D10: Ari Emmanuel + Spotify

Two very interesting interviews from the D10 conference.

Sean Parker at D10 / Sean Parker (with limited input from Daniel Ek) from Spotify.

Ari Emmanuel at D10 / Ari Emmanuel from WME

I’m sure most people think one is the visionary and the other is out of touch. I’m just not sure they are right about which one is which.

Bob Lefsetz on the Parker video – “You’ll end up hating Sean Parker.”

Ek: “As we are the second largest revenue stream for the labels, then by definition we are the second largest revenue stream for the artists too.”

Ek makes a surprisingly rookie error by assuming that because Spotify is the second largest revenue source for the labels, it is therefore the second largest revenue source for artists. Absolutely not true – not by a long way. What about live performance, publishing, merchandise, endorsements etc?

Emmanuel may rub people the wrong way – but you cannot deny his success and what he has delivered for WME and its clients in a decade of radical entertainment transformation. His comments re Verizon and Google are certainly unpopular in the tech world but still valid. In one video you have Sean Parker almost taking joy in the erosion of value he helped destroy within the music industry, dodging questions around payments to artists; and on the other you have the ‘greedy agent’ trying to build value within content creators and industries and wondering why tech companies don’t seem too concerned with protecting entertainment content and IP.

Watching these videos – one seems honest and raw, the other seems slick and sales-heavy. Which one will the artists trust? My thoughts is they’d lean towards Emmanuel every time. At least they will know with WME what deal they’re on …

Advertisements

Talking Digital Q&A #9: Andrew Hunter, Network Director ninemsn

I first met Andrew years back when I was at Mindshare. We were exploring a content led initiative for a client and Andrew got involved to ensure it didn’t become a piece of dull branded content that the users had no interest in but it appeased the brand manager involved. Through collaboration and lots of insight we created something that not only got great traction with users, but also appeased the client. A win/win scenario. Since then I’ve kept in touch with Andrew as he has an amazing understanding of how media is being consumed across channels, the technology challenges facing publishers and a view of the Australian media world that is hard to beat. He has been a leading driver of the evolution of ninemsn and its position as a leading, innovative content business in Australia, leading a large team of journalists and producers that together control some of the biggest destination sites in Australia.

Lots is happening at Nine Entertainment/ninemsn right now – the amazing ratings success of the block, the introduction of trade brand MI9 and the Summer Olympics coming up in July – so it felt like a good time to ask Andrew a few questions and get his opinion on a bunch of things.

TD: ninemsn has evolved into mi9 – can you explain what this means in terms of product evolution and also benefits to ninemsn users?

AH: Mi9 is natural move for us, but it’s more of a trade/sales story than one for our audience. The joint venture (50/50 Microsoft and Nine Entertainment Co.) had got to the point where a number of diverse businesses were operating under the ninemsn banner that the trade rightfully equated with our network of 80 owned-and-operated sites. These businesses include Cudo, Microsoft Advertising Network (MMN), Microsoft Ad Exchange, Hotmail, Bing, comparison sites Rate City and iSelect, among others. So the new umbrella brand was created to sit across the entire joint venture. ninemsn is a still a massive part of this group and remains our consumer web and mobile brand. In a nutshell, it means something to us, our shareholders and the trade but it’s business as usual for our audience and products.

TD: How have the demands on editors/content producers etc changed over the last 5 years as content becomes ‘format’ agnostic and sites like ninemsn feature content that could be copy/images/video/liveblogging/user comments or something that includes elements of each?

AH: The digitisation of journalism has given producers new avenues to express their creativity. We’ve always made a point of recruiting our news journalists from print and then helped them build video, image production and real-time reporting skills on top of that base. The biggest change has been the demand for analytical and distribution skills. Our producers monitor real-time analytical tools (some they have built themselves) to get a read on the audience and tweak the mix or pitch accordingly. They’re also good at distributing their stories through social media and search. Understanding the way social distribution works, where the levers are and when to pull them are essential components of the producer skill set.  Sharing is the ultimate valuation of a story. The more it gets shared, the more valuable we believe it is to our audience so social is embedded into our editorial workflows and culture.

TD: Which companies do you believe are at the forefront of content creation and delivery in 2012 and why?

