Over on TechCrunch, Ashkan Karbasfrooshan of WatchMojo posted a very interesting perspective on how to make money with online video.  Essentially, he breaks down the online video market into component parts in a graph that does a better job that any I’ve seen so far.  It’s safe to assume this graph will continue to evolve as the industry continues to mature at a rapid rate.  But it’s also safe to say, the spoils will go to the content producers.

This is a particularly exciting perspective.  It seems to validate the value of scarcity, and in this case the scarcity of good content.  In building a successful web video business, it’s not enough to aggregate content, or ad space…you need to create compelling content!  This is hard.  It was hard in the era of TV, Movies, and now the web.

It’s like a natural law of media.  Google’s success as an aggregator of other people’s content lulled the industry into believing creative talent was no longer necessary for achieving stunning wealth in a media business.  Well, according to Ashkan, Google was a perfect storm of circumstances that I think is unlikely to occur again.

And to be honest, that makes me happy.  From an artist’s perspective, the value of creativity can not be underrated, because truly creating something other’s appreciate is rare.  The sooner the web video industry gets to a place where that rare talent is produced, distributed and monetized efficiently, the better.

That said, I think Jeff Whatcott adds an interesting point in his post regarding this piece. He writes, “One of the things that I think Ashkan has missed here is the imporant concept that success in media is about assembling and monetizing an audience at least as much as it is about assembling content. Of course, both are required to succeed, but I think that not enough attention is paid to segmentation, targeting, community building, and brand building. These are a few of the essential building blocks for gathering a valuable audience, and that is essential to building value in media.”

I’m learning from my new colleagues at SmithGeiger, how traditional media companies do an excellent job of segmenting the audience, understanding the audience’s perspective on the content that is created, and then leveraging that perspective more effectively to monetize their work.  This is activity that has been going on for a long time in the traditional media sphere, and it seems the web content world will benefit from this sort of insight as well…as soon as they both realize the need and reach a scale capable of paying for this kind of effort.  It’s not cheap, but as we are learning, few things of real value are.

A lot of attention right now is given to the technical tasks associated with structuring and presenting content in a way that allows the search engines to index your content effectively.  This sort of activity involves tasks commonly associated with Search Engine Optimization.  Activities like content silo’ing, meta-tagging, keyword placement, XML site map submitting, cross linking, A/B and multivariate testing, etc, are some of the tactics involved in a broader strategy for ensuring your content is optimized for search engine indexing.  If your content is well indexed by the search engines, then the people out there searching for something related to your content will hopefully find you before they find someone else.  The irony obviously, is that in this stage you have to appease the bot to get to the humans.  You need to know how the bot “thinks” as much if not more than how your audience thinks.

But assuming you do a good job of appeasing the bots, and the bots in turn bring you unsuspecting humans, then you have to know what to do with the humans.  This is where a deep understanding of your audience’s psychographics will help in developing a strategy for broadening and, more importantly, deepening your relationship with your audience.  Psychographics refers to an understanding of who your consumer is, where they are coming from, what they are looking for, and how they look for it…what motivates them.  It’s the psychology counter point to demographics which is more focused on quantitative group profiling than understanding the motivations or attitudes, interests, and opinions of the people that compose that group.  Both are important.  But the motivations side of that coin is most often overlooked.

Publishing excellent content is good.  Leveraging Search Engine Optimization practices to promote your excellent content is great.  But if you have a growing audience for your content, it rapidly becomes important to understand why they like you.  Knowing why your audience likes you will help build a sustainable approach to your content strategy as you understand the motivations behind the numbers for your success.

So, this all begs the questions, “how do I discern the motivations of my audience?”  Well, there in lies the tough stuff.  It requires primary research.  I mean talking to actual humans….I know, this is something we thought we could avoid in an era of Analytics.  I thought for a long time, that math would enable me to tool away in my little digital cave and at the same time affect real people through the internet everywhere.  Well, it seems analytics shows us what’s working, but still fails to explain the details of why (or as a colleague recently pointed out…why not)  Primary research with real life humans is still required in understanding why humans behave they way they do.

The good news is that this primary research when coupled with rigorous analytics is like pulling the curtain back to expose a method behind the magic.  And that’s powerful.

About now, the media and blogosphere start publishing lists of the most important things that happened during the course of the year.  I’ll be referencing here some of the Top 10 lists I find and think are most interesting.

