As Media Brands Build Their Own Communities, They Must Evolve Their Business Model

Zuck and FB connectLeft: Several Press, Analysts, and Bloggers met with executives from Cisco and Warner using Telepresence from NY, SF, to San Jose. Cisco’s Eos (their community platform for media brands) landed an enterprise wide deal with Warner Music.

Attendees included John Chambers, CEO of Cisco, Dan Scheinman who heads Eos, and Edgar Bronfman, CEO of Warner music and Michale Nash of Warner.

Rather than focus on the details of the deal (you can read WSJ, Reuters, and GigaOm), I’m going to discuss what it means to the industry at large.

[Media companies will adopt social technologies to respond to the Groundswell in social networks --yet to be successful, the change isn’t about technology –but instead, their business model]

Media companies know that they’re not the only voices in the auditorium –the audience now talks back. They create media, content, and share it directly with each other on social sites  —now brands, like Warner seek to embrace them closer. Rather than allow this inevitable social interaction on social networks like MySpace, they want to take it back by launching their own social features.

Although EOS was announced earlier this year (read my take), this is their first major client, hence the fanfare. What’s taken EOS so long to clinch a large deal? Their hefty enterprise system is designed for media brands to cascade across multiple properties –not one-off installations. Community platform players that also compete in the media space like Kickapps and Pluck (and to some degree Ning) have self-serve features, are modular, and even have credit card payment systems so individual brand managers can get started –bypassing IT.

Impacts to Community Platforms, and CMS Vendors
Incumbent community platform players (learn more about this crowded space) like Kickapps (who power artists U2, Madonna and Food2), Pluck (who powers USAToday/Gannet, The Guardian, and the NFL), and incumbent CMS systems like Vignette, Documentum, Interwoven need to demonstrate they’ve enterprise viability by proving their systems to brands that can scale across multiple entertainment properties at media conglomerates. Warner is an ‘end to end Cisco customer’ so the aforementioned vendors should immediately reach out to their customers with a large Cisco footprint in the datacenter.

Impacts to Social Networks: MySpace, Bebo, Facebook
As media companies develop their own communities this takes some power away from social networks like MySpace, Bebo, and Facebook. Fortunately, not all fans will interact with artist created communities –so they will need to quickly distinguish how their community base is different (perhaps in a different part of the marketing funnel) –but still valuable.

What It Means: Opportunities –and Challenges for Media Brands

  • Consider this the first day in which Chief Media Officers recognize that social is a key component to fostering a brand amongst an audience that wants –and will talk back. Expect other media conglomerates to start this evaluation process.
  • Rather than punt the community to MySpace and Bebo to monetize, media companies can now aggregate the data from the community to quickly identify trends, memes, and hits and wins from the community. Artists can foster a tighter relationship with fans as the communication goes both ways.
  • They could monetize by providing premium products (exclusive content, backstage passes, or special venues). Additionally there are WOM opportunities, and harvesting data to identify new trends, top influencers, and market trends. Creating premium products for fans and evangelists will spur their business forward.
  • Media companies need to develop a strategy beyond technologies that encompasses dealing with process, roles, and allowing for the voices of the customer –not just the media brands. Remember my 80/20 rule about communities, only 20% is about technology, the majority is strategy.
  • Lastly, media companies will need to reformat their business model, as the people formerly known as the audience now join artists on stage. Given how media companies have responded to this movement with a clamping and silencing motion –this is a big change for their culture.

Media Companies Under Extreme Change as Fans Join the Stage –Changing Biz Model
Summing things up, media brands that recognize the party is happening without them on MySpace, Bebo and Facebook will build branded communities for fans and artists closer to the corporate domain.  This means the structure of the business will need to change, not just to allow fans to participate on the ‘online stage’ but to also develop new ways of monetizing through premium products, cross sales, and lean on efficient word of mouth marketing.

  • http://www.web-strategist.com/blog/ jeremiah_owyang

    Here’s some other details of the deal:

    They will roll out five artist sites, then will roll out 12 more during the rest of the year. CEO Edgar Bronfman of Warner says they can launch community sites 5 times faster than before.

