Category Archives: Industry Commentary

How Apple’s iOS Advantage is Like a Content-Distribution Merger

WWDC 2017 Apple vs Google Penetration statsThere’s a quick Recode note by Tess Townsend pointing out Apple’s huge advantage over Google: they can quickly deploy new features across all of their devices. So, even a mediocre augmented reality feature would catch fire among Apple users well before it could with Google’s Android. (Apple pointed out at WWDC: 86% of iOS users have the current software, iOS 10, while only 7% have Android 7.)

This reminded me of the entire content-distribution “debate” and the mergers we’re seeing lately between the two types of companies. This Google vs. Apple AR metaphor makes it much easier to see why it’s good for content businesses to join distribution pipes (aside from the obvious data and advertising synergies).

Theoretically, Verizon can use its pipes, retail stores and devices to quickly seed new content from HuffPo, TechCrunch and content arms of AOL/Yahoo. And a new combined AT&T + Warner could launch new shows and franchises the same way. They don’t have to wait for the right cable channel to say yes or for the right network slot to open up. Then, once the show or brand or character or channel has earned a following or gained momentum, they can force their competitors to carry it or license it. Just like Apple can quickly deploy new features, a content + distribution co can quickly deploy new IP. So, whether it’s an AR revolution or the next Game of Thrones, those that own distribution are still in the driver’s seat.

Work at a Digital Media Company? Here’s How Much It’s Worth

We’re in a huge boom of VC-backed media start-ups with tons of investment in digital media brands that are growing because of the obvious shift of consumer attention from print and radio to mobile and internet. And if you work at one of these, you might be wondering how much your equity is worth or when/what the co’s exit prospects are.

There’s a pretty neat article on Medium called The Art and Science of Online Media Exit Valuations. It’s a simple 101 about how media companies are being valued these days based on interviews with real media investors and detailed research on these types of companies.

If you’re just looking for the so-called “multiple valuation” punchline, here it is:

Digital media companies tend to sell for between 2.5 and 5 times (2.5–5x) revenues from the previous, or “trailing,” 12 months.

Also:

Most digital media companies sell for about 8–12x EBITDA.

I find it interesting how investors prioritize different types of revenue. Digital media is generally very TBD in the business model department and part of the excitement to me is how much experimentation we see in this space: loyalty programs, tip jars, paywalls, merch, licensing… but according to Dorian Benkoil and Rafat Ali’s research, four areas add big value. These could kind of be used as a playbook for CEOs and strategists trying to bump their valuations:

  1. Subscriptions services — because these are much more predictable than advertising
  2. Paid research
  3. IRL events/conferences/parties, and…
  4. Databases of user info (very lacking for co’s in the distributed media world)

YouTube TV — UGC and Vlogging Next to Premium Television

Bloomberg has an awesome breakdown of YouTube’s really cool announcement today. They’re launching their own “skinny bundle” of network and cable traditional TV access which will fuse with a high-tech cloud DVR and their own recommendations for YouTube videos.

A conversation will commence online about the viability of these low-priced “skinny bundles” and I tend to think they’re not a great model and won’t last. I don’t think Google thinks they’ll last either — I think their intention is to blur the lines between content on YT and TV. Because that’s the battle they’ve been fighting for years… Google is dominating digital ad spend but barely chipping away at television ad spend.

If they can change media buyer perceptions — prove that their content is just as premium as TV — then maybe they can get some of that dough. I don’t think it’s nearly that easy. Literally, this is the example, cited in the Bloomberg piece:

A query for cooking shows, for example, might turn up recommendations for Hell’s Kitchen, the TV staple from Fox, alongside Epic Meal Time, a web-only show produced by Studio71 GmbH.

Now THERE’S a stretch: Competition reality fans seamlessly transitioning into a handheld brofest about binge-eating. Is surfacing vloggers next to This Is Us going to accelerate cord cutting? Or shift ad spend from TV to digital? There’s no way.

This is a really cool service and it’s extremely thoughtfully designed. I’m thrilled to use it. But the idea that just putting these two types of content next to each other will somehow “merge” them in the eyes of audiences and advertisers is flawed. Until YouTube makes content like Empire, it’s not going to command revenue or ratings like Empire.

