RealTime IT News

Growing Pains for Web 2.0

NEW YORK -- It seems a safe bet to say that traditional publishers and advertisers are still learning the ropes of new media. The process of transitioning from a top-down, one-way communications model to the pluralistic Internet world where everyone can create or comment on anything, and no one wants to pay for anything, has gone in fits and starts, and is far from complete.

Here at Columbia University on the first day of New York City's Internet Week, a panel of academics and media executives offered a few glimpses of what's working and what isn't.

"It's very exciting," said Lisa Hsia, senior vice president of new media and digital strategy at Bravo. "But it's like being on a surfboard and holding on for dear life. It's changing constantly."

When Hsia took her position at Bravo two-and-a-half years ago, she said she wasn't really in charge of anything. The marketing department handled the cable channel's Web site, and there was no thought of online video distribution or social networks or mobile apps. Now, Bravo has all of that and more, with Hsia overseeing about a dozen content streams.

So how does that change the revenue pie? Not much. Hsia said she wasn't sure what percentage of Bravo's revenue comes from the new media offerings that she is in charge of, but that the number would be in the "single digits."

The lion's share of the revenue comes from the fees paid by cable providers to broadcast the channel and, of course, old-fashioned 30-second ad spots.

"I cannot create content if I don't have advertising," Hsia said. "That's the business model."

So how does that business model translate online? The panel was generally complimentary of Hulu, the joint venture of Fox and NBC Universal, which offers clips and full-length TV shows with pre-roll and mid-roll ads.

The panel agreed that television and movie production companies would be well advised to learn from the mistakes of the music industry in how it addressed the challenges of the Web. The music industry trade group, the Recording Industry Association of America, continued to cling to the model of the packaged album in spite of the evident consumer desire for individual songs. The RIAA has since gained notoriety for the thousands of lawsuits it has filed against individuals it claims have been downloading music illegally.

"What they proved is that if you stick it to the consumer long enough, they really don't care about your business anymore," said David Rogers, director of the Center on Global Brand Leadership at Columbia's business school.

Still dwarfed by YouTube

With Hulu, television producers are making their content available in an ad-supported, user-friendly environment, though with 62 million streams in April, its popularity is still dwarfed by YouTube.

"It's good to see a big corporation actually giving viewers something that they actually want to watch, rather than punishing them and suing them, but it's just a start," said Jeremy Kagan, vice president at the digital ad agency Publicis Modem.

The dilemma facing media companies bears a thematic similarity to the problem that advertisers are wrestling with when it comes to the Web. Both are tasked with giving up control of what they value the most. For the media companies it's content, for the advertisers it's their brand.

Part of the reason social networks and user-generated content sites like YouTube have been slow to monetize has been advertisers' hesitancy to place their brand alongside content that is patently amateur or even obscene. There is no algorithm to filter content on a site like YouTube to determine which clips would be a good match for an advertiser and which would be inappropriate, Kagan said.

Google's workaround to that problem has been to focus its advertising efforts on YouTube's partners, whose content regularly attracts a large number of users.

Then, too, in non-advertising situations, the phenomenon of the participatory Web can cut both ways. The panelists pointed to the lesson from the now famous Dell Hell episode. Three years ago, blogger Jeff Jarvis touched off a firestorm when he started writing about the lousy customer service he received when trying to troubleshoot a new laptop he bought. In true viral fashion, the readership spread, the comments about similar experiences came pouring in, and it became a public relations nightmare, completing blindsiding the leading computer maker.

The panelists said that Dell had clearly learned from the incident and had begun doing a better job of monitoring blogs and other online forums where their brand might be taking a hit. Jarvis has also praised Dell for turning its customer service around.

In a similar vein, columnist Bob Garfield started the site Comcast Must Die to protest its customer service. Visitors are invited to report their own travails with the cable company on the site's blog.

Leaving the humorous name aside, what Garfield's site does is provide Comcast with an online customer service line, which it can use to address problems, and hopefully improve its customer service, the panelists noted. That is, after all, Garfield's stated mission in maintaining the site.