The Infamous Crosstown Skate Race

When I was at Grand Royal we put on a Mix Master Mike show in Santa Monica and a few of us decided to ride skateboards from Los Feliz to the show. For liability reasons I avoided the word “race”, but we tried to ride quickly and there was a “winner” so call it what you want. It was way fun.

Nate is not only the person I’ve known longest on this earth who isn’t a member of my family, he’s also a great videographer, editor, etc. Right after the race originally happened he made a rad video commemorating the evening of the skateboard race. Finally he posted it somewhere easy on the Internet. Check it out.

If someone wants to run the 3rd (but not annual) race hit me up. I’m in. I won the first and got sat on the curb by the cops for the second. I’m not losing the 3rd.

Twas a good weekend. Saw both Hustle and Flow and Tsotsi this weekend and didn’t love or hate either of them. Posted the latest Mojo rundown on ymusicblog.com. Skated Santa Monica for a minute. Had dinner with Justino. Went to Julie’s yoga class. Let Zoe practice driving around the neighborhood. Made grilled cheese sandwiches for dinner. Listening to Gravediggaz first album.

Have a good week.

ian

Media 2.0 Physics

Sadly yet triumphantly, BarCamp LA has come to a close. Check out the Flickr stream for endless proof of its existence.

I promised I’d post my presentation, so here it is in both PowerPoint and text form, minus the profanities I added to the live presentation:

Media 2.0 Economics, er, Physics
or

The Blockbuster vs. The Snowball
or

Why Running A Hit-Driven Business Becomes Very Hard For Big Companies
or
Why Yahoo! Isn’t In The Content (Making) Business
or
Why Apple Isn’t (Really) In The Music Business
and
Why DRM Sucks
and
The Next Five Years
(Or More)
Are PURE CONSUMER CONFUSION

ian c rogers
Presented at BarCamp LA
March, 2006

Disclaimer
The following are my personal views, not necessarily the views of my employer (Yahoo!).
Also, I have no PowerPoint skills and even less free time so this is about content not presentation. Sorry it’s so ugly.

The physics of the Media world are changing
From a world where attention is abundant and distribution channels are scarce
To a world where distribution is unlimited and attention is scarce

Media 1.0 vs. Media 2.0
1.0 is Blockbusters
Larger and larger marketing dollars deliver the audience, spending more on quality delivers diminishing returns
2.0 is Snowballs
Quality is hyperefficient, spending more on marketing delivers diminishing returns
(for more on Blockbusters vs. Snowballs, see Umair’s incredible ppt from BubbleGeneration.com)

Large Movie Studios and Major Record Labels are based on Media 1.0
Large up-front cash investments
on many different products for a diverse customer base
leveraging centralized marketing
and a stranglehold on distribution channels.

And Therefore Are Inefficient in a Media 2.0 World
Where distribution is trivial, unlimited, and available to all comers,
marketing to a captive audience is impossible,
returning to the same audience for each product is a requirement,
and creating “quality” content is paramount.

Digression: “Quality” is a Misnomer
Not “quality” in the Mozart (”intellectual”) or Yngwie Malmsteen (”useless talent”) way
“Quality” is really “Relevance” and is individual not absolute (“Tier 1 to me”)
In the future you will consume what entertains you most, not what is marketed to you most heavily.

Do the Record Labels Disappear?
Nope.
They become more important.
They just change their core competency.

Real A&R, Again.
As musician and producer Alan Elliott says,
“A record label used to be able to look at a tree and say, ‘That would make a great table.’
Now all they can do is take a finished table and sell it at Wal-Mart.“
The record labels have to get back to taking raw materials and adding value to them. Real, old-fashioned A&R.

Focus! Focus!
Also, focus on a core audience will be a huge advantage.
Successful labels have focus and return to a core, trusting, loyal, and ever-growing audience to sell each new release.
When attention is scarce and distribution is unlimited it just isn’t efficient to sell Josh Groban one day and Green Day the next. You don’t get any scale out of the network that is at your disposal this way.