AH: Much innovation in content creation is coming from the edges, from individual bloggers and smaller publishers. I like what the Business Spectator crew are doing perhaps as much for the niche they’re occupying and the overall business play as the content, but the journalism is high-value. Crikey is always an interesting read. Gawker’s approach is worth following – Nick Denton is about a year ahead of the pack and wilfully cuts through the crap surrounding digital/social media. The Atlantic has done a great job in journalism and distribution. I admire News Limited’s ability to generate news and know its audience. On the distribution front, Zite on the iPad is excellent. It’s a news aggregator that has exposed me to many of the great small bloggers and publishers covering technology and Silicon Valley, two of my favourite news topics. And while they’re in our stable, I think Nine News TV has aced it on the distribution front. They have ground out a strong position against Seven in part by reeling in audience across the schedule with news story promos. They use social media well too. And at the risk of moving into shameless plug territory, the ninemsn newsroom is one of the most innovative and forward-looking content organisations around. They have made the audience their absolute focus. Users are now a major source of news stories (we tap them for story tips) and the key distributors of our content (through social media).  Our news operation generates more traffic from Facebook than any of our competitors. We’re proud of that.

TD: Sometimes it feels that it’s more viable to create conduits for other people’s content (ie social media, twitter, Facebook) rather than investing in the creation of content? How do you see this working over the next 5-10 years as content creators and content conduits compete for investment and ad revenue?

AH: People who make great content needn’t worry. The money will come.  If not through advertising, then through subscriptions, sponsorships, transactions or endorsements. Distributors need content and will continue to. I think it’s these middle men distributors/publishers who will feel the pinch over time. In video, for example, I think Hulu and NetFlix will get squeezed by the studios/content owners. As insidious as it is, Demand Media created a clever content model that straddles content creation, distribution and media sales. Then there’s the Silicon Valley social crew, such as Facebook, who are making money by advertising against user-generated content but appear to want to stay out of directly monetising professional news content. There are also the aggregators such as Flipboard, Zite and Pulse who are, or will one day, serve ads around the content others are producing. That’s already rankling the content owners/makers.

TD: The Voice has been a huge success both on TV and online. Can you give us an idea of the work involved in trying to create a format that lives so naturally across channels; and do you think this is the future of ‘live entertainment/reality’ type programming (ie – it becomes a cross channel event not a TV show).

AH: I had a chat to our Head of TV and Video, Ben Watts, about this and he says the format has worked so well as a cross-channel  event is because, primarily, the core show is so good. Nine and Shine have taken almost every aspect to the next level – from the calibre of coaches, to the production values, to the volume of great behind-the-scenes video content and the level of social media integration. It has been the most demanding TV integration ninemsn has worked on, but also by far the most rewarding and successful. We are currently working with Nine to raise the bar a little bit higher still with the rebirth later this year of the original ‘multi-media event’, Big Brother.

TD: The London Olympics is the first time in a long time 9 has broadcast the summer Olympics … what does ninemsn have planned and how important will ninemsn be to 9’s Olympic coverage?

AH: We’re throwing the kitchen sink at the Olympics because Nine has the rights and the time zone works well for us. The timing is great because we have the catch-up TV web streaming rights on a six-hour delay so all the big overnight races will be ready to view each morning at ninemsn. We’re integrating with Nine’s coverage from TODAY through the schedule. We will have a team producing original video content in London alongside the Nine TV guys and bulked-up team in Sydney running our Olympics site around the clock for the 17 days of the Games. We’ve been alongside Nine from the start on editorial planning, logistics and sales. All of the Olympic partners and sponsors are working with the group across web and TV. It’s going to be huge.

 

Wolff on Facebook and the issues it raises …

Michael Wolff unleashed on the ultimate value of Facebook last week in a very powerful piece in MIT’s ‘Technology Review’ titled ‘The Facebook Fallacy’.

“Facebook is not only on course to go bust, but will take the rest of the ad-supported Web with it.”

The article is worth a read – and is similar in tone to what commentators like Bob Hoffman have been saying for the better part of 2 years. The piece is controversial by design. It is worth a read for anyone working in media or advertising. It raises questions that the industry needs to be discussing at a point where media and advertising appears to be addicted to self-harm.

However, the author isn’t another ill-qualified tech fanboy masquerading as a journalist like most tech media coverage. It’s Michael Wolff – a guy who has dedicated his entire professional life to media. Media and advertising are in his DNA – his parents worked in the industry – and he himself tried to make it big in the first rush of the dotcom boom with his own media company. In short, he is as qualified as any to deliver observations around the mechanics of the media industry.

This isn’t to say what he is saying is necessarily right or wrong – it’s just with his background it’s worth considering what he’s saying within this piece and why many of the issues have significant importance beyond the context of the article.

So what is he saying? Well … I took the following out of the piece and would be keen to hear your thoughts on these issues.

