Speaking at the GigaOM RoadMap conference this week, Pandora CTO Tom Conrad suggested that more than half of Americans do not pay for music each year, while 40 percent only pay about $15 annually.
“Conrad revealed that his company aims to monetize the vast majority of listeners who pay little or nothing per year for music,” reports TechCrunch.
“While there are opportunities to build businesses on the 10 percent who are willing to pay more, Pandora plans to focus on monetizing the majority via advertisements. Other music companies might be wise to target the non-paying segment as well.”
Pandora is working to expand across multiple areas, including “in the home, the television, the living room, the bedroom, even embedded above the ice maker on your refrigerator,” and in your car.
Conrad doesn’t feel threatened by Spotify’s success. “I see Spotify as largely complementary to what Pandora does,” he said. “Spotify’s CEO Daniel Ek says he thinks Spotify is the future of the record store, and that Pandora is the future of radio.”
American consumers cumulatively watched about 2.5 billion minutes of online ads in August, according to a new report released by comScore.
The report indicates that 86 percent of U.S. Internet users watched at least some online video content last month, and more than half of that content was accessed via YouTube.
Also worth noting: Facebook, already the largest photo site on the Web, was the third largest video site in terms of unique viewers.
The rankings “find Facebook retaining third position in August, with 51.6 million unique viewers, trailing VEVO in second (with 62 million) and Google Sites (i.e. YouTube) at 162 million,” reports TechCrunch.
According to comScore, video ads accounted for 13.4 percent of all videos viewed — and Hulu generated the highest number of video ad impressions (996 million in August alone), compelling figures for advertisers when you take into account that Hulu does not allow you to skip over videos.
Ooyala Social, a new HD-quality Social TV platform (and additional entry point for Ooyala Everywhere) allows Facebook users to “share video with their friends and family, live chat while viewing, discover new content and watch video across multiple screens and devices,” according to the company’s press release.
It supports several business models including rentals, subscriptions, purchases and advertising.
Discovering new shows is based on user’s social circles. Viewers can share videos they “like” with their friends, or “loan” a show for later viewing.
Users can watch from tablets, mobile devices and connected TVs. They can purchase, rent, or subscribe to content by using Facebook Credits, PayPal, a credit card or a mobile phone number.
“Broadcasters, distributors and Hollywood studios can capitalize on the Social TV trend by using Ooyala Social to make premium on-demand and live video widely and easily available on Facebook,” suggests the press release. “The solution offers built-in social features and other tools that enable media companies to grow audiences, boost viewer engagement and realize new revenue streams.”
Facebook’s revenues have doubled the first half of 2011 to $1.6 billion, putting the social network on course to possibly earn $4 billion this year.
“It’s simply too late for anyone, perhaps even Google, to create a social network that can compete with Facebook,” writes Robert Hof in a related story.
Reuters suggests this news underscores the social networker’s appeal to advertisers. “We really see Facebook as becoming like the operating system for delivering ads on the Internet,” said Dave Williams, CEO of Blinq Media.
Williams added that Facebook’s “like” feature, that now helps endorse products and companies, provides valuable data that other online services can’t match.
“Companies like Yahoo are relying on third party user behavioral data based on things like cookies. On Facebook that’s data that users have revealed about themselves,” he said.
“The price that companies pay for every consumer that clicks on a Facebook ad increased 62 percent between the fourth quarter of 2010 and the second quarter of 2011, according to Efficient Frontier, another firm that helps companies deliver ad campaigns on Facebook,” reports Reuters.
Yahoo and other content aggregators are finding that the more content they have, the less value it has. Ad rates for Yahoo and AOL have plummeted. Meanwhile, services that find interesting content like Google are doing exceeding well.
Moreover, advertisers have a wider range of competitors to reach their target markets. And they are increasingly working with advertising exchanges that buy ad space inexpensively across multiple properties.
Even smaller publishers like Salon and Slate are not consistently profitable.
“It’s a simple rule of any market,” reports The Wall Street Journal. “The more information that is created, the more the value is reduced. And despite attempts to woo spending with bigger, bolder and more targeted ads, services that help consumers navigate that content, namely search, remain the big money makers online.”
“Most people make money pointing to content, not creating, curating or collecting content,” suggests Rishad Tobaccowala, chief strategy and innovation officer at Vivaki, the digital-media unit of Publicis Groupe SA.
In a case that indicates the U.S. government will hold websites liable for any illegal advertisements shown on their pages, Google settled its case over illegal online pharmacy ads by paying a $500 million fine.
The investigation (first revealed in May) led to this week’s settlement that has reportedly decreased Google’s quarterly profits by 22 percent.
“The Department of Justice will continue to hold accountable companies who in their bid for profits violate federal law and put at risk the health and safety of American consumers,” said Deputy Attorney General James M. Cole. “This settlement ensures that Google will reform its improper advertising practices with regard to these pharmacies while paying one of the largest financial forfeiture penalties in history.”
“Obviously, such a decision has far-reaching consequences beyond those of just the illegal pharmacies, as Google faces threats from a number of illegal and malicious entities who want to leverage its search engine to expose unsuspecting users to their ads,” reports TechCrunch. “Traditionally, Google itself has filed lawsuits against advertisers it suspected of breaking its rules, but this has clearly not been enough of a deterrent.”
Online ad metrics are typically confusing to most advertisers, including those who pursue Facebook and other online ad platforms.
Nielsen is attempting to provide a solution to this problem by combining traditional TV data and anonymous online data.
