February 10, 2004

Digital Media Summit Day 2

More on the Digital Media Summit at McGraw-Hill. Day 2 is much more digitally focused, not on digital content or media, but on connectivity, specifically broadband, and the media, business and social effects of this always-on connectivity where people interact so differently than they did with dial-up. Still though, a lot of talk about consumers, instead of those they formerly knew as their audience, who are now expecting and demanding and wanting to talk back and truly interact, mess with media. However, there was some concession that the always-on customer they sell to may want more interaction than what they currently get now.

The first panel: Broadband, Content & Commerce, the Internet and the Digital Consumer (digital consumer seems like a misnomer, because by definition, if they are truly digital they are not just consuming in the sense big media understands their customers). They threw out a few stats: there are 22 million broadband households (no definition of this, but I assume that the vast majority of these BB people are actually midband, so between 128 and 384 mbs down -- which means they aren't going to be downloading movies anytime soon) and by 2008 with 40% growth, this number is expected to be 62 million. BB people are 5x more likely to buy something online than dial up people.

"Always on is always used"

The panelists saw this as the key to understanding people who are on BB. They realized that this was the key to creating a wired household, where people just blend connectivity and networking in the house into their daily lives. There is some holding back of ecommerce because of lack of payment standards, but stores are replaced at the margin by online shopping (giving the example of empty retail space around Manhattan as the evidence of this -- but I would argue that the recession and 9/11 have much more to do with this...), and Amazon sees 20-30% a year growth, which is amazing. Also noted was that the conversion rate on free trials for subscriptions online is around 17%, though I'm not sure what is offered, price or how to evaluate this figure.

Cable internet service was discussed, with the Comcast guy saying they are in 23 million homes, which is the largest of these providers. They are thinking about VoIP, video conferencing, and other ways to connect people to communicate personally. Segmenting customers, partnering (The WDCPost is doing lots of partnerships, as is Real, and PaymentOne.) The Comcast guy was kind of pissy, but admitted that in 10 years, everything will come over the internet, and regular cable for TV will no longer be needed (ie, you will have one cable service for all of it, and maybe save some money? except for that monopoly thing they've got goin'). The most interesting questions were how to balance the integrity of content (particularly directed at Reuters and WDCPost/Newsweek) and so they acknowledged that they have to maintain high journalistic standards for online news, whether is edited and filtered by the Post, or more of a raw flow as Reuters does.

Embracing the Connected Consumer had Jeff Cove of Matsushita reflecting on a study on how consumers want to get media at home that said the key issues are people said they wanted as absolute musts:
1. ease of use and interoperability
2. access, downloading and time shifting capabilities as well as getting some access to physical media, even if it's making their own
3. confidence that technology will last, technology standards, trust and upgradeable stuff
4. no crashing (having your home entertainment system crash is a loser...)
5. failsafe: if one part stops working, the rest keeps going (ie, TV and VCR, where if one stops the other doesn't -- they are not dependent for operating)

Next generation content convergence was mostly just demoing examples of interactive or multimedia by the panelists, but there was a very good point made by the eScholastic woman, who said that the kids on their site expect total choice, total access, no intellectual property barriers, and no architectural barriers. They want to make it work for them, when they want, how they want, where and with whomever they choose. Also, it was acknowledged that multimedia content that is designed specifically for the web is accessed much more by their audiences than video, which people hardly touch.

I chatted with Craig Calder of NYT Digital, who told me that their archives generate around $1 million a year in revenue, but it's declining. He said mostly what's accessed is less than 90 days old, but the revenue is still revenue.

I missed the last panel as I had to take off for San Diego and the second half of the eTech conference. But the Media Summit was interesting, and I chatted with a lot of people there who have no idea about digital media and information in the way I understand it, and so we shared perspectives. Really interesting in getting a more specific sense of where they are and what they care about.

Posted by Mary Hodder at February 10, 2004 10:23 PM | TrackBack

Interesting that NYTD's Web archives revenues are only around $1 million annually.

NYTD's NEXIS contract, which it inherited from the parent newspaper company, currently provides more than $20M annually. I say 'more than' because that 1996 contract stipulated a fixed royalty of $20M that year and fixed increases in that amount during each subsequent each year of the 10-year contract -- so it's now probably around $25M annually.

However, those NEXIS royalty terms weren't based upon usage. Had it been, then the NYT's first year's royalties would have been only about $500K. Instead, the NYT demanded the much higher fixed annual royalties because NYT knew that NEXIS's overall revenues would benefit from being able to claim NYT was among its content.

Posted by: Vin Crosbie at February 17, 2004 08:49 AM