Here at The Guardian Changing Media conference in London, wondering whether I am going to pay £15 for the day’s wifi access. It’s astonishingly tight of The Guardian and its sponsors – MSN and Windows Live – not to put on free wifi. There are also no power outlets, which is going to be really annoying later in the day as my laptop starts to fade. By turning the screen brightness right down I’ve got my battery life to a little under six hours, but I’d much rather just have a power outlet to plug into instead.
So, Carolyn McCall, CEO of Guardian Newspapers Ltd, is now giving the introduction, but I’m not really listening because I’m still cross about the stingy lack of wifi. Apparently, if the blank pages left at the back of the programme are anything to go by, these old media types are still stuck in the dark ages of pencil and paper.
Chris Dobson, MSN
Now it’s Chris Dobson from MSN with a word from your sponsors. He wants to talk to us about how MSN views consumers, and how MS is changing to adjust to this brave new world. He also mentions ‘we in the media industry’. Hm. I never really think of MS or MSN as media. Do I hear the sound of a ‘content is king’ dot.com bubble building again, let’s face it. Content really wasn’t king five years ago, and it isn’t now… but I digress.
Dobson is saying that the consumer is in control, particularly with TV. He mentions PVRs (personal video recorders) such as Sky+ or TiVo, which is >10% penetration in the US, and likely to reach 50% in the next four years. But the problem is that people are skipping ads.
This puts the wind right up the whole media industry. (And yes, here I am paraphrasing.) 52% of people watch less than 10% of the ads on TV.
Another big change is multitasking. A wired home’s online searches peaks for certain keywords after ads are run, so consumers are using the internet as the interactive part of TV. Multitasking is normal behaviour. Ability to do multiple tasks is a profound difference.
Whilst TV is changing, print is in trouble. The overall share of media $ for print is on a steady decline. Younger ends of the audience aren’t engaging with print in the way that older ones. But content is very important and valuable, and can be published in a different way.
Rupert Murdoch had an epiphany moment in April 05. “…atfer the dtocom bubble burst…”
Thought it was sobering to see real effects on real people’s lives from this media revolution. New York Times is an iconic brand, but last Sept they let 500 people go because of the internet. This is a profound change which is affecting our business and the people who work in it more than we admit. We are in denial, but if you’re one of the 500 you’ll realise that it’s real.
This whole rise of content produced by consumers, e.g. MSN Spaces which allow people to publish their own content. Never been marketed, been launched for a year, but over 30 million people worldwide have signed up. that’s the power of viral, not to be underestimated. We know that Google the power of peer-to-peer that viral is important – Google is a household name but they’ve never spent a dime on advertising.
10% of MSN Spaces users are in the UK.
Regards TV, peak time is not what you think it is. On TV, it’s still evening, but online there’s a new peak time in the afternoon.
Is this the end of mass media? “% day after TV recall” for the US is down to 9% in 2000, from 34% in 1965. Even less now. Big challenge for industry in terms of communication.
Digital Convergence. Online and offline will be redundant terms. All content will be digital, all communications will be digital and the most important thing in your home will be your broadband connection.
How do we sort that stuff out? How do we filter it? How do we present it in a way that is useful? If you look at the stats for Win XP, consumers are waking up to the fact that they can have a PC under the TV and a remote, which does everything you want – TV, PVR, PC.
In Japan, they already have fibre optic broadband that has speeds so fast you can have HDTV with no problem. Penetration for that is 4%. Consumers are ready for this.
Sky+ box is connected to a phone line and a dish. In a few years, you just won’t need the dish, and the box itself will have more capability than it has today. Will look similar, but will have more functionality. As such the devices we know and love, like TVs, will be repurposed and that represents a challenge, in terms of having a voice in that space.
It’s broadband that’s driving the online ad revenue model. It’s not about speed, it’s about the fact that it’s always on, that you don’t have to dial-up.
What does that tell us about today’s consumer?
– time pressed
– no loyalty [very scary – consumer is fickle and will go for the newest and best option]
– ahead of the curve (your curve) [this is the industry curve, because we’re still conservative and not tracking what consumers are doing]
MS are advertisers, and also in media business, and five years ago Gates didn’t expect to be in the media business, and what’s driving this is a fundamental change in the way we use computers. today your laptop contains your life. If you don’t take it with you, you are in trouble. If you lose it, it is a disaster. But that’s about to change. The way that it will be is that MS will stop selling a CD in a box – you’ll get your programming, your data from somewhere else, it will live on a server somewhere distant. [Oopsie, I think this is the Windows Live pitch…]
What’s driving this is broadband and AJAX, which makes you feel that the programming is on your machine, and as such all of a sudden you are independent of that machine. Wherever you are, whichever device you pick up, it will have everything on it, because all your info and programmes will be elsewhere. You may not buy the software, you may lease it.
