Don't play games you cannot win

Ian Rogers, VP of Product Development Yahoo! Music: Convenience Wins, Hubris Loses and Content vs. Context, a Presentation for Some Music Industry Friends. [via: TechCrunch]

"Inconvenient experiences don't have Web-scale potential, and platforms which monetize the gigantic scale of the Web is the only way to compete with the control you've lost, the only way to reclaim value in the music industry. If your consultants are telling you anything else, they are wrong."

...

"I'm here to tell you today that I for one am no longer going to fall into this trap. If the licensing labels offer their content to Yahoo! put more barriers in front of the users, I'm not interested. Do what you feel you need to do for your business, I'll be polite, say thank you, and decline to sign. I won't let Yahoo! invest any more money in consumer inconvenience. I will tell Yahoo! to give the money they were going to give me to build awesome media applications to Yahoo! Mail or Answers or some other deserving endeavor. I personally don't have any more time to give and can't bear to see any more money spent on pathetic attempts for control instead of building consumer value. Life's too short. I want to delight consumers, not bum them out."

Good example of thinking about alternative cost a.k.a. the best way to spend resources and having a strategy that includes avoiding playing games that cannot be won.

Bilddagboken Acquisition Makes Sense For Lunar Group

Lunar Group's/LunarWorks' acquisition of the remaining 60 % of Bilddagboken makes a lot of sense strategically. Acquiring additional sites let Lunar Group use its established sales force to sell premium priced brand advertising to advertisers, even if the number of vistors to LunarStorm declines.

The reason I think it makes strategic sense, especially compared with launching LunarStorm in other countries, is the following:

Before a site/publisher has grown large it is very difficult to sell premium priced brand advertising to, primarily, media agencies. Once entrepreneurs have built a popular a site, they will have to build a sales force that can sell to the media agencies etc. Building the sales fore takes time and often requires additional capital. Selling to an industrial buyer, like Lunar Group, will often make sense.

Lunar Group, and other media companies, can by snapping up sites like Bilddagboken (not that such sites come along that often) add value to an acquisition by accelerating the move from response-based advertising to higher priced branded advertising. It is not a pure financial acquisition, as there are very real synergies. The strategy also lets the media company partly mitigate the risk of a specific site losing popularity by building an organization where advertising sales for a bouquet of sites and smart acquisitions are the core competencies.

Trust and fairness key to better ad targeting

Umair's post on ad networks being a proof of the long tail of content being quite long and Yahoo's acquisition of Blue Lithium got me thinking about ad targeting.

Behavioral/contextual/content/demographic targeting are filtering mechanisms for advertising. Filters, of course, are a key way of creating and capturing value in a long tail world. (Google AdWords is an example of the value of a good advertising filter.)

In order to be useful, banner advertising filters need data on users' behavior. A lot of users, quite rightly, don't see the benefit of giving the ad network that data but only the privacy implications. A major reason for this is the fact that the online publishers and advertising networks have done very little to earn their users' trust in this area.

The deal offered to users with regards to advertising targeting seems to be:

1) without good targeting you'll see a lot of often irrelevant adverts and the publisher will make a healthy profit
2) with good targeting you'll see some relevant adverts and quite a lot of irrelevant adverts and the publisher will make a larger profit

Not really a win-win.

But Internet users are not universally against personalization and filters. Witness Amazon which offers the deal: the more we learn about your taste and behavior, the better our recommendations will be. Yahoo, Tacoda and other companies developing behavioral targeting should be inspired and offer their users a better overall deal with regards to advertising supported content and services.