It is this time of the year where people start looking forward (and back) and come up with clever analyses of things we have always known and those that we haven’t. And because Europe has always (?) been the thoughtful and fashionably skeptic part of the world, it is that one of the leading newspapers, the Guardian, posts an article querying, gosh, Twitter. The link actually contains the words
trouble-twitter-social-networking-banality
The proof? Iran is still not free (or so most of us Westeners think) and only 0.027% of Iranians use Twitter. There you have it. It concludes that it is all narcissistic navel-gazing. The comments, alas, are a delight to read… 
Where are we then? Is this true? It is – you may have guessed that this be my stance – not. And here’s why:
Social media (Twitter included) is nothing in itself, it merely defines a group of tools. Therefore, it is not the emperor’s new clothes, it is – if anything – the emperor’s new herald: if the emperor has nothing new, interesting, noteworthy to tell, it will remain as dull and meaningless as before but social tools actually allow you to filter, to focus, to spread noteworthy, sensible and truly good stuff to a group of people that is much larger than you could have reached before at a cost that is (per capita and in toto) much lower than before. And that means it is one cool tool!
There are a gazillion reasons to dismiss Twitter (or Facebook – although fewer people seem to do just that these days) on the basis of boring info about breakfast/lunch/supper/traffic jam on way home or to hype it up on the basis of opposition in Iran/arrests in Egypt/tsunamis in Thailand or a mere plane landing on the Hudson. The argument fails both ways. It is not that. It is the fact that it is possible to communicate at nigh zero costs with people that may be interested – and it is upon the people to find you but it is also upon you to find the interesting bits!
I am already slightly tired to refer to Clay Shirky’s Here Comes Everybody who provides us with some beautiful examples of this but the point is (and here Shirky’s academic background serves him really well): it is a tool, and a tool makes only sense (or nonsense) in the hand of its user. So here’s to everyone who complains about useless and redundant info over Twitter: choose better who you follow; you would not stick around some dinner party endlessly discussing the virtues of starching napkins either, would you?
As with every tool (say, a hammer), social tools are more useful, the easier and intuitive they are to use. If it is self-explanatory on how to extract something positive (e.g. to get that bloody nail into that bloody board), the better (and if you can do it without walking away with a bloody thumb, even better). At the moment, many people walk away from Twitter because of a bloody thumb. But would you dismiss a hammer only because you hit yourself? Probably not. Unless you find a better hammer of course…
Finally (and because I called this blog “on mobile”), here’s why the combination of social tools with this other tool in everyone’s hands, namely the mobile phone, is so powerful:
- Daily circulation of newspapers worldwide: 450,000,000
- Number of TV sets in use worldwide: 1,500,000,000
- Number of Internet users worldwide: 1,600,000,000
- Number of credit cards worldwide: 1,700,000,000
- Number of toothbrushes in use worldwide: 2,250,000,000
- Number of mobile subscriptions worldwide: 4,600,000,000.
Have a great 2010!
Cartoon credit: Hugh MacLeod (http://gapingvoid.com/)
Nokia struck again, it seems. This time? No, not another multi-billion dollar acquisition such as Navteq but another tiny start-up, namely the “boutique” travel social network Dopplr, which the Finnish telecoms giant allegedly gobbled up for anywhere between €10-15m. Hm. Hm Hm…
Dopplr’s Business Case
Let’s see what Dopplr does (besides its co-founder [and angel investor] being an old Nokia hand): the idea is to share trips with friends so that a) people coincidentally going to the same place at the same time (“what??? you will be in Barcelona in the second week of February, too???”) will find each other and b) they can share cool and “unique” tips from other travelers. It is (was?) one of the group of location-aware social networks that have been and are still waiting to come out of cover.
Nokia’s Master Plan
The deal is great for the Dopplr guys who seem to have made a nice return and the pieces of the jigsaw on a very, very, very high level seem to make sense: Nokia is assembling a location-based empire. They acquired Navteq in what was Finland’s largest acquisition ever, they bought German location social network Plazes, and now Dopplr. And it now all comes together at Ovi Maps (which looks quite good!). Makes all sense, huh? The rationale was – arguably – to do to sat-nav systems what they did to (small) digital cameras: kill them and incorporate it into their phones (or multimedia devices). When Nokia moved to Carl-Zeiss lenses, mobile phone camera were basically on par with low- and mid-tier digital cameras. Why carry 2 devices if 1 will do the same job. Easy! And boy did it work!