Facebook can’t match it’s IPO price and is overvalued

My knowledge of the share market is limited so it’s hard to comment here. The only observations I’ll make are, for one, the Facebook IPO was fully subscribed at $38  a share … so those people have to have thought it was worth the $100b valuation the company was seeking when doing the capital raise. Secondly, right now at $33 a share FB is trading at a multiple of 105 … most (not all) ‘mature’ companies trade anywhere between 10-20x. can the company sustain a valuation of $100b+ with earnings of $1b? Who knows … it really depends on the appetite of people who want to buy the stock. I am confident Facebook has significant opportunity for revenue growth on the horizon and is second only to Google in long term revenue potential online. The opportunity is there but the ad product right now isn’t. However, the ad product has evolved a lot over the past 5 years and will continue to.

“At the heart of the Internet business is one of the great business fallacies of our time: that the Web, with all its targeting abilities, can be a more efficient, and hence more profitable, advertising medium than traditional media.”

This is the big question – which has yet to be answered aside for Google. Wolff raises that the NY Times makes approximately $1,000 from every print sub … but is making less than $5 annually from every web user.  FB makes about the same. Most ad funded web businesses are making somewhere between 1-6 dollars per user per annum regardless of scale. It raises the question – how can these companies grow if user numbers don’t grow and ad yields drop? Won’t lower yields mean lower extraction and ultimately impact revenues in a negative way? With media agencies obsessed to the point of distraction around lowering CPM (often out of context) publishers are going to find it hard to earn more money from their efforts. So whilst most web publishers are making around $5 per user per year, even the lowest performing FTA TV Network – Network 10 – is making revenues around $31 per year on every single person living in Australia.

“Network technology allows advertisers to more precisely locate and assemble audiences outside of branded channels.”

This is the issue with re-targeting. I guess needs to be a hate the game don’t hate the player scenario. Up until about 12 months ago no one was forcing publishers to place retargeting tags on their pages – many were doing it either through naivety or in a chase for dollars (or both). Sure, it is flooding the market with a lot of ‘cheap-premium’ inventory (ie reach a Business Spectator reader on site that tells you how to remove red wine stains) … which isn’t doing anyone any favours (more ads, lower yields, more crap ads, more lines to manage, more publishers to verify etc) but ultimately the retargeting/cookie hoarding is now a part of the media mix. And this cookie dropping relies ultimately on premium inventory existing … as without it the middlemen can’t reach the premium audience on cheap sites.

“I don’t know anyone in the ad-Web business who isn’t engaged in a relentless, demoralizing, no-exit operation to realign costs with falling per-user revenues, or who isn’t manically inflating traffic to compensate for ever-lower per-user value”

I do …  Maybe Australia isn’t as bad as the US. Unfortunately I also know people engaged in the above too. Either way, no one is having an easy run right now. It’s a brutal market.

“In its Herculean efforts to maintain its overall growth, Facebook will continue to lower its per-user revenues, which, given its vast inventory, will force the rest of the ad-driven Web to lower its costs. The low-level panic the owners of every mass-traffic website feel about the ever-downward movement of the cost of a thousand ad impressions (or CPM) is turning to dread, as some big sites observed as much as a 25 percent decrease in the last quarter, following Facebook’s own attempt to book more revenue.”

This is the big issue … there is so much inventory available that it is becoming next to worthless. You can buy inventory for 1 cent. You can buy targeted inventory for 10 cents. Targeted inventory with age/gender 5-6 years ago was something you bought from ninemsn for $15-20 CPMs. Now there’s an infinite supply for 10 cents or less. To compete publishers feel they need more inventory, more users, more 0’s … but all that does is add more inventory to an industry than is most likely doubling its amount of available inventory every few months but growing annually in terms of spend by maybe 15-20% PA at best. This to me makes no sense. It’s like a supermarket ordering 1,000 apples a day. At the end of the day 900 are unsold so they give them away for 10 cents. At the end of the day the manager says … we need more apples. If we had 2,000 apples we’ll be right. Then at the end of the next day they sell the same amount of 100 at a good price, giving away the other 1,900 below cost. The manager comes in again, shakes his head and orders 3,000 for the next day.

