Monthly Archives: December 2008

iTunesU points to a future where colleges are free

Your iPod can open up the universe.

If you frequent the popular Apple iTunes music store you may have missed iTunesU, a little link to free lectures from Stanford, MIT, Yale and other leading universities. Glance elsewhere online and you’ll find the similar MIT Open Courseware site, Peer 2 Peer University, and loads of lectures on YouTube. These are not online degree programs but rather information troves posted for free by the universities, all up for anyone to dive in and explore.

Consultant Mark Pesce writes that this online course load is approaching an inflection point in which knowledge about knowledge becomes universal. Soon you will be able to pick from the best lectures on a given subject, from hundreds of lectures rated by studious peers online; you’ll access reading lists, class notes, and tests from any school in the world (who wants to compete on the global stage); and the virtuous cycle of universities competing to be the best will end the era of the best education being only for the wealthy.

There will always be value in brick-and-mortar: College parties and classroom physical debates open eyes, context, and job connections in a way that online viewing does not. Or perhaps even that will change.

In the future you will never finish a degree

What if you could experience any university virtually, meeting peers with 3-D avatars, and leap to only the best experiences? Education would flow outside the ivory walls of top institutions and tight four- or two-year intensive cycles to become an ongoing life learning model for those who wish to continually develop their minds. Perhaps in 20 years the nature of degrees will change from end points (where an MBA or doctorate is some ideal finish line) to check points. You reach level 2.0, then 3.0, and continually evolve. And at higher levels, you contribute back into the knowledge network to pull others forward.

The entire business model of universities would shift as well. Unfortunately colleges, like businesses, profit from the friction between supply and demand — and as knowledge flows freely the participants will want it for free.

No tuition. But advertising? You bet.

So instead of pulling $50,000 in annual tuition from each student in a small elite pool (and spending much of those funds on robotic library book pick-and-pack retrieval systems or college gyms approaching 5-star hotel spas, required to attract future elite students), universities will give education away for free to millions — in exchange for third-party sponsorship offsets, or smaller surcharges for degrees, or for an investment stake in the ideas, patents or even lifetime incomes of the brilliant minds who turn the knowledge gained into economic power. Purveyors of education will still make money, but they will do so at scale.

Is it too much to hope that higher education will become a pleasant commodity, a standard of living for billions instead of a Lexus badge owned by a few in rich nations? Maybe. Perhaps the value of degrees is the mystical cachet that comes from knowing only a few can attain the title. But then, basic literacy was once only for princes and priests, too.

‘We are the generation that talks about technology. The next will actually use it.’

Dave Johnston has an absolutely brilliant post about our generation’s obsession with technology. You know, self-referential gee-whiz news about the latest Facebook add-on, the newest online video service, Apple’s coolest minor tweak to a music device — all of which boils down to communicating with words, video and sound.

Johnston notes that the telephone is a pretty amazing device, too, but we no longer obsess over our ability to dial California from New York. We just use it. He writes:

“Try to imagine right now an entire blog, updated 24/7, with ten authors dedicated completely to your (or your parents, since you don’t have one) home phone. Yeah, that one. The one with the cord going to the wall. Post after post every day about how you can get a dial tone when you pick up the receiver, how if you push Flash it switches to a different call, the Top Ten Ways You Can Use Memory Dial to Organize Your Life, etc. Sounds like a pretty terrible blog, doesn’t it?”

Words of wisdom for 2009. Let’s focus more on what we do, and less on the gadgets that help us do it.

On Twitter network, Steve Rubel finds 98% friction

Steve Rubel got the math right but the idea backward.

Last week Rubel figured out that about 2% of all tweets — short text messages sent through Twitter — are “retweets,” or forwarded postings. He suggests this is evidence of a growing Lazysphere of laggard bloggers who simply pass along ideas that come from others.

Turn this around, though, and you can see the dampening effect on viral marketing. Communicators have been agog over the promise of social media tools such as Facebook, Twitter, MySpace, and YouTube to exploit human networks. The dream has been a marketer could seed a network with a message at very little cost, and then watch as it blooms onward to millions of consumers, like a flu virus on a crowded train system.

Alas, humans do not follow Metcalfe’s Law, and the supposed exponential power for every additional node in their networks peters out. If 98% of all content that flows through the network is original, and only 2% gets passed along purely, that means there is tremendous friction for any message to accelerate inside the network.

Sure, messages can be rewritten, but the childhood game of telephone shows how each revision corrupts the original thought. Web links can be forwarded, but if the message introducing it is changed, the meaning may be lost. Rubel’s calculations suggest pure message passalong faces a 98% hurdle at each next stage of going viral.

Our conversation with Robert Scoble on pay-per-post

We had some fun today riffing in BusinessWeek on the moral perils of pay-per-post blogging — you know, where an advertiser pays a blogger to write about the advertiser’s own products. A lot of bloggers see no problem with this, although we think the conflict of interest is obvious.

