At the heart of the classical model of advertising is a simple idea: Ads create purchase behavior. Advertise a lot, sell a lot. Classical advertising has little need for quality. At its cold heart lies the notion that advertising organizes demand, that you, the customer, are sort of an idiot: highly susceptible to flattery, comedy, sex, free stuff, and, most of all, repetition. You can be made to buy a product. No matter how sophisticated the icing you put on the cake (or how you improve the model), classical advertising rests on the simple foundation of recency, frequency, and money.

Ted Levitt, the late, great Harvard marketing theorist, turned this idea on its head. People don’t buy products, said Levitt. They buy solutions to problems; advertising is panacea to nothing. To sell, to succeed, companies must innovate—at very least, pursue incremental, non-disruptive innovation: e.g., the sixth blade on a new razor. Give customers more value than rival products, a better mousetrap, a better solution to their problems, and they’ll beat a line to your door. Advertising plays a role here too, but strategically speaking, it’s a different role, advancing the notion of customers as intelligent agents actively calculating and organizing their needs and values—albeit still as less-than-equal players in the determination of how demand is created and sustained.

Recently, I’ve been wondering about what Levitt would say if he had witnessed our revolution, the one wrought by the Internet. What happens when customers become the equal, or even the better, of advertising and marketers? What happens when advertising no longer plays the dominant, pursuers’ role in this relationship, and consumers hold the cards because their choice—e.g., their Google searches—is the leading edge of need and demand? Or to put this another way: When advertising becomes commoditized and consumer intent becomes self-organizing, how do companies organize self-organizing demand?

Post-advertising solutions

As AdSense and AdWords and PageRank show, it’s not as if you can count out the importance of advertising. Birds do it, bees do it, even Google does it, so it must be good: Advertising still serves a purpose in the atomized, anarchic world of search, even if that purpose is now merely to make algorithmically relevant matches between consumer need and products.

Even in this world of predictive matching, however, advertising, even advertising with well-written SEO, is losing its edge. This is particularly true of brand advertising’s expensive flattery (banners and brand campaigns). Not because brand ads don’t tell good stories or rivet brands to emotion (take a look at American Express’s My Life, My Card campaign), but rather because (as Chris Anderson says in his new book), customers basically orgasm when they get shit for free, and brands haven’t yet figured out how to compete in this environment. As long as price is a major consumer pain point—and that’s forever—you can bet your bottom dollar that advertising will continue to decline against Free. You can build the best mousetrap in the world, but if consumers find a mousetrap that delivers 90% of the value at zero percent of the cost—you’re sunk, dude.

Of course, most companies still haven’t accepted the idea that free products in free markets are good-enough consumer substitutes. They still think they are competing against advertised rivals instead of these reviled free purveyors/pirates. “The way to compete with Free,” says Anderson, “is to move past the abundance to find the adjacent scarcity.” I agree. But “adjacent scarcity”—e.g., the premium content consumers you supposedly going to offer for purchase to customers—isn’t easy to sell either. And it doesn’t leave you with much of a business model for the free stuff you’re giving away. So it’s back to square one: what’s advertised (and supposedly higher quality) versus what is free and frequently good-enough.

Another solution is to get consumers to do your advertising for you—what passes for much of what is called social media today. The theory goes that if advertising won’t work, influence will. You can zap a commercial, but you won’t zap your best friend’s blog or the tweets and (surreptitiously sponsored) Facebook status updates of someone you sortakinda trust. This kind of “social marketing” certainly seems to be gaining traction right now, at least among so-called social marketers. But saying you need social marketing strategy today is a little like saying you need dial tone strategy. The promotional stuff you load up on Facebook or Twitter isn’t social media, it’s social selling. Slathering “Follow us on Twitter” on your websites, emails, products is a kind of pure silliness that mistakes advertising for engagement. It falls absurdly short of the sophistication that self-organizing audiences require. And it reminds me of nothing less than the bubble pronouncements of Web 1.0, when every company trying to “get the web” slathered “Follow us at www.anycompany.com” on its products. It doesn’t work, except to create awareness that you’re advertising in a new medium. To which most consumer say: meh. (Counterexample: Coke.com. Its home page is nothing but a link to Facebook.)

Social media 2.0

So, if advertising is commoditized and “social marketing” is commoditized, what’s left? How do you organize self-organizing demand?