Wolff makes a claim that internet advertising ultimately doesn’t work. I am unsure I agree. But I do agree that there is simply too much of it around now to be effective. We need to throttle supply bigtime … create some scarcity and stop the relentless pursuit of ads everywhere. It’s funny – TEN right now is the whipping boy of the Australian media industry … it’s considered backwards, old–hat and out of touch with what consumers and advertisers want. Still – it makes $38 (edited 2 June 2012 – source = http://tencorporate.com.au/lib/pdf/2011/2011AnnualReview.pdf) of revenue for every single citizen of Australia (assuming 22m people in Australia in Australia watch Ten at least once a month) whilst leading Australian digital networks and publishers are making anywhere between $1 and $5 per regular user. A business like Seven makes significantly more than Ten … which makes you wonder whether people like Kerry Stokes are wondering why they can make $58.90 (edited 2 June – source – http://www.sevenwestmedia.com.au/docs/annual-reports/2011-annual-report.pdf)  per viewer per annum but 10-15% for the same eyeball online per annum.

Is the old line ‘dollars for dimes’ still as true as ever within digital except for Google? Google on revenues of $1b or thereabouts is making $40-$50+ from its users per year, in the process being the only digital business that can rival the per-reader/user extraction of old media. Not bad. Can Facebook match it? I guess we’ll see. One thing is clear – right now it is bloody tough going for most digital publishers. Well, except Google 😉

Talking Digital Q&A #8: Alex Littlejohn, President – Asia Pacific, Adconion Media Group

Last month Adconion Asia-Pac President Alex Littlejohn was one of the first people to acknowledge what many of us were thinking – how many of these ‘digital video advertising’ companies that have sprung up in the past 18 months are much more than middlemen, buying cheaply off exchanges and selling at a premium to a local market with more dollars than sense around the buzzy area of online video.

Littlejohn: “In the last 12 months more than 15 online video advertising businesses have sprung up and all are clamoring for a share of the market, yet the reality is that many of these organizations are simply video brokers looking to make a margin on the way through the booking process. We feel that brokers don’t offer value to agencies and advertisers who are seeking global insights, cross-channel data and tech infrastructure from their partners, and so these players risk eventually being replaced by agencies and DSPs.”

I approached Alex to talk more about the boom of online video in Australia and to discuss some of the more pressing questions. It is clear there’s a strong appetite for video from Australian media agencies, it’s not so clear how strong the inventory is and what the checks and balances are to ensure clients are getting high quality inventory worthy of migrating budgets from elsewhere.

Talking Digital: A lot of the ‘video’ companies in Australia appear to be not much more than re-sellers from exchanges. Is this view correct and why has this re-selling approach boomed so much in the past 18 months?

Alex Littlejohn: The reason is simple – there are virtually no barriers to entry so anyone can set up and sell non exclusive inventory – this creates a confusing landscape with many players not delivering any value to either the publisher or the advertiser. It reminds me a lot of the display market in 2006 and prior where there were upwards of 15 display brokers operating in Australia. According to IAB Australia’s recently released PWC report, in Q1 2012 online video recorded $11.6million in advertising revenues (excluding Google and YouTube) and once the traditional broadcasters and portals have taken their likely 50 percent it doesn’t leave a lot to go around for the 15 video tech businesses.

It means that those video ad tech businesses will be more interested in fighting for their survival to secure short term revenue goals and profitability rather than considering their clients’ best interests.  There’s a danger of the market entering a “race to the bottom” when it is pitching itself as an alternative to TV – and I can’t see how that’s good for the industry.

TD: What is the risk to clients dealing with brokers/handlers? is there erosion of value and transparency with so many ‘mouths to feed’ along the way

AL: We define the “brokers / handlers” as middlemen who simply facilitate a transaction and add a margin to fund their operations by taking a clip of the ticket on the way through.  They can manifest themselves as both video networks and video exchanges and many of them are marketing themselves as “for sale” before they’ve even started. In this sort of market with so many businesses playing a short term game there will inevitably be risks and challenges for advertisers, particularly around transparency.

TD: What are your thoughts on the quality of video inventory going through these re-sellers? 

AL: The definition of quality is like beauty – it is of course “in the eye of the beholder”.  There are plenty of direct response advertisers who are using video and they will each have a different interpretation of what “quality” is.  I firmly believe that every impression in the internet has a value –it’s just dependent on price and how it’s marketed. But when we think about marketing video as an alternative medium to broadcast TV, the platform to bring big brand advertisers online things get complicated.  If the collective goal is to use video as an alternative to TV then put simply, brand advertisers should not be running video in environments where there is risk.  And we find that the issue with the brokers in this process is more about when they market specific inventory as something it is not.

