— Marketing (&) Mischief

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Disruption

The revenue model for content publishers (in this case with publishers I refer to newspapers and news outlets) is based on subscriptions and advertising and since the dawn of the World Wide Web publishers have trusted the web to drive both: Advertising revenue through banners and also more subscribers to their traditional business – printing content on paper.

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This is no longer the case. The web, and to some degree the publishers themselves, have taught us that content is free. With tablets and smartphones taking the world by storm even the common man doesn’t settle for reading yesterdays news on paper while downing their bacon and eggs. We need our news as they happen. We are also no longer content on relying on just one or two sources for our news. The (mobile) web has drastically increased the number of news sources we follow on a daily basis.

With this fundamental shift in human behaviour it’s harder and harder to build a loyal reader base and publishers are facing their ultimate nightmare: Declining ad revenues AND subscribers. We’ve already seen a number of high-profile formerly thought of as untouchable publishing houses close their doors.

So what can a publisher do?

As this change has become apparent and unavoidable publishers have started to figure out new ways of saving their business. Unfortunately the silver bullet is still to be found. The pay gate works for only the strongest brands and for some highly targeted niche players. No matter the format display ads are getting fewer and fewer clicks. Video ads have yet to fulfill their promise. Blogs and social media are stealing visitors. Google has taught advertisers that it’s all about keywords – not quality content (though with Google’s Hummingbird update this is changing back to underlining the importance of great content).

Luckily one fundamental thing hasn’t changed: We all love great content that is relevant to our lives and interests. With new technologies and gadgets we are consuming more content than ever before. So the market is there. But how to build a viable business model when everything is expected to be free?

Look at those who have gone before you

The music and film industries have been battling the same dilemma as publishing is facing now. With file sharing and torrents music, films and tv-shows are virtually free to download and consume for everyone. We want everything and we want it now. For free.

According to Jonathan Fosters, the head of Spotify Europe, the only way to fight this and teach us to pay for music is “to make finding and consuming music legally easier and more fun than pirating”. With Spotify and Netflix seeing global success with their content aggregator / subscription model that fights piracy with convenience it’s not a big leap to predict that the same model would work for publishing.

Learn, listen and adapt

Publishers have complained loudly about how Flipboard and other content aggregators leech off their content to build a business. That might be true if you think of publishing via the traditional publishing business model but as we’ve now established the world and our behaviour has changed and so must the business thinking applied to it change as well.

Instead of fighting content aggregators and the change in user behaviour publishers should accept the change (that they in part hand a hand in crafting) and work closely with Flipboard and the likes to test and build new business models based on the understanding that we want easy and convenient access to multiple sources of great content with a set price that’s closer to micro payments than magazine subscriptions. I for one would be more than happy to pay a monthly fee for Flipboard.

With the old model clearly not working it’s definitely at least worth a shot. Then again you can also just resist ’til the bitter end and see where that gets you.

All I can say is that if your content is not on Flipboard it’s highly unlikely I’ll ever read it.

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Andrew Keen @ CNN wrote a great article on social media bans at work. I wholeheartedly  agree with Vivek Wadhwa (@wadhwa) who was quoted in the article: “banning social media at work is brain dead”.

Here’s my 3 simple reasons for why you (yes you Mr/Mrs Manager/CEO) should stop being a stubborn relics and just embrace the change social media represents for your company culture.

1. You can’t stop it.

By imposing strict rules on “not wasting time on Facebook” you just show how out of touch you are and strengthen the disconnect between management and your workforce.

And no matter what you do – in the end they’ll always find a way. You haven’t hired a bunch of idiots now have you? And even if you have any modern idiot knows how to jump off the corporate WiFi and use 3G on their phones to catch up on all the essential #some gossip.

2. Transparency is the new black

NDA’s and secrecy are as important as ever when it comes to business critical information but at the same time it’s critical for businesses to step down from the ivory tower and start speaking with their audience instead of “communicating” using fabricated semi-truths (ie. traditional marketing).

Believe it or not your staff plays a key role in this.

3. Get them to work for you

Instead of fighting the change and outsourcing your social media activities to agencies you should embrace your work force’s interest and turn it in to one of your biggest assets. Educate them, guide them, empower them and unleash them.

I guarantee that in no time you’ll be encouraging your staff to spend more time on Facebook, Twitter, Pinterest, Instagram, Vine and Google+ – talking about your company / brand / product. Amidst the occasional #cutecatvideo new school watercooler moment of course.