So, let’s do the same with maps. And, more importantly perhaps, do not maps (and location-awareness in general) find a completely new way of justification in mobile phones, i.e. in devices that are, well, intrinsically mobile? Yes, it does. When Steve Jobs premiered the original iPhone, he famously ordered coffee from the nearest Starbucks, using a maps application. Simple, right? Wooing the masses but nothing much in it, right?
But! On the maps side, Nokia competes against Google Maps (this is what Jobs was using), which is free (if one leaves aside the probably not insignificant investment that will have gone into this service with its various extensions such as Streetview et al). It also has an open API and many, many people use this. It is embedded on the iPhone (Jobs again) and most people I know use it on their Blackberry because it is better than RIM’s own offering. A free download to most phones, Nokias included.
The Impact of (Fairly) Open Networks
Now, I never got these highly specialized things anyway. I find them way to complex to handle: when I am going on a business trip, I am normally much too busy to feed data in some travel network or other. And when I am going on a personal vacation, I am a) even busier and b) want to be left alone (normally). Oh, and did you see that Twitter plans something like this, too?
But even aside from this, when it comes to “being found”, all my friends (real and virtual) knew through my blog, through Twitter and Facebook that I was going to France this summer. Do I really need another, specialized service for this, over and above the ones that can provide that information and also everything else? In other words: does it make sense to try and hone a super-focused service when similar (if not identical) results can – and already are being – achieved through smart filters on networks that have somewhat of a head-start when it comes to active users? I mean, Facebook has more than 300m users, MySpace – even if it seems to be struggling a little lately – will have more than 150m. And then you have Twitter, Bebo, Hi5, Orkut, StudyVZ, etc, etc, etc. – that is more than Nokia sells all year.
Now, the existing players are adding geographical awareness as an additional feature to their services. I mean, even YouTube is doing it!
But the real point is: whoever uses one of these (say, when you are in Brazil, you use Orkut), there is a certain likelihood that your friends will, too. Otherwise, you would not be on it. Need more? I doubt it.
On top of that, it is – arguably – much easier to integrate a location-based function into a network that already has hundreds of millions of users (and I am not talking of hundreds of millions phone users because they only are potential users of any service that might come with the phone) than to build one. Nokia does certainly have a great starting point (it sells more devices per year than Facebook and Twitter users combined; see – old – numbers here) but they are not with Nokia because it provides such a great network but because their phones are good.
When it comes to services, it has become an issue of today’s mash-up world where access and resulting services go across a variety of – more often than not – open offerings rather than tight proprietary ones, and Nokia seems to be struggling of getting to grips with this. Some commentators compared it with Yahoo!‘s M&A swoop in order to try and grab back the love it lost to Google and others. Even if one isn’t so harsh, it seems obvious that the thought pattern behind Nokia’s thinking might be a little outdated. I stand to be corrected (and would love to be since Nokia has brought a lot of really great stuff to the world) but that is what is worrying me. So congratulations again to the Dopplr team again but, dear Nokia, for the time being I remain skeptical as to the commercial sense of it (and, yes, I appreciate that €10-15m is but a fly speck on your balance sheet if it fails…).
It seems to be music week this week: Apple running its somewhat anticlimactic “It’s only Rock’n'Roll” event today, lots of folks pondering Spotify Mobile and now this: the good folks at Forrester Research have released an interesting report entitled “Music Release Windows: The Product Innovation That The Music Business Can’t Do Without”. This is some statement.
The Old Model is Broken
Forrester was kind enough to let me have a glance at the report, so let me dive into its revelations and the underlying rationales, which starts off with looking at the broken model of the industry: in (latter part of) the 20th century, the music industry was mainly fueled by record sales (first vinyl, then CD). With the introduction of digital media and, in particular, ubiquitous broadband connectivity in many parts of the world, it shifted to digital downloads. Unfortunately, it mainly shifted for downloads that people did not pay for. iTunes has only taken a piece of the action. And iTunes’ ¢99 per song model has then contributed to people no longer buying whole albums but only the songs they like most, which somewhat squashes profitability.