There is also another very important issue that should cause concern for advertisers and that’s around the area of inferred “non-exclusivity”. Due to the prohibitive cost of producing quality digital video content and Australia’s lagging broadband speed, 70 percent of the available inventory to reach Australian audiences is generated by overseas websites and these sites know their inventory is at a premium so they want a global monetisation solution.  Only the multinational ad networks can deliver what they seek so these networks typically receive the best inventory in Australia and provide a global solution to their publisher partners. Yet in market, you can see duplication of inventory appearing in the site lists of video ad exchanges and video ad networks, so advertisers and agencies assume that most inventory is non-exclusive.  This is not necessarily the case as while publishers may make their inventory available to multiple ad tech vendors, they only actually deliver it to those who provide the best yield to monetise their traffic across multiple regions.

This means that while a broker or ad exchange may be promoting a site list at the time of signing the advertiser’s order, by the time the campaign runs the inventory is not available, so they will be forced to deliver it elsewhere.  Unfortunately this is an all too common occurrence in display DSPs, ad networks and ad exchanges.

TDAs a media network, how do you feel about media agencies entering the ‘media sales’ space through DSPs and the like? Do you feel it could be seen as a conflict of interest when the same group advising on media is also selling their own media product?

AL: Programmatic buying is the way of the future and agencies should participate. We have no problem with the emergence of the DSPs that are transparent and are being set up to leverage the new technologies available to advertisers around data segmentation and audience buying. If there is full transparency to the advertiser and there is a free market where those with the best skill, expertise and technology all operate on an even playing field, then I don’t think there is a conflict.  However that’s a BIG “if”. The issue is where the transparency is not there.  Just as there are brokers offering no-value on the traditional “sell side”, there are also many different business models within the DSP landscape and this is where it can get “grey” – especially in online video and in online video exchanges. Quality brand safe inventory is not available “cheap” in self-service display exchanges so why would it exist in video exchanges where the entire market has already acknowledged we are in an undersupply?

So if we borrow from the experience in online display, the reason why programmatic buying and DSPs have become more mainstream is due to the buying tools such as real time bidding (RTB) and audience segmentation to leverage exchanges, so surely these should also apply to video…..right? Wrong. Despite the claims of many vendors, aside from the major global players who have invested tens of millions of dollars in their own platform, tools such as RTB and audience segmentation are not prevalent in video, indeed in our opinion they are actually still quite nascent in display in Australia. To put it in perspective, one very well known video exchange operating in Australia is marketing its real time bidding capabilities – yet in its fine print it notes that this real time bidding is in fact an ‘average of three days’! This is not a good thing for the agencies, the advertisers or for the industry.

TD: Video now feels a lot like search did 7-8 years ago. Lot’s of resellers, lots of excitement, but not a heap of transparency and a lot of opportunists.

AL: I believe a better parallel is display. We’ve seen the consolidation of the market over the last five years and I think we are at a similar start point for online video now. So it would be fair to expect that in five years or so we’ll have a very different landscape. The counter balance to the display parallel is the richness and engagement that video offers – so niche premium video content creators will prosper more than their display counterparts did by differentiating themselves from the “audience” solutions.

TDHow important do you feel true investment in not only video ad technology, but also video content is for companies selling video based digital inventory?

AL: You can certainly operate today without owning or investing in technology but I think it’s a pre-requisite to thrive in the futureBusinesses who own their own technology are able to enrich inventory by applying data segments which will make them far more appealing to publishers chasing higher yields – which in turn means advertisers and agencies will benefit though better targeting. This is where having a multi channel offering running on a central platform is a huge advantage.  Over the last three years at Adconion we’ve invested over $50million USD in our video platform alone. On the content side of the question – the notion that “content is king” is certainly even more evident in video than any platform.  There are challenges in Australia around the costs of both creating and distributing video content, but the NBN will play a big part empowering more local content creators and enabling new technologies to develop better user experiences for consumers.

 TDIn 5 years what will the online video market look like in Australia?

AL: In 2017 I think we can expect to have seen some pretty major changes – I’ll have a go at naming five:

1.     The NBN roll-out will have a dramatic affect (assuming it proceeds as currently planned). This should go some way to self correcting the imbalance of low quality inventory as more quality content will be created at better economies than today.

2.     We will see the emergence of the TV manufacturers in this sector as their connected TV offerings are built out and they offer more quality content directly through their own user interface, bypassing the broadcasters of today. What remains to be seen though is what their monetisation strategy will be and whether they will have their own sales teams?

3.     Mobile video will be as big as traditional “pre-roll” with the global app developers becoming video content creators in their own right and playing a serious role in the market development.

4.     The ad tech vendors from 2012 will have consolidated – many will cease to exist well before 2017.

5.     The businesses who are investing in their own technology, who operate across multiple channels and platforms and who are innovators in their own right will be thriving.  Of course – the biggest of those businesses, Google, will still be the dominant player in the space!

