Has UK Online Ad Spend Overtaken TV?

 The latest research from the IAB, suggesting that the UK is the first major economy where advertisers are now spending more online than on TV, is certainly an intriguing development, though some interested parties have taken exception to the maths involved. While it says something about the sorry state of our commercial TV sector, the news does offer some hope for the online publishers waiting for the rapid growth in ad revenues that will save them from possible extinction.

Forrester’s latest consumer data – still warm and not yet published - confirms the continued rise in popularity of online content, especially video, across Europe. Good news? Not necessarily, if you are a publisher having to pay for serving all that content, with little yield (as yet) from current models.  Monetizing online video is still a defining problem for publishers.

What are the answers, and how will the market evolve? Is ad-supported the only realistic model for monetizing online video? Are micropayments for video content, as mooted by execs from ITV and Fremantle Media, really an option? And how will Project Canvas change the landscape? Is it all about TV content? And what role should video play on sites from non-broadcasters?

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Music Product Manifesto: The Product Features That Will Save Recorded Music

Forrester has just published the above title reported, the first in our new ‘Media Product Innovation’ series.  Following on from the strategy laid out in ‘Music Release Windows: The Product Innovation That The Music Business Can’t Do Without’ this report proposes some tactical implementations of that strategy.

 

As we’re now 100 years on from the first commercial album release with recorded music sales plummeting, the time has come for a radical overhaul of the recorded music product range. We believe that future music products will need to adopt a platform-agnostic world view that encompasses powerful and social interactivity to empower consumers to create their own unique experiences.

 

It is time to build music products around consumer needs, not business needs

 

That might sound like a truism, but so much of current digital music innovation falls short of this crucially important value.  This is why Forrester proposes a Music Product Manifesto of six basic consumer music rights that digital products should embrace.  These are spelt out in detail in the report, but include principles such as:

 

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Apple's App Store vs Apple Music Store: The Race is On

Apple today announced that 2 billion Apps have been downloaded from its App store in just over a year.  The App store has taken just 5 quarters to hit the same milestone that the music store took 14 quarters to reach (see chart below).

 

Granted we’re not comparing like for like here.  Many (most?) of those App downloads will be free, and the iTunes platform is mature now, whilst it was nascent during the emergence of the music store.  Indeed, the App Store’s success is built upon the prior success of the music store.

 

But even with those caveats aside, it is worth considering that whilst all iPods and iPhones support music store downloads, only 24 percent of all devices sold support Apps (i.e. the iPhone and the Touch).  Put a different way, to date the total number of iTunes tracks per sold supported device is just over 39, whereas the total number of iTunes Apps per sold supported device is 40. 

 

So in just over a year the App store has reached the same maturity of adoption among its addressable device audience as the music store took 6 years to reach.

 

This doesn’t mean that music downloads are dead: at 8.5 billion downloads to date Apple music store is more than 4 times as successful as the App store in absolute terms.  But in the context of potential, momentum and addressable audience adoption, the App Store is setting the pace.

 

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Vodafone 360 is a Major Strategic Play for Handsets & Mobile Internet

By Ian Fogg (bio, recent research or follow me on twitter)

 

Vodafone has just launched a major new initiative called Vodafone 360 (release, with the new 360.com website to follow). Key points:

  • Integration with social networks for an online address book and content sharing.
  • Combination mobile handset + 360.com cloud service strategy.
  • Single sign-on for customers or non-Vodafone customers. 360.com website available to both.
  • Deep handset integration: two new Linux LIMO handsets with "full fat" experience (made by Samsung). Lesser version pre-loaded onto a number of Symbian Series 60 handsets, downloads and other versions available for around 100 handsets.
  • Also includes an App store, new mobile web portal, music service, and maps service.

I'm working on a quicktake report. But this is such a major initiative with wide ranging scope, that I'm extremely curious in what others think? Specifically:

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Palm's Need to Communicate Its Differentiation

Can Media Products Ever Actually Deliver What Consumers Want?