Go ahead. Click it. Take a break. We all need to once in a while :)

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EA just openly stated that making movie tie-in games is bad business. They list a few reasons:

1. The IP owners take too big a cut from the profits.

2. That leads to a smaller budget = worse game.

3. Timelines are also usually too tight = bad game.

= No sales. No point in making movie-based games.

To me it just seems weird that they are giving up instead of taking a step back and re-inventing the whole model. After all no one can deny that movies loved by millions do make a great base for a game.

I think it’s just how you approach the whole thing.

The classic model (that fails according to EA) is to take a movie and try to repeat the storyline and the experience in a game. To me that is mistake #1. I believe that what moviegoers want is to experience more – not the same. I’ve seen the movie – now give me a new adventure in that same “universe” that I’ve fallen in love with. Let me explore that world and make it my own.

There are a few great examples in which this different approach has been applied and it has worked. Remember the excellent Chronicles of Riddick -games that explored subplots in the movie and actually explained the past of the main character. Unfortunately these examples are too few and too far between. Instead the EA’s of the world churn out mediocre game-fluff like the pathetic Harry Potter games. I mean that is just sad. How can you not make a great game based on the Potter Universe?? I would give my left arm for a Harry Potter sandbox/RPG-game. Think GTA + Red Dead Redemption + Mass Effect in the world of the world’s favorite wizard. And no – I don’t even necessarily need to play as Harry. I just want more adventures in his world.

I’m not saying EA and the gaming industry are solely to blame for this. It’s apparent that the studios and IP owners don’t understand gaming and the opportunity games represent as a platform to elevate their IP’s to a new level in the minds of the fans. I’m sure more often than not the bad decisions come from the Studios. They see games as a part of marketing and capitalizing on the movie and not as a longer term investment into engaging with their audience and in the best case building a new revenue model that might even surpass the profits made from one or two movies.

To his credit (even though I’ll never forgive him for ruining the prequels with Jar Jar and…well the list is tooo long) George Lucas and LucasArts have applied this model for a while now. They have not always succeeded but they have also produced some classic games…X-Wing anyone? And obviously the fantastic Knights of the Old Republic -games. At least they get it and want to use this amazing new medium to offer their fans new experiences in a their beloved galaxy far far away.

So I would not give up on the movie games Mr. Gibeau. Just take the advice of a very very old and wise green man: “Unlearn what you have learned”. And then start again.

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Now that Apple #failed to launch anything remarkable on Nov 16th (oh come on…The Beatles?) it felt like a good time to write something more about the guys that truly are doing something to revolutionize the way we consume music. My old friend and favorite music service of them all - Spotify.

I know they’ve been around for seems like ages in Internet Time and that they have not really released anything spectacular since the mobile apps and the Facebook integration but what they are doing (at least if you take their, or better yet Jonathan’s, word for it) is showing the music industry that there actually is money to be made using their freemium model. Not just for Spotify and the labels but also for the artists.

In case you don’t pay attention to music industry news there has been a “bit” of a backlash from the artists towards Spotify. When they first launched pretty much everyone screamed to get on board (both users and artists) but when the first royalties were paid quite a few artists (Lady Gaga being the most famous globally, Mokoma here in Finland) were shocked to find out that even if their songs had been played hundreds of thousands or millions of times on the new service their share of the revenue was in the tens or hundreds of euros (or dollars in Gaga’s case). Not good. Not good at all.

So what’s the beef? Why am I writing this? Read on, dear friends…

Jonathan from Spotify (LOL) shared some of their latest data at the Musiikki & Media festival/event in Tampere, Finland a few weeks back. Among the not so surprising curves of exponential growth there were some facts & figures that caught my interest and hopefully the interest of a lot of the doubters as well.

Consider this, naysayers:

1. Growing pains the reason for the ridiculously small royalties

Spotify is giving 70% of their revenues back to labels and artists. During the first 6months / year (the time period from which the first royalties were paid) they had 1 million users. Now they have 10 million users and have credited more that 30 million euros back to the labels and artists. They also are the most important source of digital sales revenue for most major labels in Sweden – the country where they are from and were they have the most users.

I also had the chance to chat with Kimmo Laiho (or Elastinen) from the Finnish label Rähinä Records. He supported Jonathan’s figures by stating that their artists are actually seeing real, substantial revenue from Spotify plays already now.

Sounds better, right?

2. 6% of the listening on Spotify is TOP50 and 94% is catalogue

This means Spotify is being used MAINLY to find new music. It’s a discovery engine geared for mining the long tail. Should be good for anyone making music. Well maybe not Metallica. But honestly – why should they care anymore in their private jets. Stop whining.