Look out Australian music TV, VEVO is here …

Last month,  it was announced the giant global music video site VEVO had arrived inAustralia. Through a strategic tie-up with MCM Entertainment, the VEVO service was finally made available to Australian eyes.

VEVO is the default choice for people looking for music videos. The numbers are significant. Estimates put VEVO’s local audience at over 2m people a month (MCM claim 5.5m; Nielsen Answers places the figure just below 2m) and 50-60m video streams in the same time. For MCM its another piece in their video puzzle – which has been building since 2009 when they launched their Digital Entertainment Network (DEN).

In my opinion, VEVO offers the first real competition to pay TVs dominance of music videos and the advertising that surrounds it. Channel V, Music Max, V Hits, MTV Classic, CMC – have been the go to for advertisers wanting to reach a younger, music keen audience with TVCs. Online video – whilst in demand for advertisers – had struggled to provide similar reach and frequency.

VEVO changes this. It injects a huge store of inventory into a market hungry for it. MCM has also cut deals with ARIA (it powers the video on their websites) and it has its own assets in Take40 and the Hot Hits. It has positioned itself nicely to take on MCN and Ignite with a much fresher advertising offering around filmed music content. Advertisers will be excited.

Most importantly, however, users will be really excited. VEVO gives them access to what they want, when they want, on the device they want. The VEVO repetoire is deep. The technology works. Why wait for your favourite song to appear on V, in between ad breaks and station promos, when you can search for it and be playing it within seconds?

Digital media needs strong, game changer products to really migrate TV spends online in a meaningful way. VEVO is one of these. It will allow advertisers to move spend away from music TV channels and into online without risk but with plenty of data driven upside. It will allow advertisers to work on bespoke content and deliver it online only to audiences that have the scale required to justify the investment. Just look at what VEVO has done in the US with initiatives like Unstaged with American Express.

And let’s not forget what might happen if VEVO was to sign a deal directly with Apple TV, or Xbox360, or a TV manufacturer, and pipe its content direct to the big screen and the lounge room.

VEVO is here in Australia and its an exciting time. Even as an employee of a competitor I feel its something to celebrate.

An edited version of this article first ran in Encore.

Talking Digital Q&A #7: John Curtin, Marketing Director Totem Onelove Group

Last year the Stereosonic juggernaut was unstoppable. Smack bang in the middle of a difficult time for festivals, Stereosonic launched its 2011 campaign and instantly had traction unlike many of us had ever seen. An estimated 70,000 people attended the Sydney show and across Australia approximately 200,000 attended the event as it covered the country. The hype was immense and in many ways reset the expectations of what a large scale, dance music oriented event could become.

Leading the marketing of Stereosonic (and sister event Creamfields) is John Curtin. For as long as I’ve known John (over 10 years) he has been involved in connecting people and music. He is widely respected for his work and after numerous dinner chats about marketing and events I wanted to showcase his thoughts for Talking Digital.

Talking Digital: How important for you are digital channels and tools, and which ones and why?

John Curtin: For our music festivals a lot of it is built on hype and literally friends encouraging friends to come to an event. My philosophy is that if a friend tells you about a great movie or event or festival you will be more inclined to go to the said event, advertising in general is a trigger for this but it’s not as trusted as a friends recommendation. The advantage of our digital channels is not only we can showcase our events but also inform our potential patrons on artists, news, sponsors etc. We don’t get a great level of media coverage (like a lot of events) so we work with key media partners, create our own content, manage a heavy social media strategy with Facebook, YouTube, twitter etc and also encourage all our content to be shared across our patrons social networks. For example some of our artist videos have had over 1,000,000 views or our lineup in 2010 was viewed on inthemix.com.au over 223,000 times and in 2010 it was shared on Facebook over 11,000 times.

We are now building Facebook applications, competitions and promotions on a weekly basis as not only does it make noise across the network but complements our advertising on the site in general. We also run a lot of market research, customer service and trend searching on Facebook and to a degree twitter.

Our ATL/BTL advertising is heavy during campaign and we push everything back to our website and it has grown to over 1.5 million visits during campaign (July-Dec 2011) from 592,000 visitors in 2010. We are not only seeing a large increase in visits but our overall numbers to events have grown as well.

YouTube is an incredible medium for us, with HD viewing we can produce cutting edge videos for our artists and events and represent our music, vibe, artists etc. We create the content and it is broadcasted worldwide.