Top 10 Biggest Social Media Stories of 2009 This post in Vator.tv by Ronny Kerr lists is interesting on a few levels.  I personally think #7 in his list is the most important as it references the growing role of Citizen Journalism.  As main stream media news continues to degrade, we will rely more on the notion of the citizen journalist.  The local concerned individual empowered with tools for publishing and distributing news will become a greater force as those platforms continue to evolve.  On top of this, the advent of real-time search exemplified by Twitter’s efforts in this area as well as Google’s year ending adding of real-time data to their SERPs will enable us all to stay informed through new channels of information and new forms of journalism.  Sifting through the growing pains involving insanely poor quality journalism will unfortunately be a condition we need to suffer through as this trend seeks maturity.  Jeff Jarvis refers to this as the “deprofessionalization” of journalism in a recent post.  (His post is not a list, but definitely worth reading on the subject of citizen journalism.)

Crunks 2009: The Year in Media Errors and Corrections OK, this post is not a Top 10 list, however, it’s an awesome line up of errors and corrections made by news media outlets during 2009.  I predict the issue of news reporting errors is going to trend in a devastating way in the coming years.  This will be due to two fundamental reasons.  First, fact checkers are getting laid off at all the major news organizations.  Second, the dissemination of any information (including erroneous) on the internet is like wildfire…which I guess shows reason number 2.5, which is, inflammatory erroneous information spreads faster than the boring stuff accurate stuff.  All business models are stoked by fast dissemination of information, so there is a clear incentive to spread total crap.  Total crap pays better on the internet.  Thankfully, we have the blog, Regret the Error, hopefully to stem the tide of this unfortunate trend by showing a possible crowd sourcing model for news fact checking.

I just finished reading Ken Auletta’s new book: Googled, The End of the World as We Know It.

Auletta delivers on many levels with this book.  As a general corporate biography, Auletta was given the kind of access required to compose a compelling story about the development of the business as well as the role various personalities played in the company’s founding and success.  In fact, the access he was given seems extraordinary in an era where famous people are as easily mugged by the media as they are truthfully reported on.  On the flip side of that, the way Auletta takes that access and pens a balanced critique of the people and company position speaks well to his character and ability as a journalist in the face of extraordinary wealth and power.

Definitely, an excellent corporate biography.

But what gives the book, and story, significance isn’t just the extreme success achieved by Google and it’s principals.  It’s the role Google is playing in a larger story about the transition our media industry at large is currently suffering.  These days, there’s quite a bit of blaming going on in old media directed toward Google.  I don’t tend to subscribe to the belief that Google is an evil plotter in the demise of an American Icon industry.  I think content will always have a central role in our culture because we value storytelling as much as any culture ever has, and we value News as a pillar for our Liberal Democracy.  Content will always be King.  However, just as real monarchies in different countries have to justify their role in society from time to time, so does Content need to re-establish it’s role as King in our context.  It’s true to say our modes of distribution are evolving at break neck speeds.  This pace of innovation compels us to wonder whether new forms of content that effectively dis-intermediate the Media Companies will become King.  We’ve been experimenting with user generated content in that regard for some time now.  But it seems to me the experimentation is leading us to conclude once again that some people are awesome story tellers, and the vast majority of us benefit from the consumption of their art.

So I’m not worried about the demise of Media.  We love it and need it too much.  How we pay for it, well, that’s what everyone is really freaking out about.

One of the recurring themes or aspects I picked up on in reading this book had to do with the way Google is perceived.  There’s a chronic question as to whether Google is naive or evil.  The question is typically posed to people in traditional media who believe their livelihood or wealth is affected by Googles presence in the market.  It makes sense for them to believe Google is evil.  According to Auletta, this baffles the people at Google in a way that then lends itself to believing they are not really evil.  Truly evil people know they are evil and are not surprised when others think it as well.  So, the other alternative is that they are naive.  Naive enough not to recognize and understand the way they are perceived by the people they are affecting adversely.  Auletta ascribes this naivete to being a function of an extreme engineer worldview.  Everything is logical; not emotional.  Efficiency matters more than anything else.  So the ability to relate to people that feel harmed by Google eludes the people at Google.

I’ve been in the Valley long enough to know this is not something unique to Google.  So, I’d probably side with the perspective that the folks at Google are maybe guilty of being insensitive over evil.  It seems to me Googlers are probably as good as folks at any other company.  They’re not out to kill anyone, they are just out to make a difference.