3. Fighting piracy. And having a real impact.

Spotify users have pretty much totally stopped pirating music (according to 3rd party research). This has to be good for anyone in the music biz. No denying that. They’ve actually done more than any government or other anti-piracy scheme. Give the people an easier and simpler way to get what they want and they’ll go for it. And in the process slowly try and teach people that they should actually start paying for their music again. It’s a tricky job but Spotify is already doing it. Respect.

4. Helping artists understand their audience and make more money

One of the most interesting things Jonathan revealed was the statistics interface that Spotify will be opening more to the artists in the future. Basically Spotify knows where and who your listeners are and when they listen to you. That information is invaluable in a world where artists have to turn to other means of revenue than album sales for their livelihood. Just as an example imagine how that data can impact gig sales…

5. The Freemium Model works

Spotify has seen that the longer you use the service as “free” or ad-paid the more likely you will be hooked and will convert to a Premium paying member. Again: Teaching people to pay for music. This is good for the labels and artists and also an interesting bit of data for anyone who is building a cloud-based service and is wondering what revenue model to go for.

So…the beef? Or my beef at least :)

My point with all this (being the unrelenting optimist I am) is to try and convince the doubters within the music industry that we have NO CHOICE but to embrace the likes of Spotify as the way of the new wild wild west – their model IS our best shot at fighting piracy and making money off of the music we so love. Only then can we free ourselves to focus on finding new revenue streams that will make it possible for artists to make music that their fans don’t realize they have to pay for (Ironic isn’t it).

So stop whining and fighting a battle you can not win. Embrace the change and follow Spotify’s lead by focusing your energy on something that will make a real difference.

p.s. Check out Jonathan’s presentation below for more details!

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Fact #1:
Social media has radically changed and continues to change the way people behave and consume.

Fact #2:
This fundamentally changes not just how companies approach marketing but how they need to restructure their organization and operate to be relevant in this “Facebook Era”.

The Big Question:
How can you drive and accelerate that change?

My answer:
Find your Life Hackers.

Who, what?

Life Hackers are the passionate open minded individuals hiding in various parts of your organization that are always questioning the norm and trying to do things differently. They are the ones who just won’t do things the way things have always been done. They optimistically embrace new technology and apply those advances to make their work more productive, efficient and god forbid a lot more fun.

To enable true change you have to go out and identify these people. You have to listen to them and take that scary leap of fate by trusting them and giving them the power and means to be the agents of change in your organization even if all your senses are screaming against it.

And if you are really brave bring them together for added effect and enjoy the ride.

P.s. Really looking forward to Charlene Li’s new book Open Leadership that should touch on this thought as well. Recommended!

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Imagine you live in a village sometime in the end of the 19th century.

You buy your bread from the village baker every day. You know it to be good, tasty and healthy and you know he won’t overcharge you for it. Why? Because you are close to him. You know him. His reputation in the community is linked to the quality of his bread. And if he would try to make a better profit by cutting back on the quality of his ingredients and raising his prizes while still claiming that his bread is “the best in the village” the community would call his bluff immediately and he would be out of business (and out of friends).

Enter the age of mass production and mass communications. Suddenly the baker can make more bread and sell it to more people than ever before. He also realizes It’s no longer his reputation that is on the line. It’s the brand, the company that gives the promise of good quality bread to it’s customers. Not him.

The baker also realizes that in is new global village the people can’t share experiences as they did in that small village where everyone knew each other. Instead what he says in his advertisements passes for the truth.

This is when greed (some also call it human nature) takes over and the baker cuts back on the quality of his ingredients in the hope of better profit.

And so it goes that it works (really well actually) and the baker makes it big with the help of his friend mass media and an industry of creatives and artists helping him craft his new truth. This goes on for quite a while and they get really good at it. They get so good at it that everyone actually forgets what it was like to live in that little village.

But then…along comes a thing called the Internet.

At first the baker and his friends try their best to ignore it. Then they try to use it as just another means for distributing their truth. And while the baker and his merry men are busy trying to exploit the Internet the villagers start using it to connect and share the real truth about the bakers bread….just like they did back in the day.

And before the baker can say “oh shit guys, I think we’re f**ked” the village is back. And it’s back with a vengeance.

So what is the lesson of my story, you ask?

For the bakers:
It’s time to focus all your energy to listening to your villagers, being a part of your community and baking the best bread possible. You can’t fake it anymore, sorry.

