New Media Calls for New Sports and New Coverage

Have you noticed the slow pace at which the existing sports leaders have adopted any meaningful attempts to bring their products to the new media? In fact, if you look at all the majors (MLB, NBA, NFL, Premier League Soccer, etc.) there has been no progress at bringing products online in TEN years!

While online growth in general has been astronomical and new solutions and products make clear the unparalleled growth of online as a marketplace, advertising channel and distribution network, the major sports have held back. If you have read this blog before, you know that I have attributed this reluctance to lack of foresight, old-minded execs who don't use new media and other trite, non-original analyses. In fact, one old media exec told me he thought I was sounding a bit pedantic.

So, I have been doing somewhat of a deeper assessment on this issue recently and have come up with another explanation, one that I believe points toward new, disruptive markets and that is based on very real growth opportunities.

The core of this new analysis is that rather than try to fit old sports into new media using existing events developed with old media in mind, it is time to develop new sports with new media in mind. ("New Sports" can include permutations of old sports). We need to assess what new media does well and tailor the sports opportunities so that they take maximum advantage of the best of new media. So, big arena events like football games that are so great for old TV based media may not be right for the new media. NBA games might work perfectly well on HDTV, but interactive one on one tournaments in front of smaller crowds at suitable locations might be better suited for new media.

I saw the light last Friday night up in Reno, NV, that known center of all things Sport! I was attending the Pole Vault Summit (as Dad of someone who wants to fly over 20') and accidentally stumbled into the Summit's Friday nite extravaganza where I saw the light.

What I saw was all at once shocking, extraordinary and inspiring. More than 2,500 people were crammed into the Grand Sierra Resort's Grand Ballroom to watch the USA's best/elite pole vaulters compete in a 'pole vault only' event on the stage of a Casino!

Men's and Women's competitions were held simultaneously with criss crossing runways and ten vaulters of each sex vaulting about 30 seconds apart to ear blasting tunes of every generation since Wodstock and an ongoing, interactive commentary that urged the vaulters to interact with the audience. Neither vaulters or audience disappointed.

Since the audience was comprised of every serious pole vaulter (and their coaches and parents/family) in the USA, the place rocked! They vaulters became entertainers, inciting the crowds with great personalities, spectacular athletic skills and perfect, beautiful bodies. The audience interacted, participated, appreciated and had a rousing good time!

And it struck me that the organizers of the Pole Vault Summit have struck gold!

Rather than restrict this amazing event to the sinking anchor of US track & field, they have declared the event's independence and reconstituted its presentation so that it is inspiring to a new generation of US vaulters and integrated with and suitable to the media that the vaulters use!

How did this happen and where is mainstream media on this opportunity? (I'm guessing you saw nothing about this on the 6 o'clock news).

This happened through the vision of one unselfish man and one institution that was willing to allow him to go do something wonderful! That man is Bob Fraley, world renowned track coach at the institution, Fresno State. Over the past 20+ years, Bob pulled together this activity to the point where it has its own momentum and is a Sport unto itself! Check it out.

The point of all this is that any sport can be reconstituted to inspire the core of its audience in ways that suit and interact with that audience. New media can be at the heart of this, with enabling technologies, distribution and $.

What new media does is make that audience relevant and interesting to sponsors and marketers and as a marketplace, by bringing people together. When knowledgable, dedicated people like Fraley are in charge, they bring out the best in sport and present opportunities that those of us in the marketplace that is new media have been dreaming about!

Now, who is going to bring this type of sports enterprise to the masses? We need a Roone Arledge of new media.

Any takers?

Automated Revenues: Fact or Fiction?

In the world of internet and content publication and services one hears the term "automated revenues" so often that an analysis is in order.

First, a definition. Revenues is $. Pure and simple, money that comes to you in reward for putting your effort, ideas or ownership to work for someone else. In short, as the reward for transferring what is yours, one receives compensation.

In business, we call the money received revenues. Automated, as intended in the phrase, has a meaning that is just the opposite of effort! In fact, automated means doing something without effort.

When coupled the two words conjure up a picture of obtaining $ without effort. Is that really it? Very close. Automated Revenues is the Internet equivalent of the Fountain of Youth that drove 16th century explorers to the sandy beaches of Florida!