Which seems like a rather hohum conclusion…which is not good for blogs.  I know this by looking at the Google Analytics for this blog

So, in the interest of being somewhat controversial, here’s my greatest concern.  I think that the current management of Google is composed of people who really believe the ideals they espouse as corporate values.  At the same time, I see the power Google is accumulating through its position in the industry as the collector of all manner of consumer data.  This power is currently wielded by personalities that seem inclined toward benevolence.  But a company with that kind of power necessarily attracts evil geniuses over time.  My greatest concern will be when the current management team moves on to the next challenge and the personalities vying for control of Google’s assets represent a very different profile than the current personalities do today.  I know if I was an evil genius I could do a lot with the kind of data Google is gathering and controlling right now.

These are economic times when you need to be either creating something, selling something or maybe establishing new channels for something to be sold.  In my industry, that means you’re either writing software, selling software or building a new channel for more software to be sold.  Everything else is a bit expendable.

I think this is the crux of the problem with News Media.  The News is reported as a service to consumers, who are all then supposed to gather around a piece of paper which includes ads sold by someone else.  The news was the content that only had as much economic value as the advertiser’s need to communicate with consumers on the paper the news was printed.  This is a problem because the societal value of good news reporting greatly exceeds the apparent current economic value.

For years, there was an uneasy alliance between news reporting and ad sales.  The Journalist reports the news and hopefully does so in a way that is not compromised by the ad sales guy’s need to impress his advertising clients.  These types of uneasy alliances were found in other industries as well.  For example, before the Bubble, there was a supposed “chinese wall” between Analysts reporting on business financial information and bankers trying to win opportunities to serve those same companies with lucrative services.  For a long time, we believed the banks when they said the two functions of the same Bank didn’t influence each other….then we found out that wasn’t necessarily true.

But back to the news business.  We’ve believed the News Media in its assertion that the Revenue side was not compromising the Reporting side.  Well, different industries have different cultures, and I think the News industry’s culture may have lent itself to at least a better attempt than the I-Banking industry to keep this assertion true.

Regardless, the ad sales side has now disappeared.  It’s been assimilated into the financials of Google for big Publishers and Craigslist for small.

So now, we have this decoupling of the economic value of News from the the societal value News provides.

Hard core tech industry people think Blogs will evolve into the new journalism.  I’m skeptical.  And I’m not even a Journalist.

Regardless, be it that the News comes from Bloggers or Journalists, how are we going to pay for truthful News?

Well, given that the News has greater societal value than economic, maybe it’s something the government should operate…kinda like Education  (or Healthcare)

Whoa…hold on there!  The government?!?  What about the fact that we depend on the Journalist to make sure the politician is held accountable…those rascals!?  Well, I’m not sure the uneasy alliance that would be held between politicians and Journalists, would be any different than the uneasy alliance between Journalists and Advertisers.  A politician’s goal is to maintain or grow their personal power.  An Advertiser’s job is to convince us to buy stuff we may not necessarily know we need or even really need at all.

I dunno.  I do suspect, however, that without Journalism entirely, we’re in for more rascally politicians than even if the politicians are the ones hiring the Journalists.

Maybe we establish a fourth Branch of government.  Something like the Judicial Branch that is theoretically less impacted by the constantly changing political winds that so directly affect the Executive and Legislative Branches.  The News Branch of government can have life terms appointed by Executive branch representatives, but be subject to the same process a judge goes through in being appointed to any local or federal bench.

Now that would be interesting to explore.  It accepts the fundamental value to our society that truthful News reporting is supposed to provide while establishing a mechanism for managing Journalists with enough insulation from the Politicians to allow them to truly seek the truth.

But I guess we’d need another tax to pay for it all….that would suck.  But I’ think there’s still some rich people in America….let’s tax them!

I’ve been digging back into the mobile arena after taking a couple years off to launch Famplosion.  When I left the technologies required for delivering a meaningful TV experience on a mobile phone were, well let’s just say, not very compelling.  But what made the situation worse was that the industry was controlled by the wireless carriers which had a nasty habit of making it extremely challenging for any new startup to try and provide an improvement on the technology.  Such improvements cost a ton to develop.  The risk associated with making that investment and effort and then being at the mercy of the mobile carrier before it can be dropped into the consumer mainstream was simply too great.  Companies like Qualcomm could make a run at it, but not many others.

Until now it seems.  Love ‘em of hate’em, Apple forced on the industry the concept of the App Store, and this route to market has dramatically shifted the risk scenario associated with developing new technologies for the mobile phone.  It’s freekin awesome!

I got a link to this video from a friend today who is involved with this startup, so I thought I’d pass it on.  This video appears to be a step in the majorly right direction.

Check it out!