    The site their recommending you visit is the band Paramore.net, and have had 11k fans register.

  • http://davidhargreaves.wordpress.com/ david hargreaves

    This is a great post.

    It is really interesting looking at how media brands are trying to bring the community back onto their own territory. One of the things we are spending a lot of time talking to clients about at the moment is the role all the different social media channels (third party communities, branded channels on YouTube, Facebook et al, specific campaign sites and brand.com) have in drving people up through the sales and marketing funnel.

    Talking to @raanan at Automattic a little while ago he was talking about Buddy press as a platform aimed at popstars, for example, all of whom also want to find a way to get ownership back of the following they built up on Facebook so that they can start monetizing it for themselves.

    This whole subject is a really interesting discussion about creating a coherent strategy which links together all digital properties around the specific end business goal

    David

  • http://www.facebook.com/adrianchan Adrian Chan

    I know folks over at EOS and as far as platforms go its emphasis on rich media (ie vid files) handling positions it well for use by entertainment companies. A company with multiple artists and sites can share files on the back end. Smart — as media management is an issue for these kinds of companies.

    But the real win for Cisco might be in better analytics — using what it learns from EOS-based communities to better engineer and target ad platforms and delivery. I remember this being an early goal of EOS (so it was rumored): to give Cisco the ability to play with real user data and behaviors.

    On a separate note, I’ve been reviewing a white label platform for a third party and in calls to some of their customers (entertainment sites) I’ve gotten the sense that communities are not only being undervalued but are underdeveloped. I heard more than once that community keeps traffic at the site — community message boards, fan pages, comments and other features serve the site’s desire to be a sticky destination.

    I didn’t once hear users described in the terms I’m used to hearing here in SV and particularly in social media circles. Fans were just that: fans. Perhaps these companies recognize that they’re not competing with the depth of social engagement of a Facebook. But I’m not sure if these companies really understand the medium well.

    Just impressions. If Cisco can develop a rich set of user-oriented features, and if it can help Warner and others like it to roll out features in a way that promotes organic and constructive social uses, I’d find that a good thing. Platforms can help build communities. But given the choice between offering template design customization and community building, I think many choose the former.

    adrian

  • http://www.facebook.com/profile.php?id=713265422 Michael Chin

    You’ve captured the digital opportunity for media & entertainment from an audience/consumer and business perspective well. As you know, it’s been our initial sweet spot as this market started taking off three or so years ago.

    The ability to scale across multiple platforms is a model that is suitable for some brands and experiences, but not all. That type of integration really isn’t anything new. I think it’s less common as opposed to integrating with other social destinations, i.e. Facebook, Twitter, etc.

    The Paramore site is a nice execution and I know some of the guys who worked on it over at Warner–smart team.

    Welcome to the game, Cisco, albeit four years behind everyone else. Try to keep up. Things move pretty quickly around here.

    Michael Chin
    SVP, Marketing
    KickApps

  • http://www.web-strategist.com/blog/ jeremiah_owyang

    Thanks David, who are you with?

    Adrian, interesting, data as a competitive advantage? Yup.

    Michael, you got a lol out of me.

  • http://www.facebook.com/profile.php?id=713265422 Michael Chin

    I just tried leaving a 2nd comment–just because I’m very self important that way–but it seems to have gotten lost. Apologies if I’m doubling up.

    The point about data is crucial. Engagement is the bait–gets people interacting and as we all know has a ton of value. Actionable data and insight is the PRIZE.

    It goes beyond more relevant advertising. Feeds into every aspect of the business, informing editorial & content programming, marketing, product development, sales, merchandising, etc. As you said, different and evolved business models and strategies.

    Ovation TV is a great example of this (KickApps client, check out our website for the case study). They’ve created a entirely new product and business off their website. Brings in audience as ‘community’ that creates content, activities, sponsorship opps, etc.

  • http://www.web-strategist.com/blog/ jeremiah_owyang

    Michael. thanks, you should write a blog post about it –demonstrate some examples, data, and case studies on this topic as Data as the Prize.

