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Category: economics

Is Television A Solitary Activity?

Steve Gillmor writes that “TV is Dead.” Clearly the concept of broadcast television as an event-based, time-anchored schedule is dead. The VCR, DVD Player and the DVR took care of that. YouTube ends up being a TiVo that just records everything and you find your programs through search. But I’d contend that Television is a social activity, many people to one viewport. The computer tends to be one person to one viewport.

Television isn’t dead, centralized broadcast schedule programming is dead. The user now decides today’s line up of shows, and does it fresh everyday. The business of televsion is aggregating audiences around popular shows and attaching advertising for a fee. When a clip becomes a big hit on YouTube, it’s potentially a powerful advertising vehicle. But will an advertiser want to attach its message to the 2 million viewers of LonelyGirl15?

As the number of content modules explodes, the individual’s capacity to consume such content remains the same. There are still 24 hours in the day, we can talk multi-tasking all we want, but we aren’t going to be watching 10 Web videos at once. With the cost of production going down, it’s possible for niche audiences to support the creation and distribution of digital media products.

The interesting economics emerging out of this have to do with scale. Spending tens of millions of dollars to produce a media product and then selling it to the masses has been a fine business model. But it requires the product be sold to large audiences, preferably audiences that will buy more than one viewing and the attendant merchandise. It’s a business with normal margins. But what happens when a cheaply produced digital media product becomes a hit with a mass audience? If it has the business model and monitization schema in place it becomes an incredibly high margin business.

Oddly enough, that’s the way the software business works. Once the software has been produced — if you can get everyone to use it, the margins are incredible. See Microsoft.

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UI Is A Conversation

The Cluetrain posited that markets are conversations. And this is coming true through the emergence of the two-way Web. Of course, the Web was designed as read/write from the beginning, but for many years the Web was a one-way street. Commercial interests modeled user interaction on the one-to-many broadcast model.

Now that “user-created content” is all the rage, the “write” part of the Web is suddenly in vogue. The economic model is still the same. Regardless of who creates the content, if an audience forms around it, sell access to that audience to advertisers. More accruately defined audiences create a better targeting opportunities for advertisers.

The User Interface (UI) has been like having a conversation through a translator. You tell it something, it goes away, decodes your input, and then returns an answer or another question. There’s no fluidity, no real conversation. With the emergence of XMLhttpRequest (AJAX) and some other UI technologies — there’s a chance that the UI could become a conversation, a fluid back and forth. To create that fluidity will require new interaction models that are easy for the user to learn. I don’t believe there’s such a thing as an intuitive user interface. Generally that’s what people say when they mean to say “good.”

In the current design and production process for Web applications, who looks after the conversation? Who acts as the host?

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Nothing Ventured

When it cost a bundle to buy the basic infrastructure to create an Internet-based businesss — venture money was critical. It’s still expensive to scale and handle large bandwidth requirements, but it’s not as bad as it used to be. When asking the question about whether the venture capital model is broken, one might ask what are top 10 things to remember when building a Web application-based business today? Are any of those things made easier or better with venture capital funding?

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Good Money, Bad Money

One sign that the business of building businesses on the Web has changed since the bubble years is that entrepreneurs are talking about “good money” and “bad money.” Used to be that all money was good. The idea used to be to get as much money as you could from a VC, then go public as soon as you could. And of course investors would cooperate by buying lots of stock, causing the price to sky rocket. Quick riches and early retirement. Then on to create a second company that never quite captured the magic of the first.

The VC funded IPO is becoming rarer and rarer. I wonder if the Small Business Administration will be the new funder of small Web businesses?

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