YouTube Bets It Can Convince Cordcutters to Pay for TV via Bloomberg

Annoying, Unskippable Ads Get a Really Bad Rap — And Might Be Better for Us


Jason Hirshhorn piqued my interest quickly (maybe accidentally?) in the mix of his rantnrave on Redef today [bolding from me]:

All advertising is content, some more enjoyable than others. Sometimes the less enjoyable ads sell product better, using less of a viewer’s time.

That’s a great trade off for a viewer! The advertiser gets to sell HARD in exchange for not much of your time. I’d take that any day.

And yet, most advertising “quality scores” (a fundamental component of bidding algorithms aka getting a low CPM) would penalize an ad for local-car-dealership-style of hammering jingles, prices, locations and calls to action. And skippable ads obviously disincentivize consumers from watching brisk but sales-ey ads… they get annoyed and hit skip. It’s all in the name of “the user.”

I’m afraid that the ad networks, ad tech and technologists are favoring more insidious, “engaging” branded-content type ad creative because it supposedly puts the user first. We know that branded content is sometimes just manipulative… hiding the fact that it’s advertising in favor of engagement. So we need to be open to unskippable, “less enjoyable” ads and heavy calls to action — because sometimes they can be annoying, but they use less of our attention… and attention is way more valuable to the user and the platform.

The Most Important Thing About Creating Content Or: The Secret to Great Content Strategy

Have you ever watched a show and thought this show is perfect for me? Maybe a movie?

Screenshot of Matthew McConaughey in True Detective observing the opening crime sceneThe last time this happened to me was True Detective on HBO. It had a cast I love, a plot that intrigued me and cinematography I admired. That seems like a lot of expensive reasons to like a show: world class writing, acting and filmmaking!

People love all sorts of content. What do they all have in common? Some of my colleagues would say story, many would say character. But then how would you explain that some people hate a certain book… even though it’s a great story? How would you explain BuzzFeed or ESPN? How would you explain a stand-up comedian? Story and character don’t really explain those things… especially not why people love those things.

That’s because the most important part of creating content people will love is… understanding what people love. It’s the “understanding” part that’s important. It’s understanding them deeply — what they want and need. How they spend their spare time. Their fantasies and fears. In one word, it’s empathy.

Most people don’t think of it this way, but great content that you love is engineered to be that way. It’s not an accident that you like the shows you do. It’s usually not just some guy making something that he alone thinks is perfect for himself — at least not if it’s a show you love.

Great creators get inside your head, take out your thoughts and wants… then give it right back to you.

Kevin Spacey in House of Cards being turned down for Secretary of StateThe process of doing this kind of research and thinking is the essence of what some people call “content strategy.” Here’s a clear and perhaps simplified version I can think of and you may have heard of it before. It’s how House of Cards was allegedly developed. Have you seen that? If you have, you probably liked that it starred Kevin Spacey, thrilled you like a thriller and had a creepy tensions that’s probably hard to describe. Well, none of this was a mistake. Netflix found in its data that:

  • Netflix users like Kevin Spacey
  • Same with their computer-generated genre “political thrillers”
  • It also showed that films by David Fincher are popular — he produced House of Cards and his involvement leaves you with that hard-to-pin-down creepy feeling… you’ll sense this pacing and style in other movies like The Girl with the Dragon Tattoo or The Social Network
  • (Bonus: The DVDs of the original House of Cards mini-series were also popular among Netflix’s by-mail customers)

In fact, Netflix was so certain of their content strategy here that they didn’t ask the producers to do a pilot of it.

This actually makes a ton of sense! What does a pilot really do? It’s engineered to get into a different kind of head: a development executive’s head! A great pilot empathizes with a development exec by introducing the characters and showing them the direction of the show. It’s not really for the audience. You don’t have to sell a show to the viewer in the very first episode if you already know they love Kevin Spacey, David Fincher and political thrillers. You’re reading their mind already. The pilot doesn’t matter — it’s a homerun for that audience.

And a homerun for an audience entertains them. And the key to entertaining them is understanding what they want. And truly understanding someone — truly getting them — that’s empathy. I have a literally religious obsession with that word, empathy. And that’s why I think it’s the most important part of creating content.