The question may sound excessively controversial, but perhaps less so when worded in another way:

 

Where should the product development balance be struck between consumer wants and business imperatives?

 

All consumer products should meet the needs of the target consumers right?  Well yes and no.  Of course if you fail to meet consumer needs a product will fail.  But at the same time not every consumer demand can be met, certainly not at a price that those same consumers would be willing to pay.  For consumer product managers at consumer electronic companies these will be highly familiar concerns.  But now media companies are finding themselves thrust into a product manager’s crash course. 

 

Throughout the peak years traditional media companies didn’t have to worry too much about product innovation.  They focused on their core competencies of developing great content, and then marketing and programming it.  In the age of the Media Meltdown though those assets alone just aren’t enough.  The fundamentals of many media products need wholesale review (see my previous post for some specific analysis from the music perspective.)  But most media companies will find themselves needing to take a much more proactive role in this process. 

 

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Is Apple Playing a Subtle But Smart Platform Strategy?

I have to admit to being a bit under whelmed by Apple’s announcements today.  I’d been hoping for something a bit grander from a music perspective.  I’ve spoken about the iTunes Album launch and explained my thinking that it falls short of what it could have been.  But on the other hand there is an argument that Apple’s relatively modest tweaking might be part of a bolder strategy: that of establishing iTunes as a platform that explicitly coexists with the big name social platforms, namely YouTube and Facebook.

 

Apple is all of course all about selling devices.  But part of that strategy is building compelling user experiences that establish and reinforce the value of usage scenarios of their portfolio of devices.  This is the context into which to consider approving the Spotify app, enabling posting of iTunes song information into Facebook and Nano captured video into YoutTube.  From that perspective Apple is playing a smart game that builds the social context of their devices as explicit extensions of the value proposition of the iPod an iPhone ranges. 

 

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iTunes Albums: A Decent Start, But Not the End Game

So today Apple announced the long anticipated new ‘music format’ codenamed 'Cocktail', productized as ‘iTunes Albums’.  There are some nice features (photos, exclusive videos, lyrics, customized artwork) that deliver a good user experience.  It’s a quantum leap from the standard album download.  But is it enough?  I think it is a useful transitory step, but not the end game.  I’d go as far to say I think it it pulls its punches.  The bottom line is that music buyers are rapidly falling out of love with buying the album. Downloads from stores such as Apple’s iTunes are predominately single tracks, as are P2P downloads.  Little wonder when you consider the fact that the first commercial album release made its way onto the shelves almost exactly 100 years ago in April 1909.  Since then it hasn’t changed in any meaningful sense.  Sure the actual mediahas changed, as has the number of tracks, but it remains essentially a bunch of linearly programmed tracks. 

 

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Forrester's Estimates of the Number of UK File Sharers: A Clarification

The BBC recently aired a story that focused on some Forrester statistics regarding the number of people in the UK engaged in illegal file sharing. I’d like to provide more context in order to clarify any confusion about how we arrived at our estimate that the number of illegal file sharers in the UK is 6.7 million.

 

There are two parts to this issue, so let me take them individually:

 

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Music Release Windows: The Product Innovation That The Music Business Can’t Do Without

Forrester has just published a report which lays out a radical vision of the future of music products.  In the report we suggest that a comprehensive programme a product innovation is necessary to save the music industry from the current Media Meltdown it finds itself in.  The CD is dying, the 99 cent download model clearly isn’t enough (nor is live), and ad supported and subsidized models all have much distance to go. 

 

The immense challenge is to persuade consumers that music is worth paying for again.  The scarcity that music value was built upon was disappeared with the rise of Napster.  Content scarcity can never be truly regained so value must be reestablished with the scarcity of convenient, compelling services operating within three broad music release windows.  These release windows will stagger content releases, with premium services getting releases first and ad supported services last (see chart below). 

 

Windows

 

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