Well, first let’s look again at why purely promotionally focused marketing in nano-niches over Facebook, MySpace, Linkedin items doesn’t work. Why shouldn’t you advertise the latest feature by Author A in the new issue on a Facebook page; promote that new concert via a MySpace page; advertise a 10% discount off “allready [sic] low prices” via Tweets. After all, these do their part to a media buy.

But compared to the real gains these companies could create by creating service to their customer base through conversation and engagement—or conversely, concentrating promotional power at the touchpoints of specific use-cases—these promotions look like wasted spend chasing cheap dollars from customer segments. There’s no margin worth chasing here, and the instant someone else makes a better offer (or this consumer is convinced that Torrents aren’t the end of the moral universe), they’ll be gone. (See the recent Stephen Fry brouhaha on this very subject.) Of course, the counter argument is that the power of cheap promotion is all in the long-tail—it’s a volume game. But if you’re going to be in the shmatte business instead of branded fashion, you’d better be prepared for low margins, heavy debt to support inventory, and nasty, fast-paced churn as your customers run. I’m not saying it’s never worth it, only if you’re building a brand, it’s a distracton from finding that “adjacent scarcity.” A tough game to play

A more interesting game—more rewarding to brands and more lucrative, with less churn and higher margins—is the one that builds conversational and engagement gambits based on already existing social relationships, digging into what John Seely Brown and John Hagel called the social life of information: the information that lives, breathes, and functions in and through social relationships, online and off.

From this point of view, all media are social—the big question is how you unlock their social power. Just as we say that the only communities worth building online are those that already exist between people—that our job in building community should be to unearth and facilitate the communities that already exist—we can also say that the only media that can break free of commoditization are those that exist within an inherently social construct. The trick is finding the social tentacles  already at work in the DNA of the brand.

Of course that’s easier said than done. Where’s your brand DNA? Cue the consultants, right?

Well, here’s a different answer, one thankfully less indebted to bright shiny object syndrome but still somewhat novel: Don’t think of social media as a construct placed on top of your media, instructing or seducing consumers to accept the ventriloquistic subterfuge of influence., of advertising. Don’t even think of it as sharing or collaborating or creating a conversation. (Although that’s certainly better.) Think of social media as the social construct of every piece of data your organization already owns or can own. Not as an object in a database but rather as part of an exchange—between customer and company. That involves understanding every single utterance your company (and your customers) make as a scarce social bits that must be organized into context(s) and arrayed with that understanding.

Condensed to a single thought: social media can’t exist without content strategy—and vice versa.

Without social context, content strategy is arid taxonomical merchandizing contained by (and girding) user architecture. But social media without content strategy is typically promotion-by-another-name. Together, audience creation and social connection make beautiful music. Together, content strategy and social media perform superhuman feats of revenue creation. Together, they create real service to the customer, unlocking the riddle of “organizing self-0rganizing demand” over the lifetime value of the customer, and not in response to a cheap promo.

And what’s cool is that they don’t do it through Flashy multimedia SEO-immune trickery by the Silverlight of the moon. (And please don’t tell me the solution is custom publishing, unless you’re willing to put your custom published content into the market against paid content.) They do it through the remix and mashup of the content already in the storehouse, the treasure trove of digital assets most companies build or aggregate every day—whatever objects they generate through data creation, including documents, text objects (captions, pullquotes, etc.—) photos, music, video, Tweets… no matter whether they are made by your authors and contributors or your users.

As Andrew Savikas says, Content is a Service Business, but how, exactly? How do you go from “we have a lot of tweets about business that intersect our brand” to ExecTweets, a Tweet aggregator about business; from “we have stuffed suggestion boxes about how to improve our stores” to MyStarbucksIdea; from “we have a ton of blogs about small business” to OPENForum. From registered Democrats to the Obama campaign’s amazing social strategy? Or (to borrow from my own examples above) from promotional chitchat about the latest performance at that big Las Vegas hotel to an entertainment community that brings aggregated news of who’s playing with user comments from FB, MS, etc. Or travel listings that bring aggregated news and blogs about hot destinations with users’ tweets, geodata, and photos—and rankings of hotels, travel agents, and airlines.

The secret sauce

In fact, it’s not so secret—and if you’ve been prescient enough to have some kind of end-to-end XML-based CMS behind your operation, you probably already have a start. Because all it takes it the metadata you and, one hopes, your users, attached to those assets.