Live events, etc used to be a support for record sales. They have recently become the biggest revenue generator for some recording artists (as well as for some labels, at least if they managed to conclude so-called 360-deals with artists) but they cannot alone make up for the shortfall. On top of all that, people like my 14-year-old son use a plethora of services (Spotify, Last.FM, YouTube and probably dozens more of which I do not know) to quench their thirst for music.
Change the Product, not the Business Model
The researchers suggest to re-think the product offering in order to engage the fan more holistically: leverage diverse assets through those maligned 360 deals: they might “feel” a bit tight around the hips but the opportunities are immense: labels and (capable) artist management can create a very rich offering of diverse content. This then ties in into step #2, which sees the industry moving away from (or rather beyond) the classic album model where an artists would release one album per year (or so) and sustain the buzz in promotion thereof (and in between) with concerts, interviews, singles and EPs. With digital distribution, there is no need for that (an album on CD might be maintained as one part of the mix however): one can produce a continual stream of creative products from the artist. This will help build sustainable and longer-term relationships with fans.
The final piece is – put simplistically – the introduction of release windows similar to what the film industry is doing for decades: releases are structured successively with higher product (read: better monetizable) tiers coming first. It is re-vamping a trusty old model though: you want it first and exclusive, you pay more.
The bottom line is – oh, the bliss of buzzwords – the 4 C’s, which are content, convenience, cost and community: The higher the cost, the greater the convenience and the better the choice of content. The authors basically plead a re-introduction of scarcity in order to re-build the perceived value. Convenience ranks above content in terms of the creation of value: and this is where mobile plays a role: it is always with the user, it is always on, it is readily accessible (at least the new generation of phones is). It is arguably why services like Spotify are believed to be a valid revenue stream for labels, at least on mobile…
Community is the Glue
Is community just thrown in for good measure? No, of course not. According to Forrester, “Community enhances social value.” It is the glue that will be the key differentiator from piracy (or so they hope): the thinking is that a sense of community will build some sort of moral cohesion (another C). Here though, Forrester tails off a little. It says:
“Social functionality should be deployed right across the hierarchy.”
Nothing wrong, you say? No, it is not. However, “deploying functionality” is way short of what is needed to build social value. What makes a community? Emphatic engagement with fans, not a set of tools that sits somewhere on the various sites and offerings being operated by some far-away call center. Whilst the principle is right, the suggested execution remains a little shallow. Forums & networks is all they have to offer. Hm. Everyone has them already, so will this work?
The principle does work, I believe, However, the execution is much, much more complex than the analysts reveal. Here, one can make or break this.
Release Windows
The analysts suggest that a release should be tiered by windows: start with a preview, then go into the mainstream for-pay channels (2-3 weeks delayed) and finally release to “free-to-air” (6 weeks delay). The premier window is suggested to being the one where incremental value can be unlocked: first releases, premium value-added content (and no DRM!), etc; users only get this if they pay. Elegant packaging and programming is crucial to convince people of the richness of this. Then they will not defect to P2P sites. CD releases remain in the mainstream window and then, finally after six long weeks, the Spotifys of this world will be able to get it through their ad-supported model, TDC Play, the Danish flat-rate all-you-can-eat model that generated more than 100m downloads in 15 months would be able to add it to their package, etc.
Mobile is in the premium tier (with very few others): Forrester believes that carriers’ and OEM’s efforts, investment and – last but certainly not least – billing relationships merit this. I would suggest that the eye-opener ringtone where one could charge huge premiums for monophonic (!) 20-second-loops would contribute to this conviction, too.
In the “modern world” with smartphones and flat rate data plans, a lot of it of course hinges on how such services tie in with a) the handset (app vs. mobile web), b) the provider(s), namely labels, artists, operators, handset manufacturers, other (mobile) distributors as well as iTunes, and c) the users, i.e. will they adopt it or will they defect to the (free) web side of things after all. The crackdown on piracy in many countries will have something of a disciplinary effect but the jury on this is probably still out.
Is that It?