Pay per post goes beyond advertorial to actually paying a writer to forge an opinion. Traditional journalists are forbidden from this practice; the restaurant reviewer for The New York Times pays for her own meal, and if she were ever caught taking money from a restaurant she would be fired. The tradition goes beyond journalism to most major corporations too, which prohibit gifts above certain sizes and are clear that senior executives must avoid even the appearance of conflicts of interest.

What does Scoble think?

While researching our BusinessWeek viewpoint, we were delighted to find that uber-blogger Robert Scoble feels the same way. Yes, Scoble takes money from a major hard drive manufacturer — but he considers that an advertising sponsorship clearly related to his technical expertise.

Here’s what he told us in a late-night phone interview:

“Let’s say a whole bunch of advertisers came in and started doing this and getting bloggers to do it. All of a sudden you’re seeing a lot of ads,” Scoble said. “Blogging started as a pushback against committee-based marketing. The danger is you’ll see a lot more ads on blogs, like listening to talk radio … but it’s also the selling of the opinion. What I really liked about blogs initially was I was getting unfettered opinion from people, and now I have to filter opinions. That adds a level of complexity to reading blogs that hasn’t been there before, and it will retard their popularity.”

Reputations are not just for journalists, people.

Why is all this so important? If you blog, you are not a journalist — so who cares, right? Because allowing even the perception that someone can influence your opinion is inefficient — for bloggers, journalists, corporations, and government (see: Illinois Senate seat opening). There is nothing wrong with taking money to run an ad. But if your intended reader or constituent or client thinks your mind is being bought, that recipient will think less of your opinions. In the long run this erodes trust in you, trust in the advertiser, and may limit future, larger business opportunities.

The fact that many bloggers see no problem with taking payments to forge opinions is frankly a sign of the immaturity of the blogging channel. As Dirk Singer at UK public-relations shop Cow told us, paid posts only create the perception that an advertiser is buying word of mouth — but the intent is transparent, and readers will see through it.

The larger risk is the entire communication channel of blogging may be sullied. There is a historical precedent for this: Telemarketing. Once upon a time marketers spent millions calling consumers over the phone trying to sell them products, in essence “monetizing” the phone networks. Consumers rebelled, signed up for Do Not Call lists, and today telemarketing is an almost dead channel with diminishing returns. What happens when every mind online has a for-sale sign, and pushes offers onto their readers?

Scoble said it best: “The brands that protect their credibility and authenticity go up and the ones that don’t go down. This world moves so fast, if you get caught selling out your readers you will get exposed and derided and you’ll be less for it.”

In 2009, no more music lawsuits (but you’ll still be punished)

WSJ reports 35,000 consumers have been sued by the music industry since 2003 for allegedly stealing music over the internet. This created a public-relations debacle for the industry, which sent sharky lawyers after single moms and even a 13-year-old girl, so now they are changing tactics.

No more lawsuits. But if you do download music illegally, a music trade group will trigger a series of email warnings sent to you via your internet service provider … and if you don’t stop, eventually the ISP may slow down or shut off your internet service.

It’s a fascinating capitulation by the music industry, which recognizes that most consumers now don’t think stealing music is bad — even though it is stealing. David Pogue, the NYT tech columnist, recently asked an auditorium of 500 students a simple question:

“You want a movie or an album. You don’t want to pay for it. So you download it. Who thinks that might be wrong?”

Two hands went up out of the 500 students in the crowd. If laws represent the wishes of society, what happens to laws when the morals of society change?

Photo: Canon Snapper

NYT tries to save your source material

And now let’s think about the big hole in our modern information society: Source documents. Google does a lot of things, but it doesn’t index the interviews or hardcopy legal documents or scribbled notepads that are the source of your online knowledge.

The New York Times and ProPublica plan to “launch an online repository of primary-source documents,” according to the Nieman Journalism Lab at Harvard University. A NYT grant application, submitted to the Knight News Challenge, notes, documents are the foundation of investigative journalism, but today’s newsroom is a throwaway culture. Too often, reporters gather reams of information, do their stories, then chuck rich source documents into a dusty corner, never again to see the light of day.

The DocumentCloud would let any news group upload source materials for public review, and potentially be expanded to include non-official news sources, say, you there, writing your blog. As the public struggles to validate the knowledge they find online, indexing actual source documents seems like a fine idea.

For a look at the power of source documents, check out the transcript of the NYT interview with Senate candidate Caroline Kennedy. It’s more illuminating than any possible reporter’s revisions.

Photo: S.C. Asher

It’s a beautiful day for cancer

2008 was the year online video got longer. The grainy segments on YouTube faced new high-def competition from Vimeo; YouTube responded by experimenting with sharper formats; and took off with full TV shows and movies, all for free. The pundits who said in 2007 that ad spots longer than 15 seconds would never work online appear to be wrong, as consumers begin settling down for deeper entertainment from PCs and cell phones.