Next time you create something, think less about what you like. Consider what people like you like. And you’ll know you’re creating something they’ll love.

Eye Tracking Reveals New YouTube Thumbnail Tricks

Mashable and EyeTrackShop did a study of several social media sites and buried in the data are two eye tracking studies on the YouTube homepage.

There’s little debate that thumbnails are critical to a video’s performance and this study punctuates that (especially in terms of subscribers, who get your videos through their homepage). But the study also reveals a little wisdom about what kinds of thumbnails specifically perform the best in a competitive environment. Here’s what you’ll notice:

  • All of the top thumbnails contained faces and humans. The most effective ones were close-ups.
  • The 3 most effective thumbnails featured women.
  • The most effective thumbnail, by far, featured a close up on a woman and what appears to be a bright red heart.
  • Most of the top 6 thumbnails had a high-contrast background in either black or white. Two of the top 3 thumbnails were actually completely in high-contrast black-and-white. Black-and-white thumbnails aren’t widely used so this is a really interesting discovery.
  • The least effective thumbnails appeared to be pulled from “bootlegged” footage from TV or a movie.
  • Thumbnail effectiveness trumps upload order and probably even title in terms of fixation.
  • It appears that after a user sees a thumbnail, they read the title of the video.

Another interesting note — people are quite likely to fixate on their own profile icon and the adjacent functions there near the top of the page — comments and inbox. So, don’t count those out as effective ways to reach an audience.

YouTube’s Secret New Related Videos Design

YouTube is occasionally showing users a new, re-designed related videos grid. You won’t see it at the end of every video (YT is probably just testing it), so here’s a peek.

I’ve seen lots of eye-tracking studies on video sites and users BURN the frame where the video is, so end cards like this get a really high click-through-rate. This is valuable real estate. Notice that share functions are much more hidden than before. YouTube is trying to encourage users to engage in longer viewing sessions — focusing them on watching another video rather than sharing, replaying or embedding. But sometimes giving users too many choices like this results in a poorer aggregate CTR, so we’ll see where this goes.

YouTube recently acquired Next New Networks and folded them into a “lab” part of the company focused on improving the platform for creators. This new design looks EERILY similar to the end cards that Next New puts at the end of each of their videos. Something tells me they had a part in this…

The main difference is that Next New’s end card is animated; the videos are playing versus the still thumbnails in YouTube’s design. This might up the CTR. But still — given the new redesign, is it worth creating end cards any more?

Update: Looks like this “end-screen” is here to stay. YouTube just announced it.

Could Justin Timberlake Bring Back MySpace?

This is neat — Harvey interviewed me about Justin Timberlake’s new investment in MySpace. The coolest part is that TMZ Live, our daily live web show, is now being syndicated on Sirius XM. So it’s exciting to think that people were listening to my “punditry” in their cars on the way home from work.

Jump in to about minute 32 for my short bit.

A Sports Site Setting the Standard for Scalable News

You may have heard that the EIC of Engadget left a little bit ago… And his new project is a collaboration with SB Nation, a sports news site. Tech to sports… Odd transition, right? It’s because he was so blown away by the technology behind how SB Nation publishes news. SB Nation is completely new to me. They’re worth keeping an eye on.

I really think the blog network has taken over as the gold-standard new media company and they’re mastering it at scale — 300 distinct, niche sports sites and 400 paid staff writers. They also have some really cool ways of updating developing stories on the site. Give it a look-see.

Gossip Assistant

This article was orignially published in the official Revision3 intern blog. I’ll be interning with Revision3 through August 2008.

I have a secret and for a while, I’ve been embarrassed to admit it. My Facebook profile is missing a piece, my Twitter account has yet to comment and at every mention of New York (a city I’ve never even visited before) I have to bite my tongue to avoid divulging this personal bit.

I watch Gossip Girl. And I like it.

I find myself rationalizing this immature fondness much more than my pretentious coffee hobby, my iPhone ownership or even my brief “Toxic” obsession. But in my Gossip Girl rationalizations, a pattern has emerged: I’m convinced that the show is actually good. So, here I am, sharing a testament to its wisdom.

…Read the full story at Intern Row.