Catalog Is Key
Jeff Ayeroff: “A record label without a catalog is like a speedboat with a hole in the bottom of it.”
Antony and The Johnsons is catalog — low risk initial investment, slow burn, great ROI over the long haul
Pussycat Dolls are not, 10 years from now their albums won’t sell more than Spice Girls albums do today — high risk initial capital investment, fast burn, bad ROI over the long haul
The 10 failures you’ve never heard of that were meant to be this month’s Pussycat Dolls — large, high risk initial investment, no burn, no ROI (Pussycat Dolls’ success foots the bill)

Small Labels and Catalog Are Already Showing Growth
Independent music currently 27.5% of US market and is the only market segment that’s growing
Catalog 39% of CDs sold and growing

But What About Movies?
I know less about the movie business, but I am assuming the physics apply similarly.
Anecdote: Spielberg recently noted that for what it cost him to make Munich ($80M), he could have made ALL FOUR of the other Oscar nominees for best picture. Quality appears to be becoming more efficient.

So, Is Content King?
No. (because it’s still going to be difficult for big businesses to be in hit-driven content businesses)
But great content is good business, and the ecosystems for creating these new, smaller, more efficient content businesses are starting to gestate.

So Should Yahoo! be in the (Original) Content Business?
Like HBO before us, Yahoo! should only create content in two cases:
a) When it’s maximized all the opportunity around distributing the content of others. Which, in a Media 2.0-leveraging-edge-competencies sort of way, is a LONG ways off.
b) Opportunistically: The way Music pursues original content — sponsors drive original content, not vice versa), but…

The Real Value Yahoo! Provides
…is in providing great experiences around content (Personalization, Community, Search) (to steal from Jeff Weiner of Yahoo! Search) helping users Find, Use, Share, and Expand (on) whatever media is most relevant to them

(shifting gears)
Why Is Apple Winning?
For so many reasons (the charisma to align the record labels around a single model, great marketing), but from a technology industry physics standpoint because, “When the technology is not yet good enough, the integrated solution always wins.” This from The Innovator’s Solution, which goes on to point out that eventually the technology overshoots what the consumer needs, allowing disintegrated solutions to gain ground, and forcing the integrated solution up market.

Apple is Not (and will never be) A Music Company
It means that Music is just one stop on Apple’s train. Apple is in the hardware business, not the Music business. As they move up market, they move away from Music over time.

Yet We’re Stuck With Their Legacy
(oh the irony!)
Customers trained on a low-margin a la carte download model meant to drive hardware sales
A lot of files purchased that only play on one company’s device (the 8-track tape of the 21st century) Wrapped in a proprietary DRM

Proprietary DRM Is Like Bad Airport Security
It punishes the honest and is merely a speed bump for the potential pirate.
It also creates a convenient technology platform lock-in for Apple and Microsoft, who have capitalized on the Media companies’ fear of their business models changing to further their own interests.

And the problem is getting worse, not better
As poorly conceived DRMs are moving to our cell phones and living room devices what we’re really locked into is Five more years of PURE CONSUMER CONFUSION.
And I’ve been saying that for five years. (the clock doesn’t start ticking on the five years ending until we have REAL OPEN STANDARDS serving the digital media value chain, but more on that later)

Doh!
The music industry has handed the keys to their business over to two companies that DON’T CARE ABOUT MUSIC. I think Jobs really does love Bob Dylan, but he is not in the music business (in fact he promised Apple records he never would be, and I’d argue he’s kept his promise).

What is the Path Out?
Please appreciate: it was not great technology that drove the Internet boom, but great standards.
Great technology gave us AOL, Compuserve, and Prodigy.
Great standards (TCP/IP, HTML, and HTTP) gave us unprecedented opportunity (the Web).

We’re Still Lacking Standards in Digital Media
Similarly in digital media Great technology has brought us iTunes, iPod, and Windows Media Player.
Great standards (XSPF, XIPF, Web services loosely coupling together services like eMusic with applications like Songbird) can give us unprecedented opportunity.
But relatively few standards exist to serve the digital media ecosystem.

GO CREATE AND USE STANDARDS
If we have one collective mission, fellow campers, one place to focus all our energy, it’s to create standards that decentralize and create platforms of opportunity.
“What if Internet Explorer only went to Microsoft’s site?” (Rob Lord) This is where we are in Digital Media today. The amount of unlocked opportunity due to lack of standards is enormous.

Thank you.