    No worries about second, third, or fourth comments, I’m open to the on topic dialog.

  • http://www.facebook.com/davepanos Dave Panos

    Jeremiah, I’m a bit confused about your reference that this is the first day that Chief Media Officers (is that really a title?) recognize the value of social media in a world that wants to talk back.

    In February 2007, Cisco acquired Five Across so that they could get into the community building business. That was exactly one month before USA Today and Pluck launched the first national media property with social media at its core. Thirty months later, Cisco is announcing its first media company customer — with two artists live; while over 450 media company sites are powered by Pluck.

    Our experience is that mainstream media companies figured out the value of social media a long time ago — and actually pioneered its application as a core site experience. Don’t let those CEOs with the fancy Telepresence system fool you. In this case, they are the last ones to the dance.

  • http://www.cisco.com/go/media Scott Brown

    Jeremiah,

    Great analysis as usual.

    The social entertainment experience is definitely a new(er) opportunity for media companies, but as we’ve discussed: building the technology is the easy part. Helping media companies shift business models and perspectives to tap into that social experience is the longer, tougher job, but ultimately that’s the approach that unlocks the real economic value.

    Deploying individual widgets or one-off social sites is great for experimentation, but as WMG CEO Edgar Bronfman Jr pointed out yesterday, it’s all about the ability to scale when you want to turn an experience like this into a meaningful business. Economies of scale is the whole point of having an integrated platform and a centralized data source like Eos for all your efforts.

    Michael, thanks for the best wishes. I’ve always been more of a distance runner than a sprinter; we’ll see you on the track. 8)

    Scott Brown
    Sr Manager, Marketing
    Cisco Media Solutions Group

  • http://www.web-strategist.com/blog/ jeremiah_owyang

    Dave (Co-Founder of Pluck)

    Thanks, it could be a title, but we know the responsibility and role exists –regardless of business card. I’m watching this dance, interesting to see the established incumbents that can grow organically into brands compete with Cisco who’s coming in from top down. The situation gets interesting when the CIO/CMO needs to evaluate an enterprise strategy to community platforms –and decides to go with what works from a distributed play, or go with an enterprise play.

    Dave the fancy systems Cisco provides is something you can’t overlook, why? It’s representative of your enterprise class competitor. Cisco is selling end to end solutions –competitors will need to out maneuver the Cisco battleship. What would I do? take a look at incumbent CMS systems at media brands –and develop partnerships immediatly.

    Scott, (Cisco) been hearing information that Warner music previously had Drupal deployments for some artists, do you have any information on how migration is handled from legacy to Eos systems?

    These sports metaphors are a hoot. I guess that makes me the bookie.

  • http://www.comradity.com Katherine Warman Kern

    Thanks Jeremiah, I will RT this post. Totally agree with the potential for media companies to merit subscriptions by adding the social dimension to information and entertainment. Technology may make it possible for individuals and media brands to “socialize.” But that doesn’t mean they will. Individuals and media brands alike are inhibited maybe even intimidated by social networking. Based on our analysis of the problems inhibiting individuals and media brands from forming the trust necessary to interact socially, we have designed a solution and seek technology partners interested in collaborating.

    Don’t hesitate to contact me at katherine (at) comradity.com if you are interested in learning more.

  • http://www.elasticbrands.com Tim Dempsey

    Jeremiah,
    Thanks for sharing this. There’s an additional aspect to these markets, though, which seems to be missing. With the acceleration in the flow of information and ideas to which the ‘social web’ has greatly contributed, comes a need for agility — to be able to launch artists, tours, CDs, special fan events — instantaneously, and yet for each to be feature-rich socially.

    At the height of disillusionment about ERP, pundits referred to companies “pouring the wet cement of SAP” over the enterprise. Going the hefty, proprietary route of the community platforms and chubby ECM / WCM products is one way, but at least one competitive media player, Sony, has taken another approach: open source (Drupal). Seems they’ve got scalability, agility, localization to multiple languages — pretty neat solution.

    Reasonable alternative? I’d love to hear your take.

