bigger Force in Mobile Phone Business

Best Buy Co. is planning to open 40 standalone mobile-phone stores this fiscal year and hopes the move will help it quintuple its share of the U.S. mobile-phone device sales market to 15 percent.

Mobile phones are a crucial component of the company's new sales campaign to focus on gadgets that feature "connectivity." That view is part of an overall trend of recent years: more of the commercial value of any piece of hardware is the services stream attached to it. Likewise, more of the value attached to any piece of software is the services that are associated with it.

Best Buy's phone sales share has grown 1.6 percentage points in the past two years and now has about three percent share of new phones and connectivity plans sold.

http://online.wsj.com/article_email/SB124586883031248947-lMyQjAxMDI5NDI1NTgyNjU4Wj.html

New iPhone Boosts Mobile Video Uploads 400% a Day

Once again, we have evidence that Apple iPhone users behave quite differently from other smart phone users, and in ways with broad ramifications for mobile bandwidth consumption.

Since June 19, when the Apple iPhone 3GS came out, uploads from mobile phones have increased by 400 percent a day, YouTube says.

By way of comparison, over the last six months, uploads from mobile phones to YouTube have jumped 1700 percent, say Dwipal Desai, YouTube product manager and Mia Quagliarello, community manager.

Google Voice Now Open to New Subs

Google Voice now is available to new subscribers. Users who already have requested an invitation on the Google Voice site or on the GrandCentral site should be getting email invites shortly.

Once you receive your invitation, just click on the link and follow the instructions to setup your new Voice account.

Google Voice has added a Google number picker that will allow users to personalize by area code and text. The idea is to allow users to pick numbers, letters, a specific word or a number combination.

If you haven't signed up for a Google Voice invite, go to www.google.com/voiceinvite.

Seamless Handoff Between Wi-Fi, WiMAX and 3G at 60 km/Hour

Fixed-mobile convergence has been growing in importance for several reasons, among them a general demand shift to wireless access, but also because of growing preferences for a more unified user experience and broadband economics.

On the latter score, the key issue is simply that wireline broadband is more economical than wireless broadband, and likely always will be. So to the extent that end user demand shifts to wireless devices, service providers must find ways to offload traffic to the wired network.

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On that score, KT Corporation of Korea, TelcoWare, and mobile broadband gateway developer Stoke say they have succeeded in implementing seamless network handover between 3G, Wi-Fi and WiMAX networks, even when users are moving at speeds of 60 kilometers per hour.

Seamless handoff will be key for mobile providers trying to automatically shift access to any available wired broadband network, and to enhance seamless handoff back to the mobile network.

Historic Milestone for Online Advertising Reached

Ad rates for popular shows like The Simpsons and CSI are higher online than they are on prime-time TV. That's a stunning reversal from the rule of thumb that online ads cost less, often far less, than they would if placed on a TV, radio, magazine or newspaper outlet.

If a company wants to run ads alongside an episode of The Simpsons on Hulu or TV.com it will cost the advertiser about $60 per thousand viewers, according to Bloomberg. On prime-time TV that same ad will cost somewhere between $20 and $40 per thousand viewers.

Why the reversal? Targeting and engagement. Online viewers have to actively seek out the program they want to watch, so advertisers end up with a guaranteed "captive" audience for their commercial every time someone clicks play on Hulu or TV.com.

Also, fewer online ads means viewers are twice as likely to remember a commercial they've seen on Hulu than on television, Bloomberg reported.

The challenge for the networks, whose total prime-time audience shrank 3.6 percent last season, is that Web viewing and ad sales, while increasing, are still too small to replace traditional revenue sources.

Therein lies the danger. Networks risk siphoning off prime-time audiences with lots of inventory and higher sales volumes to sites with less inventory and lower ad sales volume.

A “Simpsons” episode on Hulu has just 37 seconds of ads, for example. A broadcast episode has nine minutes and produces three times the revenue per viewer at half the price.

So cannibalization remains an obvious danger.

http://www.bloomberg.com/apps/news?pid=20601204&sid=atKGiQOMco.Y