Perhaps I’m just exhausted, but reflecting on BarCamp LA at the moment makes me a little misty-eyed. So much effort was expended in search of knowledge and people sharing similar passions this weekend — the group idealism was palpable. Thanks sincerely to everyone who made it happen. Jason, Kareem (thanks for the photo and for being the next slide guy for my presentation, man), and Sean for the impetus, Dave, Jimmy, and Dino, our hosts (the space was INCREDIBLE). All the sponsors. But mostly all the participants. Thanks for coming, participating, and making it happen. It SERIOUSLY wouldn’t have happened without you. Seriously, think about it. BarCamp is made of people.

Night,
ian

Media 2.0 Physics, My BarCamp LA Presentation

Sadly yet triumphantly, BarCamp LA has come to a close. Check out the Flickr stream for endless proof of its existence.

I promised I’d post my presentation, so here it is in both PowerPoint and text form, minus the profanities I added to the live presentation:

Media 2.0 Economics, er, Physics
or

The Blockbuster vs. The Snowball
or

Why Running A Hit-Driven Business Becomes Very Hard For Big Companies
or
Why Yahoo! Isn’t In The Content (Making) Business
or
Why Apple Isn’t (Really) In The Music Business
and
Why DRM Sucks
and
The Next Five Years
(Or More)
Are PURE CONSUMER CONFUSION

ian c rogers
Presented at BarCamp LA
March, 2006

Disclaimer
The following are my personal views, not necessarily the views of my employer (Yahoo!).
Also, I have no PowerPoint skills and even less free time so this is about content not presentation. Sorry it’s so ugly.

The physics of the Media world are changing
From a world where attention is abundant and distribution channels are scarce
To a world where distribution is unlimited and attention is scarce

Media 1.0 vs. Media 2.0
1.0 is Blockbusters
Larger and larger marketing dollars deliver the audience, spending more on quality delivers diminishing returns
2.0 is Snowballs
Quality is hyperefficient, spending more on marketing delivers diminishing returns
(for more on Blockbusters vs. Snowballs, see Umair’s incredible ppt from BubbleGeneration.com)

Large Movie Studios and Major Record Labels are based on Media 1.0
Large up-front cash investments
on many different products for a diverse customer base
leveraging centralized marketing
and a stranglehold on distribution channels.

And Therefore Are Inefficient in a Media 2.0 World
Where distribution is trivial, unlimited, and available to all comers,
marketing to a captive audience is impossible,
returning to the same audience for each product is a requirement,
and creating “quality” content is paramount.

Digression: “Quality” is a Misnomer
Not “quality” in the Mozart (“intellectual”) or Yngwie Malmsteen (“useless talent”) way
“Quality” is really “Relevance” and is individual not absolute (“Tier 1 to me”)
In the future you will consume what entertains you most, not what is marketed to you most heavily.

Do the Record Labels Disappear?
Nope.
They become more important.
They just change their core competency.

Real A&R, Again.
As musician and producer Alan Elliott says,
“A record label used to be able to look at a tree and say, ‘That would make a great table.’
Now all they can do is take a finished table and sell it at Wal-Mart.“
The record labels have to get back to taking raw materials and adding value to them. Real, old-fashioned A&R.

Focus! Focus!
Also, focus on a core audience will be a huge advantage.
Successful labels have focus and return to a core, trusting, loyal, and ever-growing audience to sell each new release.
When attention is scarce and distribution is unlimited it just isn’t efficient to sell Josh Groban one day and Green Day the next. You don’t get any scale out of the network that is at your disposal this way.

Catalog Is Key
Jeff Ayeroff: “A record label without a catalog is like a speedboat with a hole in the bottom of it.”
Antony and The Johnsons is catalog — low risk initial investment, slow burn, great ROI over the long haul
Pussycat Dolls are not, 10 years from now their albums won’t sell more than Spice Girls albums do today — high risk initial capital investment, fast burn, bad ROI over the long haul
The 10 failures you’ve never heard of that were meant to be this month’s Pussycat Dolls — large, high risk initial investment, no burn, no ROI (Pussycat Dolls’ success foots the bill)

Small Labels and Catalog Are Already Showing Growth
Independent music currently 27.5% of US market and is the only market segment that’s growing
Catalog 39% of CDs sold and growing

But What About Movies?
I know less about the movie business, but I am assuming the physics apply similarly.
Anecdote: Spielberg recently noted that for what it cost him to make Munich ($80M), he could have made ALL FOUR of the other Oscar nominees for best picture. Quality appears to be becoming more efficient.