  • http://www.onesite.com Thad Martin

    An enterprise-model is certainly nothing new (agree with Michael) and critical to many media companies who have a broad set of properties. We even have a patent still pending on enabling social interaction across multiple domains (http://tinyurl.com/oytb). Old news.

    Those audiences are very, very different, even from artist to artists. Those are different audiences that will demand different experiences. Right now, aside from some skinning, “enterprise model” seems to mean the same user experience and flow for every site. In reality a country artist may see fans that want very different content and different interactions from the fans of an alternative rock artist. It is something ONEsite noticed very early on with radio – even stations needed different experiences.

    I believe it echoes some of Adrian’s sentiment – a platform can be a powerful tool, but it takes more than a cookie-cutter experience for a website to be competitive and compelling for a user.

    But to second Michael once more, certainly welcome to the game, although definitely a bit late. And things certainly move very fast.

  • http://www.facebook.com/profile.php?id=713265422 Michael Chin

    Ugh, you mean I actually have to do some real work and thinking? Man…can’t I just tell you what I think? No one will believe me anyway.

    Scott — “building the technology is the easy part.” Is that why it’s taken Cisco the better part of several years to catch up to were KickApps and Pluck were several years ago? Sorry, I couldn’t resist.

    I get your point though and in some ways agree with you–I mean, we’ve had the great honor of working with some of the most successful brands in media, entertainment, CPG, B2B (oh sorry, Cisco of course sells hardware to many of these companies, I’m sure it’ll be able to figure out how to help them be successful in engaging customers via the social web. Duh, naturally).

    However, we should put aside the 50k ft stuff, the one off’s, widgets, experiments and economies of scales, and let’s look at the real businesses. Now, today.

    But as you say, we’ll see you at the track. The rubber meeting the road so to speak. The puck meeting the ice.

  • http://www.facebook.com/davepanos Dave Panos

    Jeremiah — good insight around developing partnerships with the leading CMS vendors (and let’s throw in Analytics vendors while we’re at it.) That’s why we’re pleased to count six of them on our partner team, where we regularly integrate with them in the field and in their core product line.

    Now, it just remains to be seen if the people buying Cisco gear for a media company’s outsourced data centers have anything to do with the SaaS developer tools that site GMs and their web developers are choosing today.

  • http://www.facebook.com/derekshowerman Derek Showerman

    Jeremiah, have you seen http://www.modlife.com? One of the Blink182 members started this with his own capitol. It needs some work, but looks like the basis for the future of the music industry.

  • http://danceamongelephants.wordpress.com Mike Mathews

    Great post Jeremiah. As a lowly end user, I’m interested in seeing the results of all this technical capability–extremely capable technology, as evidenced by all the comments here–but I think you nailed the big problem with the list of opportunities and challenges at the close of your post.

    Frankly, I don’t believe the media companies can change their business model to meet the audience they want to engage. The media companies may be able to implement the technologies with the help of some great technology partners, but I expect them to stub their toes on the business strategies. There are some fine marketing minds in those companies that will bring in some wonderful business models. But the old guard will kill the baby before it breathes to protect their existing model–which they may not have noticed is dying because it no longer fits the market need and not because of a lack of market size.

    This has been the reaction at every turn in the last ten years, we’ll see if these companies can make the right move to save themselves for a change. On the bright side, the artists are doing great and will continue to develop new ways to meet their audience needs and desires.

  • http://www.facebook.com/jasonjaynes Jason Jaynes

    Jeremiah – thanks for the post. It strikes me as odd that you would state the following, “As media companies develop their own communities this takes some power away from social networks like MySpace, Bebo, and Facebook.”

    At Pluck, our customers are most successful when the end goal of their community is not to compete or take away power from existing social networks (e.g. Facebook), but instead harness the power and value those networks provide.

    The fact I can submit this comment on your site using my Facebook identity, enticed me to contribute and take part in your community. As a result, you have data and insight on me as an individual you did not have previously. Plus, the conversation continues on your site.

    The websites that are successful in the long run will leverage social media tools on their own sites to gain insight and understanding, while harnessing the power and tools provided by social networks to entice users to participate.