The final piece that will make this work is security. Windows Vista got delayed to January because we weren’t happy with the security access. [And here’s the DRM pitch…] Consumers won’t buy if they feel something’s not secure.
In the MS galaxy, MSN is on the outer rim, experimenting with web services and advertising. The future of online is not subscription based. The future is advertising-based. MSN has proved you can run a profitable business entirely run on advertising. MS has woken up to the fact that advertising is a major force that will shape the future of software and media businesses.
We formed last year a new division, Windows Platform and Services. We went through a profound restructuring of the company, to reflect that advertising is at the heart of it.
The reason is easy to see. Advertising opportunity is $45 million worldwide. This is a significant revenue.
In the UK, what people do online is very much standardised. They are searching for info or communicating. More and more they are using online for entertainment, but that is dependent on the quality of content that we bring into this space.
So the first thing we’ve done is rethink what an online portal is. Traditional portal models are 10 years old now, and 10 years is a long time. As of this summer, we are providing services for consumers that put them in control and don’t force them down any route. Windows Live will be a suite of services overlaid on Vista that use AJAX. Mail, messenger, search, Spaces etc. Will be entirely funded by advertising.
Consumers have two ways that they want to behave. Some want to be in total control of their content. So WinLive is a fully customisable home page so that consumers can create their own experience.
Some also still want a pre-programmed editorial rich content space. And MSN evolves to be the home of content within this model. We are working on improving the standard of content MSN carries.
So everything is designed to work together; accessible from any device, in any location; underpinned by safety and security. Must be available to everyone you know. If you migrate to WinLive email then will pre-load every contact on your PC. If a contact changes details, it’s just reflected automatically on your machine. Put you at the centre as an individual. More profound than mass media – mass 1-to-1.
Search is important. If there is so much content, and no way to access it, then it goes to waste. Same goes for entertainment. Has to be integrated.
No point creating this ecosystem unless you can monetise it. Whether it’s Google-like clickthroughs or not, there’ll be more information available to the ad buyer provided in real-time. Consumers want three things.
– social network
– availability on any device/location
MSN is ceasing sales, starting to be an advertising company.
If we don’t re-invent ourselves, the money will slip away. Captains of industry get it. They know they need to change, but they need help to know what that change should be. But further down in the company, people don’t get it. There is a sea change and we need to educate people.
Online is bigger than outdoor advertising, where share of ad revenue is concerned.
What is the problem? Why are people reticent to cough up for online advertising.
People think that
– internet is not a mass medium, but it’s on a part with Times, Guardian and ?? put together
– not measurable, but actually it’s too measurable. too much data to sort through. just need to decide what you want to measure.
– not prime time, but that doesn’t matter. if a consumer wants to compare two cars, they can do it any time of day.
– takes away media $, yes and no. Money follows effectiveness (eventually).
– not impactful, but creative industry has been slow to embrace online, but results = impact. need to work with interactivity., slapping a TV or press add online is only the beginning of really engaging consumers.
Got to let old rules go, and rewrite. Else we’ll be stuck. Like a dinosaur. [ooh, a nod to ad campaign.]
New rules of engagement
– search is good if you know what you want.
– display, shows people what they might want
$30 billion, half will be search, half display.
Relevancy. Consumers who are engaged hate being shown ads that are irrelevant to them, that are obviously not targeted. Great thing about search is that it has relevancy built in. Pretty good targeting. Display is the same. Consumer that’s been on a car web site within the last 24 hours, or few minutes, then they will get ads for cars. [Oh, not sure about MSN tracking what sites I look at! Cheeky.]
Big change happening in real world, but not in our industry. Notion that there will be no difference between online and offline is a big one to grasp. We’ll pick up any device and expect all our content, be able to search, even locally with a GPS-enabled device, and this will affect how consumers behave.
Need to start to put aside the barriers and decide how we are going to live in this world and maintain the industry we’ve built.
Carolyn McCall now responds, basically saying that the Guardian is responding, although some areas of the media aren’t.
Q (Chris): Will news be edited to suit the advertisers?
A: Not necessarily, because of RSS. Content will stay purer than in an old world because you can target keywords so the content and advertising are always in sync. Consumers are more savvy, they know when they’ve been advertised at, and news brands will want to retain their purity.
A (Carolyn): One thing that will be more powerful in future is loyalty in trusted content. We are independent, we can write what we want, and that’s our biggest asset. So we have to be careful about that. So in this world where there is a huge amount more of user generated content, when you have a team of 50 foreign correspondence, there is opinion, and there’s news coverage.
As an aside, it turns out that the wifi is not £15 for the day – that service is not available in the conference room. Here in the conference room it’s £10 for 30 minutes. That is, even by normal standards, absolutely outrageous. If I wanted to be online for the whole of the conference it would cost me £180.