There must be more in order to create compelling services and products. Otherwise, I cannot see people doing it in sufficient numbers. It could be seen online with Spotify where, anecdotally, only 17,000 in the UK have signed up to the premium service; I cannot believe that the premium music market should be limited to that. The analysts suggest the creation of
“truly 21st century products [...] blend[ing] interactivity, multimedia, multi-platform, convenience and social to create something totally new.”
That sounds awesome but how do you create it? The starting point needs to be the relationship between artist and fan. I have long held that this bond is more than actual musical tastes; it is a lifestyle decision, which is why fans crave to belong to “their” artists’ circles. As early as 2002, a “Britney Spears Mobile Fanclub” was successfully running, and that did not even involve her label! What it did involve though was access (or at least the promise thereof) to Britney (who was, at that time, arguably one of the biggest recording artists in the world). The service combined text (real-time backstage reports from Britney herself!), live concerts, editorial, merchandise, and special promotions to create a rich and comprehensive experience around the artist. And this at a time when a ringtones were just on the rise and premium SMS not widely available! The principle works! It does take however (and that’s a big IF) active involvement of a complex ecosystem of artists, management, labels, merchandise firms, media, etc.
The new generation of artists is of course significantly more tech-savvy (see e.g. upcoming singer Remi Nichole‘s video blogs and tweets): one sees a much higher willingness to participate actively and – even more importantly – authenticly in engaging the fans (“audience” is probably an overcome term in this respect). This can work, and on mobile it can work as a revenue generator, too! But the core is the revised approach to the people (and this is not limited to the music industry): they are not sheep that want to be exploited; if you treat them that way, they bolt. Treat them honestly, fairly, transparently, and you have at least a fighting chance!
Palm came out with a bit of news that reiterates the old wisdom of joining who you cannot beat. The Pre will apparently be able to sync with Apple’s iTunes and iPhoto apps. Apparently, the Pre makes iTunes think it is an iPod or something. The whole thing apparently fails on the DRM side, so no “old” iTunes for the Pre then… What Apple will say to this? Well, that remains to be seen. They surely won’t be happy. But on the other hand, they will probably want to avoid any in-depth tussle over the question of their proprietary software, monopolization and all.
We also learned that, because Palm Executive Chairman Rubinstein is an old Apple hand, “the engineering culture at Palm bears some similarities to [Apple's]“. There you have it.
But the Pre is doing even better on the music front: its MP3 player includes onboard support for Amazon’s MP3 Store. Files are downloaded directly over the air to the device. Now that’s pretty cool!
More coolness comes with search: the Pre searches, and then – if you want – it searches some more, in Google, in Twitter, … Neat, very neat!
Now, on to the app store. Oops, it is called “web catalogue” at Palm. How many apps at launch? Um, “a dozen or so”… Ah…
So will it succeed? Of course it will: according to Roger McNamee, managing partner of principal Palm investor Elevation Partners, all iPhone users with expiring contracts will switch to the Pre at 4.25pm. There you have it, again!
Orange UK, one of the large carriers in the country with 15.8m mobile subscribers, has released its “Fifth Digital Media Index”, containing a set of interesting numbers on the data uptake on their network, and it makes for intriguing reading!
- Music and video downloads increased both by 38%.
- Games only grew by 8% (but at least they grew; anecdotally, some other carriers recorded sometimes dramatic drops in take-up) to a total of 770,000 downloaded games, which equates to a market share of 23% of all UK games downloads (the total UK games market would hence be 3.35m downloads for the year with Orange claiming top spot). From the top 10 downloaded games in 2008, 8 were part of the carrier’s embed programme, which shows – again – that users appear more comfortable if they can try it out before (embedded games normally are trial versions).
- Social network use over mobile increased by 129% in page impressions per month and 48% in unique users. The monthly average number of pages per user was 397. In terms of popularity of social networks, Orange’s Mark Watt-Jones (@MWJ) fed us additional bits via the Twittersphere: Facebook dominates, Bebo is significant, MySpace less so and Twitter grows very quickly (what was the Oprah moment in the UK?)
- An average of 386,000 GB of data have been transferred via dongles and handsets per month.
- Mobile search grew by 120% with 45% of the results being “off-portal”, i.e. outside Orange’s domains.
- Good old SMS still looking good, too: 19% growth with 1.7bn sent every month.