Most of our artists have management that are very digital savvy and we can work with them from our pre-launch and promote music, mixes and news on them. Twitter for us is not a major concern but when you look at some of the artists with 5 million followers it’s a great marketing tool

Working with inthemix.com.au has been great and we see that not only are their users interested in our events but they have a great database of users that they email out to weekly and we like to share content with media and then release it on our website, inthemix/Nova are trusted news sources in the youth community so to run an exclusive with them and then link back to our sites is much better for us.

We also don’t over complicate our website, it has all the relevant info, easy syndication and sharing via our EDM’s and social media and viewable on mobile/tablets.

We had 58,500 of our iPhone application was very successful (even in comparison to sporting/non dance events), it was the #1 app for iTunes music and #8 most downloaded overall which was a great result but again it continued our patrons sharing content and organizing their day by the set time planner etc. We saw a huge growth overall in mobile, iPhone is still dominating but android is picking up some speed and we had an android app for Stereosonic.

TD: You also run the Top Melbourne Restaurants brand which has a heap of loyal followers, how did this come about and what are your plans for Top Melbourne?

JC: It has been a learning experience for me and has taught me a lot about working with developers and working with PR agencies etc. It has grown to 68,000+ fans and a lot of interaction, it’s a great service for Melbourne in the sense that I learn a lot about places to go in Melbourne, in the next 3 months we will launch our site then an iPhone application based heavily on user generated content and contributors writing articles and interesting people in hospitality adding content. We will then have advertising for restaurants/hospitality and brands that work in this space and launch weekly/monthly events. I have started building the other cities now and plan to have them launched soon as well.

It’s a really interesting way to launch a product via Facebook we have taken a long time but I really want to get it right, have been able to work with genuine people in the Melbourne hospitality industry, created an audience who are keen to push our website etc when launching and spoken to hospitality businesses who have seen patronage from our press releases/promotions etc. I started Top Melbourne as I love going out for dinner and it was a central spot to talk about Melbourne dining and now it is a pet project that is growing and have some great hospitality companies wanting to work with us.

TD: As a consumer, what media and technology innovations are impressing you?

JC: I no longer take my laptop home as I use my iPhone/iPad at home and primarily when travelling. I love a lot of iphone apps especially Pulse which is an incredible news aggregator. http://ssonic.co/GV3AFj

I love Google Analytics, I am not an expert but we have built monthly, weekly etc reports and it is so interesting to see our growth, referrals, mobile usage etc.

I have been trialing Spotify and think that its going to change the entire music landscape, so amazing to use, share content and the music database is fantastic. Being able to stream songs to your TV/digital radio etc will be great.

Digital Radio will hopefully open the opportunity to have more dance music content on our airwaves as currently commercial music/Chris Brown is been played but not much more, it is so hard to get a song to radio as not many songs are added.

I love Google Docs so I can work on one document with a number of users worldwide or local and collaborate.

Google Cal is great to manage multiple calendars in personal and work time. I have just started using tungle.me which is great for organzing time and meetings

I love my Apple TV at home, been able to watch movies that are still at the cinema is awesome via aUSaccount.

I think that Australians kind of luckout with a lot of technology, for example how silly is it that we spend billions of dollars on MYKI (public transport card) and we can upgrade our cards at 7-11’s but we can’t actually purchase products in store using the cards, whereas in Hong Kong the Octopus card you can pay for parking and products in-store etc, iTunes is way too expensive and shows/movies should be available faster, why punish those who want to download legally?

TD: When marketing a festival as large as Stereosonic or Creamfields, how do you go about pulling together a strategy to create demand for the event?

JC: Months and months of planning, coming up with interesting concepts and banking on artists that we think are headliners and hope some acts break through (e.g Avicii, Afrojack, LMFAO) that have. Although I am not primarily involved in any of the touring aspects of artists it weighs heavily on the overall marketing. We have been working on Stereosonic 2012 since before Stereosonic 2011 finished and really getting our marketing right.

The competition is pretty fierce, not only other festivals, but with the Aussie dollar at parity, people are travelling overseas and even going to other festivals internationally. For example Coachella, Tomorrowland, Exit Festival and Ibiza are definitely been pushed on to our patrons and it is a believable option for our consumers where 5 years ago it was too expensive.

We also like to hype our event via online, social media and push everything back to our website. For such a long campaign (July-November) we have periods that we push heavily and then in tune with university exams or spring racing we will drop off.

We love working with artists and push their careers as well so I guess as a strategy we plan but a lot happens along the way, such as shows selling out early or sideshows or artists getting bigger and bigger during campaign.

TD: Which brands marketing efforts inspire you and why?