Why metadata?

Because that’s the system—on either the authors’ or users’ sides—through which you’ve made yourself searchable. Increasingly, tags are no longer second-order data—they’re the brass lamp in Aladdin’s cave, without which nothing can be illumined. Rub the lamp, and you can turn all those programming stacks into the most scalable, continuously profitable revenue generating data you own. Leave it as pure content or a promotional bolt-on from advertising, and you’re not only failing to create the layer of customer service that drives user loyalty, you’re failing to create the rich and inherently social content experience that users expect today. And as the metadata get better and richer, as the capabilities of OWL and RDF and SPARQL and the rest of the anagrammatic programs of the semantic web (sometimes called web 3.0) become more mainstream—and newsier: like these International Press Telecommumications Council “newscodes” (now being ripped off by AP)—we’ll get to evercooler and more useful mashups of news data, with greater revenue earning potential than ever.

So is anyone doing this now? (Apart from the OpenCalais project already initiated, albeit phlegmatically, in a handful of websites.) OK, here’s a trick question: What is the most successful media company in the world using metatag data to whip-up self-organizing demand?

OK, I give: It’s Apple.

As Kontra (a self-described “veteran design and management surgeon”) wrote in a post a few weeks ago on counternotions, Apple has created an entire universe of metatag strategy and dynamic metatag management via the App Store. Kontra points out that there’s always been a trove of metatag data in iTunes, more relevant to pre-packaged, static content than dynamically updated content. But thanks to changes in iPhone OS3, the App Store now allows for content to be upgraded recurringly and connected to other apps—you can even alert customers that new data is available via push-based numbered badges hovering over your app icon.

You don’t have to be a genius to see where this can go, but in case you can’t, Apple tells you about potential business opportunities push notification and metadata open up in black and white right  on its website: “Create a subscription magazine app where you ask for payment on a monthly, yearly or periodic basis of your choice. Sell extra levels to extend the experience of your game. Build a general-purpose city travel guide app and let your customers pick the city guides they want to purchase.” Obviously a lot more too.

So what’s this got to do with media? After all, publishing hasn’t been central to Apple’s business model until now. Bob Cringely, the brilliant tech (and now mortgage) writer I read as soon as he posts, recently said that Apple is moving slowly and steadily toward becoming primarily a content provider with Apple TV as Jobs’s Trojan Horse. Preposterous though it sounds, Cringely may be right: I’m a (hacked) ATV lover, and I can see where and how Apple might use the aggregated metadata knowledge it acquires from my purchases to create new programming. Genius playlists, in my experience, already do this so well, they’re a total substitute for dj playlists and mixtapes. Could ATV do the same thing for networks and channels? Scary thought if you’re NBC.

But now start to apply Apple’s brilliantly counterintuitive strategy—using broad distributed networks as the foundation for a moated ecosystem—to drive revenue in other media. To steal Jarvis’s WWGD idea: WWAD (What Would Apple Do?): How would you build a metadata strategy for more traditional media companies (magazine companies, newspapers, book publishers, online programmers) using Apple’s model? For book publishing? For a candy company? A digital camera manufacturer? For vertical search with travel, real estate, or auto listings?

This post is long enough as is—mea culpa—but let me finish by pointing to one of the biggest companies to have applied Apple’s lessons to its own business to date, creating a wave of disruptive innovation that may actually succeed where so many others have failed. I’m talking, obviously, about Amazon’s amazin’ Kindle. The correspondence isn’t one to one. You can’t compare the depth or pricing genius behind the App Store with the more conventionally priced Amazon Kindle bookstore. And—to return to the argument I made above about finding “adjacent scarcity” in competition with free models—I’m not so sure how much I’d bet on a DRM-based publishing model when there are so many amazing substitutes out in the wild.

On the other hand, Kindle—or maybe an Apple tablet, we’ll soon see—will I believe one day change the whole way we think of the media product. No longer will we buy a “book”—one day we will buy a relationship to a title. Home reno: we’ll buy a title and a continuing stream of articles and community relationships. (Or you can flip this into a freemium strategy—we’ll get involved in nano-niche communities, and buy their books and teeshirts when they finally appear.) Nothing, not even fiction, will be untouched by the Kindle model: Instead of buying fixed narrative, we will be purchasing a touchpoint in a story, one likely to have living prequel(s) and sequel(s). Whether we fix a badge to the content unit to let you know there’s new material waiting to be pushed or whether you just download it per Kindle, the key to organizing the self-organizing community will lie in unlocking the value of the socially affective (and effective) metatags that can power revenue-generating media. Call it social media, call it content strategy, call it whatever you want. I think it’s the future, but it’s already well under way today.