    We, at Pluck, will have a lot more to say on this topic next week, so stay tuned!

    Jason Jaynes
    Director Product Management
    Pluck

  • http://www.cisco.com/go/media Scott Brown

    Jeremiah, WMG still has a number of very successful Drupal deployments; probably will continue to do so. That said, migrations can and do happen to Eos.

    Back in the Bubble, the Net Impact Study — http://www.netimpactstudy.com/NetImpact_Study_Report.pdf — (done by folks like Hal Varian, then at UC Berkeley, and Bob Litan at The Brookings Institute) found that enterprises that deployed technologies before reworking their underlying business processes/models experienced a ~50% lower productivity return than companies that re-engineered processes first to leverage new technology capabilities. Even though Eng and IT groups might disagree, I believe it’s far more difficult to fundamentally shift how a multi-billion media company thinks about engaging its audience than it is to build/deploy a new technology.

    The media companies I talk to are at the tipping point with social media. They’re at the end of pure experimentation and are starting the hard process of looking at their core processes (not just incremental stuff on the edge) and identifying which tech platform best suits their needs. Hey, we never said Eos would be perfect for every media company. We built it for folks that want a highly customizable audience experience, an integrated administrative environment across a portfolio of sites, and a unified data layer.

    On a final note, I completely agree with Jason’s comment. Social platforms are not binary decisions because ultimately it’s about delivering an experience to a fan whereever they are. That’s why media companies need complementary solutions to reach fans in multiple locations.

  • http://www.mindby.com Brent McConnell

    Interesting post and interesting product, but a product does not make a community. I fear that most corporations have only a vague idea of what they are trying to do with the “Social Web”. In today’s community building, users (aka “fans”) don’t want an “experience delivered to them”, they want to be a part of the experience. They want to influence decisions and feel like their opinions valued. They want to belong to something special. If Cisco has created a product that can do that WoW! I’m way too skeptic too believe that.

  • http://www.facebook.com/profile.php?id=713265422 Michael Chin

    Scott — I’ve not read the Net Impact study but I will. Thanks for pointing it out, I’m sure it will be very enlightening.

    Wait, did you REALLY cite a study about the Internet that was written in 2002 and use it to reinforce your point about today’s web? Nevermind, I’ve not read it so I won’t judge or make assumptions. Also, good of you to mention that the study was sponsored by Cisco.

    The media companies that you’re speaking to are done with experimentation? So, you’ve got it all figured out? you’ve got it all nailed down? You’ve proven how it works? You’ve got the magic formula for engagement and a PROVEN method and business model that comes with it? That’s really interesting.

    I call.

    Show us some examples of how your clients are done with experimentation and have proven business processes in place with the degree of certainty that you’re claiming.

    The real question I have is how you come to that certainty and new business model without testing it out in the current web environment.

    One thing I’ve learned in this industry is that we’re on the very edge of the start line. Our clients evolve their digital businesses at a very rapid clip right now. Not because they have flaky processes. If you’ve been executing in this space for any period of time you’d know that it’s because that’s the nature of the beast.

    Show me I’m wrong.

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  • http://www.web-strategist.com/blog/ jeremiah_owyang

    Had some time to sleep on this interesting topic, what I’m seeing from an industry perspective is two approaches: 1) Bottom up and distributed, which is how it’s been done till now. vs 2) Top down and enterprise sell, a newer approach. Each approach has it’s own merit, and I’m not sure one will win out over the other.

    Later, I think I’ll have a podcast on this topic and allow some vendors and client side brands discuss this so the market can hear more of the different approaches. The goal? Help media brands (buyers) understand which type may be best for them.

    More on that soon.

  • http://www.facebook.com/profile.php?id=713265422 Michael Chin

    I think you’re right on the two general approaches. I don’t think they’re mutually exclusive, in fact, entirely complementary. A few things to think about for a media company:

    1. New distribution channels = new business models. As you say, fish where the fish are, and that’s what the 3rd party social websites do really well. Aggregate audience. You have to ask yourself what the business objective is on these bottom up approaches. They’re great channels for marketing and awareness. Are they great as a direct revenue channel? Maybe but a bit more challenging if that’s 90% of your objective.