Here’s one sweet example — a 3-plus-minute music video promoting skin health for the Cancer Council of New South Wales in Australia. The piece, by Naked Communications, is obviously meant to go viral — you can just see 18-year-olds chuckling over it on an iTouch in the back of class — so let’s break it down: catchy music riff; beautiful bodies that are hard not to watch; and a message that sinks in like the mole on this dude’s back. With every passing second the hero Al Bino looks cooler and cooler. What we love about this format is it is one long, powerful impression. In a world where so many ads blip by without being seen at all, longer video may be better.

Now we’re off to call the doc — need an appointment to get the moles checked.

Via Consumer Psychologist and Cow. gives new writers a lift

Writing fiction is a dark and unfathomable business; success is almost random, given the odds of a major publisher casting marketing dollars behind your little novel. In 1995 Joanne Rowling submitted a typed manuscript to 12 publishers and each rejected it. Rowling finally had a stroke of luck when Alice Newton, the 8-year-old daughter of the chairman of Bloomsbury publishing house in London, happened upon the first chapter, loved it, and demanded that her father give her the next. Bloomsbury eventually published Harry Potter — but in turn demanded Joanne use the initials “J.K.,” fearing young boys wouldn’t want to read a book written by a girl. now offers a simpler solution to writers who want to get noticed — if you pen fiction, simply email 3,000 words or less to the site, they’ll produce it in an e-book, and you can sell copies to your friends for $4.95. The site offers small cash prizes for the books liked most by fans, and a starting point if you want to spread the word about your brilliant plot of a young unloved boy who was almost killed years ago by an evil boss and wakes up to discover he is being groomed to cast magical marketing spells in an underground world of advertising social influencers. Oh wait. That’s us.

Image: Allan Grainger.

Plaid: Yes, lawyers, there is no Santa Claus

Scott Monty over at Ford shared a laugh. A leader at another organization called a lawyer. Which business would you rather brag about?

Our final holiday story revolves around Plaid, a Connecticut brand shop that created a mock video for Christmas in which you can insert anyone’s name into a “news report” that they’re having, ahem, scandalous intimacy with Santa or Mrs. Claus. Completely over the top. And completely safe for work — no nudity, no vulgarity, a few uses of the word “sex” as you’d find on the evening news. When Monty got the link at Ford, he forwarded the humor on to 6,600+ people who follow his thoughts on Twitter.

Unfortunately another organization who got the link, unlike Ford, didn’t get the joke. They sent Darryl Ohrt, principal of Plaid, a nasty note hinting that the online art was defamation. (We look forward to hearing of the alleged material damages to a person’s reputation resulting from a rumor that one slept with Santa Claus.)

The real story is not about appropriateness or monitoring employees’ use of the internet … but about the brand implications on both organizations. Ford comes off like a hip company that has a bit of fun (and we’re sure Ford has plenty of lawyers, too). But this other group, well, feels as grouchy as an HR executive pricked by a physician’s needle.

Is your organization loose enough to share a laugh with employees and customers? Or is your brand heart two sizes too small?

Pricing strategy: How to fight deflation in the new year

Are you feeling cheap?

For the first time in 70 years the price of most goods is falling significantly, creating a thorny tangle of “deflation” for marketers. You see, your customers don’t like to buy stuff today when they believe the same stuff may cost less tomorrow. How should advertisers react? By reframing the price.

Here’s an example: Say you’re in the business of selling tickets to dancing elephant events, and the price of admission is $120. The typical elephant fan in the past comes to three such events a year — so the total cost is $360. In a down economy, consumers may retrench. So reframing the price might include moving it to a subscription model — sign up for a season pass for a monthly fee of $30! — or using artificial discounts.

Ways to reframe your price:

Optimize margins — by strategically deciding whether to sell fewer products at higher margins, or more products at lower prices. If the market won’t bear high prices, you may need to move down a step and shoot for scale.
Create a reference price — an artificially high price that you then “discount” beneath. Retailers such as Talbots use “40% off” deals to show a perceived value that really does not exist.
Obscure the reference price — make it difficult for a buyer to discern the real cost by bundling in other items or services. Toyota does this brilliantly when you buy a minivan that includes numerous packages, until you just can’t figure out the real sticker.
Segment your customer base and charge variable prices — increasing prices for some customers seems damned unfair until you realize most of the world does this. Supermarket coupons are a perfect example, where your Aunt Millie buys a can of soup for 50 cents while you pay the full buck. You’re both getting the same soup, but at different prices. Campbell’s makes more money off you because you are less price sensitive than your coupon-clipping aunt.
Explore subscription or extended payment models — You can help customers manage their bills by reducing spikes in payments. Utilities do this with monthly payment plans; can you?
Bash the competition — If you ever thought someone else was charging too much, this is the economy in which to shout about it. See McDonald’s slamming Starbucks. We bet customers will respond.

If pricing strategy is not on your task list for January, jot it on the whiteboard and get going. Read Richard Thaler, the economist who wrote the book on the psychology of price framing. Your customers are waiting for a better deal.

Hat tip: New Shelton.