So, Is Content King?
No. (because it’s still going to be difficult for big businesses to be in hit-driven content businesses)
But great content is good business, and the ecosystems for creating these new, smaller, more efficient content businesses are starting to gestate.

So Should Yahoo! be in the (Original) Content Business?
Like HBO before us, Yahoo! should only create content in two cases:
a) When it’s maximized all the opportunity around distributing the content of others. Which, in a Media 2.0-leveraging-edge-competencies sort of way, is a LONG ways off.
b) Opportunistically: The way Music pursues original content — sponsors drive original content, not vice versa), but…

The Real Value Yahoo! Provides
…is in providing great experiences around content (Personalization, Community, Search) (to steal from Jeff Weiner of Yahoo! Search) helping users Find, Use, Share, and Expand (on) whatever media is most relevant to them

(shifting gears)
Why Is Apple Winning?
For so many reasons (the charisma to align the record labels around a single model, great marketing), but from a technology industry physics standpoint because, “When the technology is not yet good enough, the integrated solution always wins.” This from The Innovator’s Solution, which goes on to point out that eventually the technology overshoots what the consumer needs, allowing disintegrated solutions to gain ground, and forcing the integrated solution up market.

Apple is Not (and will never be) A Music Company
It means that Music is just one stop on Apple’s train. Apple is in the hardware business, not the Music business. As they move up market, they move away from Music over time.

Yet We’re Stuck With Their Legacy
(oh the irony!)
Customers trained on a low-margin a la carte download model meant to drive hardware sales
A lot of files purchased that only play on one company’s device (the 8-track tape of the 21st century) Wrapped in a proprietary DRM

Proprietary DRM Is Like Bad Airport Security
It punishes the honest and is merely a speed bump for the potential pirate.
It also creates a convenient technology platform lock-in for Apple and Microsoft, who have capitalized on the Media companies’ fear of their business models changing to further their own interests.

And the problem is getting worse, not better
As poorly conceived DRMs are moving to our cell phones and living room devices what we’re really locked into is Five more years of PURE CONSUMER CONFUSION.
And I’ve been saying that for five years. (the clock doesn’t start ticking on the five years ending until we have REAL OPEN STANDARDS serving the digital media value chain, but more on that later)

Doh!
The music industry has handed the keys to their business over to two companies that DON’T CARE ABOUT MUSIC. I think Jobs really does love Bob Dylan, but he is not in the music business (in fact he promised Apple records he never would be, and I’d argue he’s kept his promise).

What is the Path Out?
Please appreciate: it was not great technology that drove the Internet boom, but great standards.
Great technology gave us AOL, Compuserve, and Prodigy.
Great standards (TCP/IP, HTML, and HTTP) gave us unprecedented opportunity (the Web).

We’re Still Lacking Standards in Digital Media
Similarly in digital media Great technology has brought us iTunes, iPod, and Windows Media Player.
Great standards (XSPF, XIPF, Web services loosely coupling together services like eMusic with applications like Songbird) can give us unprecedented opportunity.
But relatively few standards exist to serve the digital media ecosystem.

GO CREATE AND USE STANDARDS
If we have one collective mission, fellow campers, one place to focus all our energy, it’s to create standards that decentralize and create platforms of opportunity.
“What if Internet Explorer only went to Microsoft’s site?” (Rob Lord) This is where we are in Digital Media today. The amount of unlocked opportunity due to lack of standards is enormous.

Thank you.

Perhaps I’m just exhausted, but reflecting on BarCamp LA at the moment makes me a little misty-eyed. So much effort was expended in search of knowledge and people sharing similar passions this weekend — the group idealism was palpable. Thanks sincerely to everyone who made it happen. Jason, Kareem (thanks for the photo and for being the next slide guy for my presentation, man), and Sean for the impetus, Dave, Jimmy, and Dino, our hosts (the space was INCREDIBLE). All the sponsors. But mostly all the participants. Thanks for coming, participating, and making it happen. It SERIOUSLY wouldn’t have happened without you. Seriously, think about it. BarCamp is made of people.

Night,
ian