But is there really a reward of money without effort? Fact is, NO. There is significant and substantial effort, just not the usual kind. Bear with me as I explain.

In most businesses, the only way to earn revenues is to make a product or service, sell and market, deliver the product or service to the customer, then collect $ if the customer is satisfied.

In internet automated revenues businesses, software does all of the above. Software makes the product or service, markets it to consumers or businesses who find it on the Web through search or other automated web tools. The product delivery is one hundred % digital, so no human being need be involved in delivery. The money is received through automated transactions if there is a price for the digital goods, or advertising solutions are plugged in if the product is free but supported by ads.

So, the things most businesses are accustomed to doing are done by software systems, hence the term automated. But, there are tasks that must be undertaken...the software must be developed, then maintained. The network and servers must be managed, maintained and upgraded from time to time. The money must be received and anaged and bills paid.

In a well conceived and managed automated revenues business, the time investment can be minimal compared to an ordinary business. In fact, it is possible to run many automated businesses at one time. Many are doing exactly that. There are milions of internet spawned automated businesses that provide all or part of the support for families. And there are large automated businesses that are amazing and growing every day. For example, automation of systems allows Google to have the largest revenue to employee ratio of any company in history.

In a matter of days, any major media site (e.g. ESPN.com, NBA.com, MLB.com, Getty Images etc.) could be transitioned to an automated business with 50% of current staff and revenues per employee far exceeding Google's current $1.5M ratio (note that the Google ratio is much lower than it would be if they were not spending so much on activities unrelated to revenues).

Funny, considering the shareholder activist proposals at YHOO, I would probably just drive that business to a pure automated system and drive the price of the stock up based on a goal of $5M per employee in revenue!

Am I serious? You betcha.

Consider YouTube with 100M videos viewed and just 70 employees or the pre-Fox MySpace run with nothing but geeks (10) and servers.

This is how it gets done today and it is also the reason that private equity $ is flying into Internet companies in spite of the clear knowledge that the days of high flying internet IPOs are over. The fundamentals per classic bricks and mortar, General Motors type analysis are simply too good to ignore!

Much more coming on this subject.

eBay buys StubHub for $310M!

Hot off the press is the announcement that eBay is paying $310M for StubHub, the online market enabling ticket sales between consumers (some call it scalping!).

This is a natural play for eBay, picking up a company that is well versed in the 'sales enabling technology' space, a company that has been doing quite well.

But it wasn't always easy for a group of really smart guys at StubHub in San Francisco.

The StubHub Founders, especially Jeff Fluhr, CEO, are bright guys who came up with an excellent idea and ran with it. When their first idea (that the Sports rights holders would want to tap into the market and share revenues and drive toward an IPO) failed because the rights holders flubbed the handoff, Fluhr was brilliant in recognizing that he had to change what he was doing and avoid partnerships unless they were on equitable terms with reputable organizations. Otherwise, with the waffling 'partners' who really might prefer he fail (e.g. NHL, MLBAM), Fluhr decided that StubHub would pay the freight for advertising on their sites and keep all revenues from StubHub sales.

In short, StubHub started out with a strategy to provide a service for the obvious beneficiaries (the Sports teams and leagues) with a rev share for successful sales. When the Leagues did not cooperate, Fluhr abandoned the services play even though he was four years into it, and went with an 'in your face' strategy, taking them on in Court (Patriots and Yankees) and paying the freight to get fans to his site to buy and sell tix. Almost immediately the site turned around and started making $. How close was StubHub to being stubbed out? We'll never know the real deal, but it was close enough that employees were jumping ship, including co-founder Baker.

What amazes me is that once again the Leagues and rights holders missed out on an opportunity to build a business with a smart, willing service provider. All they had to do was provide traffic and cooperate in enabling a market that everyone knows exists. They could have shared in ticket sales revenues and gotten big equity kickers in a very big business. Instead they underperformed on obligations where they worked with StubHub and did everything they could to turn the market into one where StubHub competitors like Ticketmaster paid rights fees to play in the rights holder ballparks, the only model that the rights guys seem to be comfortable with although they continue to give lip service to visionaries like Fluhr.