    2. An integrated approach. Just as brands are doing this, so are media companies. Reach your audience, drive them to an experience with content or activities that compels them to engage => call to action, => sales opportunity.

    Why not just engage within the bottom up destination? Maybe you can. #1 consideration = relationships, data and insight. Other consideration = how much control of the experience can you have?

    Will people want to engage outside of 3rd party social website? Well, that depends on what you have to offer. Websites aren’t losing relevance. Crap websites are (another topic you’ve blogged about). Great experiences like great content and great products will always be able to attract an audience and customers.

    A case study you ask? VIBE Verses was community of hip hop/rap enthusiasts and wanna be stars that was created by VIBE Magazine (I’m excited to hear that VIBE.com will be coming back online soon), think American Idol for hip hop/rap, online. People used MySpace and YouTube as viral marketing channels for a user uploaded and community voted contest. Contestants said to their friends: “Come vote for me!” They took over MySpace’s Hip Hop channel to feature top submissions. Drives traffic back to the site. Community grows. Highly targeted. Highly contextual. Very attractive to the right brands. VIBE goes from a static one way publisher to a highly engaged community.

  • http://www.facebook.com/profile.php?id=713265422 Michael Chin

    Actually, The Community Roundtable is holding their bi-weekly lunch right now, check out #theCRlive. Always a very interesting discussion, this was just Tweeted: Talking about community management as managing a complex systems and how to set boundries & incent behavior.

  • http://www.facebook.com/modza Michael Odza

    Excellent post, as usual, and also as usual it (well, you) attracted stimulating and lively discussion. And everyone is right, but I’m betting that Mike Matthews and Adrian Chan are more right. (Righter?) The problem is that “media brands” just aren’t (brands), generally speaking. I remember the president of Simon and Schuster book publisher wondering how to promote S&S as a brand for bookbuyers. He hated the fact that people wanted the next book by author x, rather than the next book published by S&S. It’s great that Cisco continues to move into new business areas, but I don’t think any “fan” is a fan of the enterprise — except perhaps the person who sells something into that channel.

  • http://www.imagineyourreality.com/blog Taylor Ellwood

    Great post. I think it will be interesting to see how these specialized sites engage and create closer relationships with the fans. I would suspect though that this really won’t hurt other social networking sites such as Facebook or myspace or bebo…if anything it’ll be another outlet or vector for brands to reach out to client, fans, etc, but one used in sync with the other social networking sites. What will be interesting to see is if these brands will go so far as to offer social networking site specific offers, so that you have to be on a particular social networking site to capitalize on an offer.

    Taylor Ellwood
    Social Media Coach

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  • http://www.web-strategist.com/blog/ jeremiah_owyang

    Michael from Kickapps, the Vibe case study is interesting. Media brand and artists are learning that youtube and myspace are for viral marketing –but aren’t the homebase for their top fans. It’s clear, we need both as they represent different fans in the funnel. With that said, I’ve pushed on community platform vendors to quickly adopt the APIs where their client’s end users are located at (like FB connect)

    Taylor, we should expect media brands to give customers on their branded community special access that they can’t get from being on Facebook/Myspace

  • http://www.superiorpromos.com Promotional Products

    Very thought provoking article. I would agree that business owners must always be willing to evolve their business model or they will be left in the dust by competitors who are willing to adapt and have the means to do so.

  • http://www.facebook.com/alpeshdoshi Alpesh Doshi

    Wow! what a great discussion and wonderful insight from media companies and vendors. There still seems to be something missing for me. What does the consumer (fan, artist etc) want to see? How do they want to interact and participate in the social web? What user experience do they want?

    From our point of view, media and entertainment organizations must focus on providing and experience to the user how they want and their favorite social community (if they have one).

    Also, absolutely agree with the points made that this is about operating model and business model change rather than implementing technology. Taking that approach provides a better chance of a successful project.

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