Back in September, Brian Stelter reported for the New York Times, on the acquisition of NowPublic by Examiner.com.

My last startup company, Famplosion, is focused on local family audience content, so these sorts of deals are interesting to me.  The landscape of players in local digital news media is likely to continue to consolidate as some companies have raised more money than others and all are continuing to burn Capital as they wind there way down the path toward discovering what will hopefully be a sustainable business model for new media focused on News.

I believe finding a sustainable business model for the News Business is critical.  It’s not just a business thing, but it’s something that’s critical to sustaining our liberal democracy.  As the business model that has supported Journalism in our society continues to erode, so erodes our societal ability to hold the powerful accountable through true and trained Journalism.

But I’m not convinced Examiner.com has the model we need.  For sure, they are growing really rapidly, which is awesome to see.  In fact, Brian writes in his piece,

“Rick Blair, the chief executive of Examiner.com, said in an interview that his company’s expansion into more than 100 markets indicated that hyperlocal information could be a scalable and sustainable business.”

Then Brian adds the important stuff,

“Whether it can be profitable is still to be determined. ‘We’re trying many ways to determine the advertiser interest,’ he [Blair] said.”

To be sure, there is a heavy focus on scaling their local coverage to support as many local markets as possible in the shortest period of time.  The content model Examiner.com employs has been tremendous in accomplishing this goal.  But I’m waiting to see whether that same content model is sustainable over time.

It’s just that the examiner content model pays local “examiners” what amounts to pennies per page view for the content they contribute.  This model has been effective at driving the sign ups of thousands of local examiners.  However I’m not sure it pays enough for those examiners to stay engaged over the long haul.  Additionally, the examiners that do stay engaged realize rather rapidly the value of Optimizing their articles for Examiner in order to get paid more pennies than not.  And to do this, well, mention Angelina Jolie or incorporate some sort of iPhone review, (and yes, I’m tagging those both:) and you get crazy clicks!

So, the model that has driven amazing growth, I believe, will also drive low quality content over time.  And this is not going to be the way we save Journalism as an institution in our society.

About a year ago, I was sitting in a conference room at a hedge fund in the midwest.  Across the table from me was the President of a Media company, in the fund’s portfolio, which owns several small to medium sized local newspapers.  His company also owns a bunch of lifestyle magazines and does custom publishing.  I quickly learned that all aspects of the business are basically losing money except for the custom publishing operations which is bankrolling (kind of) the rest of the news business.

I was running Famplosion at the time.  We focus on aggregating local event information for the family demographic, and I was very eager to talk about a partnership.  I figured this guy had feet on the street selling ads up and down main street.  I didn’t.  He had diminishing ad inventory to sell.  I had growing inventory being an Internet based business.  Let’s make a deal…right?  Wrong.  Turns out, he didn’t see me as the potential partner waiting to be linked with at the hip.  Instead, I was more like a representative of the barbarian horde amassing outside the gates of Rome.

It was a weird meeting.

Fast forward.  A few months later, I’m on the phone with a senior executive who runs all Digital for all the newspapers of a major media company.  They have dozens of websites that correspond to the dozens of major market newspapers they publish nationwide.  This was a first call, and I was super eager to chat with this guy having angled my way into that call over the last couple weeks.  The first words out of my mouth were a very excited, “how are you?”  His response, “…well, we’re in the newspaper business, so I guess that says about it all.”  Hmm.  This guy, if anyone, was supposed to have a silver bullet.  Some brilliant idea that was going to save the newspaper business with innovative online business models.  But more importantly, he was supposed to save Journalism as the arbiter of Truth in our liberal democracy.

Yea, not so much.  He seemed too depressed for such idealistic misgivings.

The deal I wanted to pursue was…I got content, they need cheaper content…I’ll give it to them super cheap since it costs me hardly anything to aggregate, organize and distribute it.  They get to monetize it with their advertising clients and all that business stuff those media companies are supposed to be really good at.

Yea, no deal there either.

Fast forward to today.  I just ready Jeff Jarvis’ blog post from a few days ago titled, “The future of news is entrepreneurial.”  It’s an interesting piece about the notion that the major media companies should just give up and go home, and as the talented journalists walk out the door they should set up shop as entrepreneurs gathering up, making sense of and then reporting the news.  Innovative startups should spring up to provide business services to this burgeoning corps of talented (and more importantly trained) journalists.

I agree the major media companies should probably fold up the tents on their news businesses, and I agree that the next phase of journalism will be entrepreneurial.  But by entrepreneurial I don’t mean small business or sole proprietor.  I mean fits and starts and carnage and wasted money and failed dreams all leading to something we have no idea about right now.