For the villagers:
Make you voice heard. You have the tools and the right to do it. Don’t settle for ok.

For the bakers merry men:
Figure out how you can help your baker embrace the Village Values. Help him listen, react, learn and develop his bread. And then help him get the real truth out.

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This almost brings a tear to my eye :)

Check out this really nice recap presentation of the thinking that has been happening in and around the Nokia Digital Marketing team during the past few years. I’ve been fortunate enough to work closely with this brilliant group of thinkers and advocates of change and I gotta say I miss those days. Not to say that this is the end of the collaboration – maybe more an end of an era.

Anyhow…check it out and let me know what you think!

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The Finnish Government (or to be precise the Prime Minister’s Office) just hopped on the crowdsourcing bandwagon with their ideoikasvua.fi -site that aims to crowdsource ideas for sustainable economic growth. Cool, right? Wrong. Unfortunately.

Ideoikasvua.fi - Government crowdsourcing

It’s a nice step to the right direction I’ll give them that but why won’t you go all the way and do it right? Why have a two month submission window with a very strict step-by-step Q&A structure that will put most people off at the start? And if you want to start a dialogue like you claim why force visitors to submit their answers to your questions before letting them view the thoughts other people have submitted?

While you are at it why not create something more open and inviting that would get us non-academics hyped and excited as well about helping our dear country take the next step beyond Nokia-land? An environment that would facilitate an ongoing open and inspiring dialogue between the people running the country and the folks down in the trenches. From now ’til we reach that great new future and beyond.

Don’t get me wrong. I’m not saying this is not a great step to the right direction. I just hate it when the opportunity for something ground-braking is wasted because of the paralyzing fear that dramatic change inflicts in people. The fear of leaving your comfort zone and just boldly going where no man has been before.

Bottom line: They are looking for game changing ideas but are afraid to lead the way. I just feel sad for all the crazy interesting ideas we could have shared that will now never see the light of day.

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A friend of mine (props to Misko Iho) created a small Christmas miracle during his surfing trip to Africa. By using just Facebook, email and SMS’s he rallied his friends (and their friends) to donate a small amount each to help get backbags, pens, rulers and other basic school equipment for the kids of the local school. Result: 8384 items packed into 470 backpacks ready for school = 470 lives changed.

What Misko and his friends did got me thinking. Why aren’t the big charities more active in social media?

I’ve worked with some of the biggest charity organizations on the planet. We’ve talked about social media and it’s impact on what they do and tried to figure out ways for them to embrace this clearly potent new way of sharing information more efficiently and also recruiting more people to their “cause”.

The interesting thing is that they do see the obvious potential but are for some reason unable to embrace it.

Let’s take Unicef for example. They are the biggest and the most powerful. They do a lot of good BUT admit that they are having trouble convincing their beneficiaries that their money is indeed used in the most efficient and beneficial way all around the globe.

How to do this then when armed with Social Media? Should be pretty self-evident: Let your audience choose where their money is spent and show the concrete results of the work (like Misko did by posting pictures on Facebook) = Give them a social object that they can share with their friends (“this is the village I’m supporting”) and the tools to share the message easily all throughout the web.

Simple, eh? Not for Unicef.

Their argument is that they need to be able to direct the flow of support / funds themselves as they know best where the help is needed. I see the point but I’d argue it will also be a fundamental issue for them in the future if they indeed want to engage a broader more internet-savvy audience that is used to being actively involved and is not content by buying the Unicef desk calendar for Xmas.

The change needed will not be easy as it means rethinking some of the fundamentals of how the big charities work but it is inevitable as people want more control and will therefore flock to smaller grass-roots charities that operate more transparently, are more agile and thrive on user involvement.

They will flock to look for alternatives in the Long Tail of Charity. That’s where I found Misko’s project. And I have yet to buy a Unicef desk calendar.

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Reading Scott Berkun’s post on Calling bullshit on Social Media made me think more about my concept of Social Media Ethos. In my original post I was only applying it to brands and companies but after reading Scott’s post I think it actually should apply to everyone who is in some way involved in Social Media. From agencies and experts to us individuals.

So we all should follow the principles of Social Media Ethos
(first crack – send me your thoughts!)

  • Be unselfish: “Give love to get love”.
  • Be transparent, open and honest.
  • Don’t pretend you know best. You don’t and people will call your bluff.
  • Respect others: Listen instead of just talking.
  • Admit when you are wrong, apologize and make up for your mistakes.
  • Follow the Golden Rule (Like Scott said: This one might be impossible as history has shown but let’s at least give it a try)
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