Paul Wallbank – Brilliant Communications

Tag: innovation

  • Disrupting the markets

    Disrupting the markets

    Generally it’s not a good idea to have nearly a hundred slides in a presentation, but Mary Meeker’s overviews of the tech industry are so rich in data it’s impossible not to spend a weekend looking over the entire sldieshow.

    Last week Mary gave her presentation at the All Things Digital conference and as usual she identified a range of trends and issues in the technology industries.

    Smartphone upsides

    Still the early days of smartphone adoption, with 6 billion mobile phone subscriptions worldwide but only 954 million smartphones activated.

    This adoption is driving mobile revenues with income growing at 153% per year. Although as she shows later, this is not necessarily good news for everybody.

    Print media’s continued decline

    A constant in Mary’s presentations over recent years the key slide in has been ad spend versus usage across various mediums.

    In this year’s version we still print still vastly over represented with 25% of US advertising while TV remains static, although Henry Blodget at Business Insider thinks the tipping point might be arriving for broadcasters.

    Online’s thin returns

    One of the things that really jumps out is how thin onlie revenues really are. In annual terms services like Pandora and Zynga are making between 6 and 25 dollars per active user over a year.

    These tiny revenues indicate the problem content creators have in making money on the web, after the gatekeepers like Pandora or Spotify have taken their cut, there isn’t much left to go around.

    Facebook and Google are also encountering problems as users move to mobile where revenues are even smaller than those from desktop users. This is constraining both services’ earnings growth.

    Disrupting markets and governments

    Mary’s presentation goes on to look at the disruption web and mobile technologies are bringing to various markets – it’s a good overview of whats changing right now and the products driving the changes.

    It’s not just markets that are being disrupted with Mary also looking the US’s budget position and entitlement culture. This in itself is a massive driver of change which will have a deep effect on our lives regardless of where we live.

    Are we in a bubble?

    Mary finishes up with a look at whether we’re in a tech bubble or not.

    Her view is that we are and we aren’t – there are silly valuations of companies in the private market however the poor performance of tech stocks on the stock market indicate the public aren’t being fooled.

    One telling statistic is the only 2% of companies have accounted for nearly all the wealth creation of the 1,720 US tech IPOs between 1980 and 2002. There’s little to indicate much has changed in the decade since.

    The optimism in funding new businesses is based in the disruption they are bringing to markets and industries – you only need one eBay or Google in your portfolio and you’re a legend, if not filthy rich.

    Both the economic and technological changes are disrupting our own businesses and this is why its worth reading and understanding Mary Meeker’s presentations if only to be prepared for the inevitable changes.

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  • Grappling with the online news beast

    Grappling with the online news beast

    The head of Google News, Richard Gingras, last week discussed how the news industry is evolving at Harvard University’s Nieman Foundation.

    Much of Richard’s discussion centred around disruption – the newspaper industry was disrupted in the 1950s by television and by the 1980s most print markets had seen several mastheads reduced to one or two.

    The remaining outlets were able to book fat profits from their monopoly or duopoly position in display and classified advertising.

    By 2000, the web had killed that business model and the newspaper industry was in a decline that continues today as aggregator sites like Huffington Post steal page views and Google News further changes the distribution model.

    One of the problems for the news industry is how different the online mediums are from print, radio or television broadcast. The struggles of media startup The Global Mail is a good example of this.

    In the middle of last year news started trickling out that one of the Australian Broadcasting Corporations’s top journalists, Monica Attard, had left the broadcaster to set up The Global Mail, an online news site funded by Wotif founder Graeme Wood.

    The site launched on schedule in February 2012 and underwhelmed readers with pedestrian content and a confusing layout. By May, Monica Attard announced she was leaving the organisation she’d founded.

    Tim Burrowes of the media site Mumbrella examined why the Global Mail is struggling, his Nine problems stopping The Global Mail from getting an audience details how the site doesn’t use online media effectively.

    At heart is a fundamental mismatch between the methods of journalists raised in the “glory days” of print and broadcast journalism against those of the online world, not least the much harsher financial imperatives of those publishing on the web.

    One key problem it the TL;DR factor – Too Long; Didn’t Read. Where online readers tend to leave stories after around four hundred words.

    Richard Gringas is quoted as encountering this problem when he worked at online magazine, Salon.

    At Salon, articles were paginated, but only 27% of readers made it to the end of the four-page articles. Compared to competitors, Richard was told, this was a good benchmark. But with fresh eyes, he was astounded that a product was being produced with the knowledge that the vast majority of the audience would not consume the entire piece. Richard loves the long form, but if the objective is to convey information, we need to think about the right form for the right medium at the right time.

    So “long form” journalism has to be written the right way and it has to be backed up with good visual components and have “short form” versions suited to the more impatient readers who make up the bulk of the web audience.

    The New York Times made a step in this direction with their iEconomy series on how the US middle classes have been displaced with manufacturing’s move to China.