JC: I love Apple’s marketing, I know its captain obvious but I do. I thought Vivid and Sydney Festival marketing was great, I was on a panel at Ad:Tech last year and Jill from Sydney Festival was a really interesting panel member and campaign. Jay-Z does a lot of great stuff and some of the smaller startups on facebook etc. I love the Absolut marketing books and I love travelling to Hong Kong and looking at the skincare activations in department stores. If you have someone that is passionate about a brand and clearly knows the results they want it generally works. Sometimes people are so hell bent on sales that they don’t understand that marketing gives your brand identity. That’s why I love looking at some of the installations or billboard campaigns inNew York, it’s about identity and been present in the market place.

TDLastly, can you give us any hints on what Stereosonic has in store for us in 2012?

JC: I am really excited as always about Stereo, 4 shows sold out last year and although Brisbane didn’t sell out it was a huge increase in numbers, as a group we are working harder and working with better people to make it bigger. As an operation it is amazing to work for, Private Planes for artists, been flown all over Australia and seeing 160,000 + over 2 weekends having an amazing time. Just expect a big tour, heaps of amazing artists, all your friends and a great mix of electronic acts.

Stating the obvious: Great content requires funding

It seems like an obvious statement but great content requires funding. Without it, it’s difficult to create things people want to read, watch and spend time with.

Funding happens in numerous ways. Free to air TV networks pay content creators upfront for first run programming, they invest heavily in rights deals around sports broadcast, effectively taking a calculated punt on shows and events that advertising revenue as a result of ratings will ensure they at a minimum don’t lose on the investment. Pay TV stations do the same – secure programming through initial investment, or invest in original programming – and pay TV operators globally pay significant carriage fees to pay TV stations in order to carry their channel. For instance, ESPN in the US (and in Australia) receives a monthly fee per month for every house the channel is carried in.

Right now it seems like a good time to look back on the early history of ESPN. In the early 80’s the station found itself in the middle of an emerging content area in a rapidly developing yet embryonic media channel. Consumer demand was promising and ESPN was developing a stable and growing audience. However, ESPN was struggling to fund its current content and operating costs, let alone enhance and build its content suite, on a solely advertiser funded model.

That’s because ESPN was running was one stream of revenue – advertising. Just like 99.9% of websites today are – many of whom are facing the same problem … advertising revenues are proving inadequate in terms of funding the development of content.

What ESPN did at the time was radical. It went to the cable providers – such as John Malone’s TCI – and asked them to pay a fee to carry ESPN as part of their cable bundles. At the time ESPN asked for 25 cents. Malone was outraged. He threatened to start his own sports only competitor. Eventually he buckled. This allowed ESPN to further secure content – such as MLB and NFL football – and grow and evolve the product. ESPN’s plea to Malone was simple – this fee for carriage was essential for the survival of both companies. ESPN needed more revenue to continue to develop a compelling product, and Malone’s TCI relied wholly on having a suite of compelling content creators that people would pay to pipe into their homes.

I wonder whether we need to revisit what ESPN did here in 2012. The Internet’s most dominant companies seem to be companies not entirely different to what TCI’s core business was in the early 80’s – distributing content but not investing in it. Google, Facebook, Twitter etc – are not in the business of creating nor helping fund content. It raises the question – who is going to pay for content online? One thing seems to be clear – great content online needs more revenue streams than advertising.

Just as a side point, ESPN now receives almost $5 per month for each household it is piped into in the United States, and similar amounts in other cable markets, including Australia.

Here’s a radical proposition. Can you imagine Google, Facebook, YouTube or Twitter investing upfront in content creation? I don’t mean a few million here and there, I mean the sorts of multi billion dollar bets the large TV and cable companies place. Here are businesses that rely wholly on content created by others, but whom are unwilling to help pay for it.

And why is it that companies that do invest heavily in content on digital platforms – Yahoo, Newscorp, the NYT for example – are often laughed at by digital insiders as out of touch?

Cable and Pay TV has the jump on digital as its dual revenue stream of advertising plus fee for carriage offers content producers security upfront that great content can have its costs covered. It is what is creating shows like Mad Men, Game of Thrones and Dexter, as well as evolving coverage of NFL and major sporting events.

Until this happens, can anyone really see ‘marquee programming’ moving online? Under current digital approaches (revenue share at best 60-120 days after payments) could you ever see a show as strong as Sons of Anarchy or The Borgias being first run online? Doubtful.

Great content requires significant investment. Why is it that the highest valued digital companies, who all rely heavily on this content, refuse to invest in it?