Friday, October 31, 2008

02 (UK) Free iPhones... Hello ATT?

Thank you O2 for my free iPhone. Yes, you heard me. For a minimum monthly contract of £ 45 the nice people at O2 in the UK will give you a free iPhone. My bill has been more like £ 80 a month with the amount I have been over there, so I happily collected my free phone. I still don't have one here in the U.S. though. Do I really want to commit to another two years on ATT? Maybe President Obama will actually re institute some oversight of the communications industry and ATT will be forced to become more competitive... I think I'll wait and see.

In the meantime, Apple, why can't I take my US SIM card and slide it into that UK iPhone. Did you really have to lock phone serial numbers to particular carriers? Sigh. So now I have to carry two phones EVEN IF they are both 3G iPhones.

Which brings me to my other complaint - why can't the carriers figure out how to let us have reasonable calling rates from multiple countries? Even if I have to have a contract with multiple carriers, my SIM should be "multi-homed" -- registered with each carrier I have a contract with.

Anyone in the telecommunications industry listening?

Tuesday, October 28, 2008

The Coming Transformation of the Media Ecosystem

There is a tipping point, as Malcolm Gladwell famously defined it, for the old media world, driven as it has been by advertising dollars. This day of reckoning was coming, no matter what, but now it will be here sooner due to the current economic crises. 2009 could be the first year in a long time with an actual decline in total dollars spent in the US on advertising. And if it is, massive changes will finally take place in the relationship between media, advertising companies, and the public relations business.

Already a memo is circulating claiming that a number of well known print publications are close to failure. Here is a partial list, you'll recognize more than a few: Entertainment Weekly, Kiplinger's Personal Finance, SmartMoney, Men's Vogue, Teen Vogue, Nickelodeon, National Geographic for Kids, Sports Illustrated for Kids.

But the economic pain that publishers are going to experience in the next few quarters is going to bring down quite a few larger publications as well. An analysis of advertising spend as a percentage of GDP over the past 100 years shows that it has fluctuated between 1% and 3% but has been remarkably stable over the past 25 years at around 2% of GDP. This has been over a period when annual GDP has grown from 3.5 trillion to 13.8 trillion dollars (though not as large a growth when inflation is taken into account).

It is clear from the historical record that recessionary periods can put pressure on advertising expenditure both through a decline in the GDP and through a decline in the percentage of GDP spent on advertising. The last time annual Real GDP (which is to say, inflation adjusted GDP) actually declined was the beginning of the 1990s.

As you can see in this graph of historical real GDP by quarter and by year as hard as the early 2000 period was for us in tech, annualized Real GDP didn't drop. In both periods, however, advertising spending declined as a percentage of GDP -- in the early 1990s by .1% and in the early 2000s by .2%. So based on this historical record, media companies should expect a decline in the amount spent on advertising due to the current economic crises, and that decline may be especially severe as Real GDP is likely to fall in 2009.

But something else has clearly been going on in the last few years, even as the economy has been growing, which adds a third threat. From 2004 overall advertising spend as a percentage of GDP has declined by .1% in each year, dropping from 2.4% to 2.0% in 2007. From 2006 to 2007 this meant an inflation adjusted dollar decline in advertising. Arguably this decline is coming as the result of the changing spending habits of corporations within the overall marketing budget. As authors John Deighton and Leora Kornfeld argue in the HBSarticle Unanticipated Consequences
"...the shift from broadcasting to interaction within digital communities is moving the locus of control over meanings from marketer to consumer and rewarding more participatory, more sincere, and less directive marketing styles."
Marketers who are taking this seriously are shifting dollars away from advertising and into more engaging, more direct connection with markets.

If you take all three factors into consideration, a drop of $50 billion on advertising spend in 2009 is conceivable. The actual drop is likely to be less severe, but could be as much as 10% of total spend (which would be about $30 billion). If so, 2009 will be a watershed year for media.

Look at this from the perspective of the complete ecosystem. Tens of billions of dollars reduced from advertising spend means many fewer jobs at advertising companies and perhaps more than a few that fail. The loss of dollars into media companies will reduce the number of journalists, the number of pages, and probably the number of publications. This will then have an impact on traditional PR as there will be fewer journalists and fewer publications to pitch.