    An even better example of journalists using the web well is The Verge’s Scamworld where an online expose of Internet get rich quick schemes and the conmen behind them.

    Scamworld shows us what skilled journalists can do online. The amazing thing is the site’s new steam is tiny compared to those of established outlets like the New York Times, Guardian, Fairfax or those of News Corporation.

    This failure to execute by incumbent news organisations isn’t because they are lacking talent – every young, and not so young, journalist has been required to have multimedia skills and the ability to file stories in multiple formats for at least a decade.

    Old Media’s problems lies in the mindsets of senior journalists, editors and their managements who are locked into a 1950s way of thinking where fat advertising revenues funded the adventures and expense accounts of roving reporters who tough as nails editors occasionally bullied into filing stories.

    That model started to die in the 1980s and the Internet gave it the last rites.

    Richard Gringas’ discussion at Harvard shows news and journalism isn’t dead, but it is evolving. Just like many other disrupted industries, the news media has to adapt to a changed world.

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  • Continuing the online payments battle

    Continuing the online payments battle

    Today Mastercard announced their PayPass service, a “digital wallet” that allows consumers to pay through various online channels including the web and their smartphones.

    Mastercard’s PayPass is the latest move in the battle to control the online payments industry as consumers move from plastic cards to using their mobile phones and Internet devices.

    One of the interesting aspects of PayPass is how it is a direct challenge to PayPal who in turn recently launched their PayPal Here service which threatens incumbent credit card services like Mastercard and Visa along with upstarts like Square.

    While its early days yet in the mobile payments space as consumers slowly begin to accept using smartphones and tablet computers to pay for goods and services, its clear the industry incumbents are moving to secure their positions in the market place.

    It’s going to be interesting to see how this develops, many merchants will be hoping this competition starts to drive down transaction costs.

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  • Cargo cults and your business

    Cargo cults and your business

    “We need an interest rate cut” thunders the business media.

    “Give us GST relief” plea the big retailers.

    “China will boom forever” assert the government economists.

    “Big corporations will buy us out for a billion dollars” pray the hot new start ups.

    “I’ll win the lottery this week” thinks the overworked cleaner.

    We’re all waiting for the big saviour that’s going to rescue us, our business or the economy.

    It could be a big win, a big client or a big government spending program to rescue us.

    Sadly, should we lucky enough for that saviour to arrive, it may not turn out to be all we expected.

    There’s many lottery winners who curse their win while many disaffected founders who watch their startup baby fade away neglectful new owners.

    For a lumbering department store, tax changes will do little to save them from market changes their managements are incapable of comprehending.

    Interest rate cuts are great for business when customers are prepared to take on more debt but in a period where consumers are deleveraging a rates cut will do little to stimulate demand.

    The clamour for interest rate cuts are a classic case of 1980s thinking; what worked in 1982, 1992 or 2002 isn’t going to work the same way in 2012.

    What’s more, the Zero Interest Rate Policies – ZIRP – of the United States and Japan are a vain attempt to recapitalise zombie banks saddled with overvalued assets rather than an effort to help the wider economy.

    China is more complex and there’s no doubt the country and its people are becoming wealthier and there are great opportunities.

    The worry is most of what we read today could have been the wishful thinking written about Japan thirty years ago. Lazily selling commodities to the Chinese while they create the real value is not a path to long term prosperity.

    In business we have a choice, we can pray for luck or we can make our own luck.

    Some choose to join the cargo cult and pray, or demand, that someone else does something. Others get out and do it.

    John Frum gravesite image by Tim Ross through Wikimedia Commons

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  • Rivers of gold

    Rivers of gold

    Google’s announcement that their revenues have increased by 24% over the last year shows the search engine juggernaut keeps rolling on.

    It’s tempting to think that Google is untouchable and that’s certainly how it appears when you’re on track to earn forty billion dollars a year and book close to 40% of that income as profits.

    On the same day, Sony announced a massive restructure including with 10,000 redundancies and the company’s CEO, Kazuo Hirai, spoke of a sense of urgency to address the once dominant corporation’s drift into irrelevance.

    Twenty years the thought of Sony – one of the world’s innovators in consumer electronics – would be wallowing in the wake of companies like Apple and unknown upstarts like Google was unthinkable.

    Fortunes are won and quickly lost in a time of great change and this is something we should keep in mind about Google when we look at their rivers of gold.

    “Rivers Of Gold” was a term coined to describe the advertising riches of the newspaper industry in the 1980’s. Google’s online advertising is partly responsible for destroying that business.

    Today Google is a search engine business that makes its money from the advertising that deserted print media and went online.

    It may be that manufacturing mobile phones, running “identity services” disguised as social media platforms or augmented reality spectacles are the future of Google but right now they it’s search and advertising that pays the bills and books the massive profits.

    The challenge for Google is not to lose sight of its current core business while building the future rivers of gold.

    If Google’s leaders can’t manage this, then they risk following the newspaper industry that they themselves disrupted.

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