According to Nielsen: “The new system will use an innovative, patent-pending process combining traditional Nielsen TV and online panel data with aggregated, anonymous demographic information from participating online data contributors. Using its unique approach, Nielsen will be able to provide reach, frequency and Gross Rating Point (GRP) measures for online advertising campaigns of nearly any size.”
The Nielsen Online Campaign Ratings service is currently in its testing phase with 80 brands. A public launch is expected by August 15.
Early partner Facebook is also working with comScore on a tool based on GRPs designed to assist advertisers. Facebook hopes both efforts will help make its ad platform more “approachable” to media buyers.
Tom Anderson, former founder and president of MySpace, details the key advantages Google+ has over Facebook in a recent guest post on TechCrunch.
Anderson suggests Google+ can attract game developers by taking a smaller cut, and may not need any advertising at all. “Google has plenty to gain without ever showing an ad and, put simply, Google doesn’t need the money,” writes Anderson. “Facebook’s got to know this, and it’s got to have them just a little bit concerned.”
Facebook is testing out a “real-time” feed, as opposed to its current default “Top News” algorithm (which Anderson has criticized). Facebook is having to deal with complaints from advertisers and app developers. “It seems that the ‘Top News’ stream is killing the virality of advertisers ‘content’ and of apps that are trying to find new users,” he adds.
Anderson addresses Google’s decision to block business accounts and suggests both companies have some challenging decisions to make: “How do they balance what’s best for the regular guy (you & me), advertisers (big brands), small local businesses (who can never afford the big spend), platform developers with non-competing services (games & music, which it appears FB won’t get into) and platform developers with potentially competitive services (like business networking and dating, which FB/G+ may want to get into themselves someday).”
“Over the long haul (5-10 years), the company that makes the right choices in these areas may just end up winning,” he concludes.
Jell-O has unveiled a Twitter-powered billboard on the corner of West Broadway and Grand in New York City, enabling consumers to serve as active participants in the company’s advertising.
The billboard features an enormous distorted face that appears happy or sad depending on the number of positive or negative emoticons posted via Twitter.
It is essentially an outdoor physical version of Jell-O’s Pudding Face website, and is paired with a campaign that distributes coupons to cheer up random downcast Twitter users “whenever overall smileyness dips below 50 percent.”
The billboard, from ad agency Crispin Porter + Bogusky, went up last week.
Brian Barrett of Gizmodo provides a compelling and timely opinion piece that addresses various issues related to the current and future cost structure of online media (“The Biggest Lie the Internet Ever Told: Free Everything, All the Time”).
Barrett’s post reminds us that the Internet is still in its infancy — and online media is still essentially in beta, and as it continues to grow we should accept that not all content can remain available for free.
We’ve seen an interesting collection of revenue and advertising models in recent years that were designed to keep up with online media distribution and related technological advances (all of which are really still in beta form) — as well as a steadily climbing level of consumer demand.
Barrett points out that in order to move forward we may need to recognize the need for paid subscriptions and get past the philosophy that everything on the Internet is meant to be free.
He cites recent examples of online media approaches that have drawn criticism (“each one a flaming arrow launched straight at the heart of free”), such as Hulu Plus, the New York Times paywall, the TIME magazine paywall, and Fox’s recent decision to delay new episodes from streaming.
Most media and entertainment company senior execs believe they are not fully leveraging customer data that would make it possible to deliver customized content, suggests a new study by consulting firm Accenture.
The research indicates that 91 percent of these executives are not taking full advantage of the data, and as a result, are not adequately prepared to identify revenue opportunities related to current and future digital technologies. Additionally, 95 percent do not have strong digital customer relationship management capabilities.
If fewer than 10 percent of the companies have a fully integrated view of their digital consumers, a new operating model may be necessary for sustainable digital growth (Accenture recommends a shift from legacy vertical, channel-oriented structures toward a horizontally-layered operating model).
Only 55 percent said their companies had a clearly defined social networking strategy in place, while 80 percent believe the industry is still in a state of flux. And 42 percent anticipate that advertising will serve as their main source of revenue in the next two years.
Accenture’s “Global Media & Entertainment High Performance Study” canvassed 130 executives across Europe, North America, South America and Asia Pacific from industries including television, gaming, film, music, publishing, portals and advertising.
News Corp. is in the process of selling once-popular social networking site MySpace to Specific Media, an Irvine-based ad network.
The cash and stock deal is reportedly valued at $35 million — a mere 6 percent of the $580 million News Corp. paid for the site in 2005 (although News Corp. claims it made back its investment earlier from a Google ad deal).
The one-time leading social networking destination, MySpace was decimated by the global popularity of Facebook.
Specific Media is expected to return MySpace to its music roots as a location to discover new bands and songs.
The sale comes in the same week that Google announces its own new networking service, designed to directly challenge Facebook for dominance in the space.
Facebook is presently valued at more than $70 billion.
Microsoft’s ad division has created a research partnership with Nielsen dubbed the Television Online Effect program.
The project’s primary goal is to better learn how consumers are influenced by TV and the Web in terms of engagement with marketing messages.
The research, which begins in August, will use Nielsen’s TV/Internet Fusion panel and customized research Microsoft will develop.
The pilot will initially launch with entertainment advertisers, but will most likely expand in the future.
“If advertisers are looking to capture food enthusiasts for the launch of a new cooking show or networks are looking to drive Moms to primetime programming, they can leverage our exciting new service,” commented Microsoft’s Joslyn Moore in a blog post.