All of this is great news for bringing about a new world of direct company-market communications. It will accelerate the realization by companies that they can talk directly to their customers and prospects -- "more participatory, more sincere, and less directive marketing styles."

Monday, October 27, 2008

PitchCamp Winners and thank you to ALL!

Robert Goldberg and I invested a ton of time and thought into our PitchCamp workshop at Web 2.0 Expo Europe (held in Berlin again this year) but I have to say, it would not have been a huge success (thanks Mike Butcher for saying so!) without the tireless help of numerous others. But before I get into the thank you shout outs I must tell you about the terrific companies that won the arduous pitch process. We had 12 great companies and I think all of them made great progress in their pitches. But here were the judges favorites:

And a tie for third place:

We had an incredible group of judges officiating and I must thank all of them --

  • Mike Butcher – European Editor TechCrunch

  • Olivier Creiche – Vice President and General Manager of Europe, Middle East and Africa, Six Apart

  • Simon Levene – Partner, Accel Venture Partners

  • Patrick Liechti – Business Development Manager – Web 2.0 Startups, Sun Microsystems

  • Matt Marshall – Managing Editor and CEO, Venture Beat

  • Dr. Maximillian Niederhofer – Atlas Ventures

  • Mehrdad Piroozram – Managing Partner, iSteps Widget Ventures

  • Jens Redmer – Head of European New Business Development, Google

  • Carsten Rudolph – Emerging Business Team, Microsoft

  • Rob Schiller – Investor and Entrepreneur

  • Reshma Sohoni – CEO, Seedcamp

  • Yossi Vardi – Investor and Entrepreneur

Part of what made this so much fun was a terrific group of sponsors who provided prizes and sponsored the PitchParty afterwards -- I have to especially thank Ernst & Young, LinkedIn, iSteps, ContentTeam, Hobnox, SixApart, and VentureBeat.

But let me save the most superlatives for the tremendous, astounding, wonderful David Nöel of Hobnox who did an amazing amount of work to bring everything together on the ground in Berlin so that we had a great party and hundreds of happy pitchcampers. THANKS DAVID!

Stealing the Election

Attention John McCain - take time now to send a memo to all party members. Subject: Don't Steal The Election. Sure, some of us poor losers in blue states think the Republicans have stolen the last two presidential elections. And perhaps Republicans can forgive us for some of these (hilarious) satires of Diebold voting machines in Florida fixed to only record votes for Dub-yah. After all, there were a few inconsistencies. But does the Republican party really think that America is going to stand for this B.S. again? Apparently they do. Reporting on CNN in an article calmly titled "Long Lines, Glitches Reported in Early Voting" CNN's Sean Callebs, Brian Todd and Manav Tanneeru report this frightening comment from a voter in West Virginia:
In West Virginia's Jackson County, there were some reports that voting machines were accidentally recording the wrong vote.

"I went in there and pushed the Democrat ticket, and it jumped to the Republican ticket for president of the United States," said Calvin Thomas, an 81-year-old West Virginian.
Can this really be true? Did 81-year-old Calvin Thomas simply make this up in order to raise the specter of Republican voter fraud? Did CNN report this as yet another example of the "liberal biased media" stoking the flames of unrest against our duly elected representative government?

I certainly would not go as far as Jack Myers who predicts civil unrest and political demonstrations should the outcome of next Tuesday's election be a defeat for Obama. However, I think it is reasonable to point out to the election commissioners of every state that a perception of fraud in this election will significantly damage the faith of Americans and the world in our democracy and undermine our ability to be a positive force for good in the world. As Myers writes:
This time you will be uncovered. While some may try to obstruct the votes of Democratic-leaning segments of society, hundreds of thousands of poll watchers are on hand outside polling places. The Democratic National Committee has lawyers standing at the ready in contested states.
So am I concerned that the election will be stolen? Am I concerned that John McCain, Patriot and war hero, will allow a result to stand which rests upon voter fraud? Absolutely not. If John McCain is elected President of the United States and if John McCain knows that this election was achieved through subverting the democtratic process of this country, I fully expect him to assure his place in our history as a savior of our democracy by standing on stage and telling the American people and the world exactly how the election was stolen and renouncing the results. Note to McCain -- seems like a much easier way to become a permanent positive part of the history of America than trying to turn around this economy!