I guess living here in the Silicon Valley, I get to see up close and personal the kind of devastation new industries require before no longer being “entrepreneurial,” and instead becoming institutions in our society.  This is normal around here.

And it’s fine for tech, I mean the world is not less for lacking massive innovation immediately.  We always get it eventually.

But when it comes to Journalism, namely that societal institution that hopefully keeps us all from completely believing the stupid stuff we’d choose to out of natural bias and predisposition, leaving that up to the entrepreneurial path kind of terrifies me.

Entrepreneurs are supposed to increase wealth.  Journalists are supposed to tell the Truth.  I might be a cynic, but I don’t see a natural market for the Truth.  I guess my case-in-point would be cable TV, um both sides, in case you were wondering.

So, if it’s true to say Journalism needs to find a new home because the Media Company model is flawed beyond repair, and that Journalists need to go out into the desert for a while and live the entrepreneurial life, then I think this is more terrifying than hopeful.  But it’s probably true.

I had dinner last night with a new friend, Kevin Friedman, the Founder of Mister Archer.  To describe Mister Archer, I’ll use Kevin’s own words: “Mister Archer is the ultimate insider for the adventurous and urbane in San Francisco.  Mister Archer is your friend in-the-know revealing what’s cool and undiscovered across a diverse mix of local activities.”

Basically, when Mister Archer finds cool new places to go or things to do around town, he sends out an email newsletter to his subscribers.

I have to admit, I also subscribe to Urban Daddy and Thrillist, which are a couple other locally oriented newsletters/arbiters of urban cool.  At least I think I still subscribe to Thrillist, to be honest I haven’t read it in a while .

But the category, namely, a local email newsletter service for busy urban professionals, is definitely intriguing.  I think Daily Candy really spear headed or at least popularized the category by providing a newsletter focused on women.  Their success was capped by the Comcast acquisition for north of 100Million last year.  This success encouraged a lot of other folks to wonder whether something similar might work for a more male oriented audience as well.  Hence, Urban Daddy for the “male mid-life but convinced I’m still an urban swankster” audience and Thrillist for the “younger hard core urban hipster” audience.

Urban Daddy totally has that Mad Men thing going for it, and awesome graphics.  I love the photos.  But I’m not sure I represent their core target audience…I never feel rich enough.  As for Thrillist, I  definitely know I’m not their core target audience since I’m not really in to designer T-shirts and my only baseball cap is a Giants cap with a decidedly uncool curl to the bill.  What can I say, I’m just not that hip.

I think the thing that worked for Daily Candy is the same thing that’s lacking in Urban Daddy and Thrillist.  That is a more ambiguous approach to the target audience so as not the be offensive to various corners of that audience.  For example, I sometimes feel guilty looking at Urban Daddy and I sometimes get offended reading Thrillist.  I’m pretty sure if I was core for either of them, I wouldn’t feel guilty or get offended.

So, that brings me back to dinner last night with Kevin.  His approach seems to be a little less hard edged than Urban Daddy and Thrillist, and while this may not hit the epicenter of a core audience dead center, I think it will lend itself to being appreciated by a broader set of subscribers.  That’s a good thing…to paraphrase another arbiter of cool, probably the “grandmother” of the category.

In any case, I’m now rootin’ for Kevin, so here’s a link to sign up for the newsletter.  It’s bound to be cool.

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Mobile social networking is continuing to wind it’s way toward something er other.  Dennis Crowley of Dodgeball fame is back with Foursquare…basically the same thing but better funded and involving native apps for iPhone, Android and BlackBerry.  You can also use text for all you old timers out there.

I was first acquainted with Dodgeball when building Famplosion.  Dodgeball was truly a NY urban hipster app, but I thought it would be awesomely applied to parents heading toward the playground or zoo and wondering if there were other friends in the stroller class headed the same direction.

I got in touch with Dennis and chatted briefly over the phone.  He mentioned there was actually a group of parents in Boston using Dodgeball to coordinate playground time.  Never too old to be cool!

Anyway, I signed up for Foursquare, which went fine.  But then when I tried to book mark the BlackBerry URL and access the app, the browser went no where…me thinks there’s a broken link in there somewhere.

Regardless, I will remain undaunted and try again tomorrow.  I think the potential is awesome obviously for urban hipsters wanting to spend real instead of virtual time with their friends.  As for us parental types, well, it doesn’t hurt to explore the possibilities.  If nothing else, it keeps us young.