So, they almost killed StubHub, then missed the gravy train and watched as a really smart guy (Fluhr) made it happen anyway! His original strategy should have been a multi-billion dollar play with leagues and teams as partners. Instead, because of stubborn, arrogance born stupidity, he and his investors took 100% of a smaller play and the Leagues and teams got zilch!

Will they ever learn? Unfortunately for the financial stakeholders, it seems the answer is no...

Congratulations to Jeff Fluhr and some really smart advisors, including Steve Young, Dave Checketts, Brian Bedol, Allen & Co. and Frank Biondi.

Sometimes in the Internet it's like a toboggan ride down a steep ski slope. You need to hang on tight for your life while you fly in directions unknown and be willing to crash, then pick up the sled for another ride down!

2006- the Year of UGC- What does it Mean for the Industry?

UGC- User Generated Content and I promise not to use too many other acronyms!

As you probably know, Time Magazine awarded its "Person of the Year" award to "You" in honor of what You are doing in generating the new Internet Content with User Generated Content. They even put a mirror on the cover so that You can see Yourself!

It is time that this blog address some of the issues raised by UGC and its implications for our digital media industry.

To be the cynic, UGC has been around since Day One of the Internet. I had my first blog when my Windows 95 system made FTP easy and Netscape Navigator Gold put out the first WYSIWYG editor. Not much has changed (technically) since then. The publishing step is easier and you don't need FTP, but you still need an idea and the focus to post it as often as possible and that is the hardest part.

MySpace and You Tube are not the first UGC enablers to hit it rich, either. YHOO bought GeoCities in 1996 for a ton of cash!

The difference is the proliferation of easy publishing tools, services and digital devices to produce content beyond the written word. Yes, cheap digital cameras have made everyone a producer!

While it is easy to understand why so many are producing, it is harder to grasp the reason that people are spending so much time looking at other UGC. The social element of this inserts a business model that formerly did not exist. The big ($60B?) question is whether this is hurting old, produced media (the rights protected versions) and what the Big Boys should do (if anything) as the result of its emergence.

There is a long advocated theory in digital media that there is never an emerging network or channel that is bad for the existing media, that media will consistently expand to fill new opportunities and that old channels will survive. While that sounds like some bullshit coming from the mouths of old media execs trying to save their skins, there is definitely some validity. Television as we know it is not going away. Radio continues to be strong as does in Theater movie entertainment. New Channels mean new outlets and new ways to cross-market as the channels develop. That does not mean that the content businesses that inhabit the old channels will survive. They need to recognize the new opportunities and address them, service their customers wherever they reside and use new media as both new $ opportunities and feeders for old $ plays.

So, UGC is definitely HURTING Old Media because new customers are looking at content Old Media has nothing to do with. It is as though the old media boys are missing out on an entire generation of customers.

Why are they missing out? It is simple....it is because they are fighting the new channel and its fundamentals. In short, people want to see lots of content, see it where they want it, how they want it without paying for it. Rather than riding this roaring current, old media is fighting the rip and while they are not drowning due to the continued vitality of the old channels, they are not participants in the new media play. Worse, they are allowing the biggest disruptive strategy in business history to take a stranglehold around their throats.

If you have read this blog before, you know that I believe that success in the media business is all about disruptive strategies. The old media boys have set themselves up for disruption and if there is a danger that UGC brings it is this. The next play for UGC is the living room and the television set. Interactive TV will mean UGC and free content on the TV and the rights boys are likely to be found with their pants down again.

What should they do? Forget the fight. It is lost. UGC is here. So, instead of fighting a losing fight, ride the big wave....put every bit of image and clip content you possibly can into the UGC world for syndication to any site that wants it (hire 50+ UGC editors to do nothing but put your content into this world). Use YouTube and MySpace as marketing vehicles for going to movies and games, watching shows and games on television and getting consumers to buy rights to better content online. And One last thing....wake up to the fact that users have huge systems that can embrace significant applications. Capture the ardent fan and his or her system with a proprietary client that DELIVERS your amazing content to the desktop along with your ads and upsells! And, help the fan create their own UGC relevant to your content and post it to your environment so that they STAY HOME with you.

Yep, use UGC to create the means by which you acquire and strengthen customers, make $ and siphon the UGC enthusiasm into your world. In short, develop and execute a strategy to disrupt and bypass the biggest disruptor in history- Google!

More to come....