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Here’s a phunny story how ‘lectronic telephone—from a community listserv (Park Slope Parents) to a newspaper (the New York Post) to a globally plugged in blogsite (Gawker)—can create some interesting ideas about hyperlocal news and community—and how I got swept into it….

Over the last year, the folks who run Park Slope Parents, a terrific Yahoo!-based group (actually two groups with corresponding but not much used websites), decided they were overworked, and—since they are volunteers—underpaid. PSP has to be one of the best electronic communities I’ve ever been part of. The Yahoo listservs—one about parenting, the other for classifieds—are free of abuse, commercialism and flames, and the community just seems to grow and grow—it now stands at nearly 7,100 Brooklyn parents, who, despite the best efforts of Gawker to portray us as over-protective parental narcissists—ok maybe we’re a leeeeetle bit overprotective—use the boards to get info on everything from “help! my baby won’t sleep” to “i need a divorce lawyer” to “i need a nanny” to “i have 2 pair of size 3T boys shoes to sell” to “we’re having a stoop sale this weekend.” As they say at the site my wife works at: “We’re not perfect, we’re parents”—and the same is true of PSP. It’s a real, functioning, and by large protective community. It ain’t perfect or purty, but it works—and it couldn’t have been built without Susan Fox’s focus and dedication.

A year ago, Fox and her core group of volunteers, announced—with no group discussion—that they were moving the classifeds listservs behind the website wall. Not a paywall, at least not yet (although they soon announced fees for real estate postings), but the clear intention was to begin booking revs from the website. The hue and outrcry (remember this is Park Slope) was pretty immediate, and three weeks later, they backed down, reopening the Yahoo listserv (albeit preserving the fee for real estate listings).

Flash forward a year. About a week ago, Fox and co once again tried to mount the revenue question. This time, starting (again) with an Announcement from On High—i.e., without any attempt to solicit comment from the user base ahead of time—the PSP folks again declared their intention to take the groups down from Yahoo! and move them behind a paywall with a $25 annual fee. There are literally pages of reasons why they might want to do this, and the debate has been pretty intense. Although it was kind of dumb to merely announce via ukase this rather momentous change, I give Fox props for defending the idea.  But that still doesn’t mean I agree with her.

No to moderators

I certainly don’t begrudge Fox the right to make a living from her baby. I just don’t want to pay $25 to be part of it. And I don’t like her old media way of handling her community. A good part of why PSP works for me is that it has the freewheeling, open electronic ambience of a broad set of people—without being too small. Critical mass, in my experience, really does amount to something when it comes to social media, especially when you’re actually trying to sell something or have vital needs at stake. (In many instances, there is no “too small.” For example, I was user 11 when EchoNYC was started in 1985, and watched it grow from 11 to 50 to 500 to 1200 to nearly 5000—and I can definitely say there were diminishing returns after 500, but that’s another story…)

My biggest objection to the change wasn’t about paying the $25 but rather the idea—the big idea behind the subscription—that moderators need to be paid to keep the site from deteriorating into a Babel of baby-crazed Park Slopers: debauched dads, monstrous moms, crazed real-estate agents, and loony stroller-obsessed lesbians: that is, the entire LoserGawker stereotype.

Here’s what I wrote on the listserv:

I’d like to add my voice to those who believe that PSP should remain
as it is—a self-assembling, self-organizing community.

This isn’t the first time the PSP folks have made this mistake. Last
year, they tried, unsucessfully, to move us (and we are an “us”) to a
walled off web site where it was envisioned they would be able to
collect either advertising or subscription fees to subsidize the hard
work of its moderation staff (and supposedly add new features and
functionality through a walled off community.) This year, clearly
having thought the issue through less—because both Yahoo and Google’s
group rules forbid “sale of access” —they are trying to replace our
work as a community with their own.

Notice I said “our work.” Let there be no doubt: Susan Fox and Rachel
Maurer and all the administrators have done a terrific job. They
invented this. They grew it. They’ve enabled the self-assembly of an
organic community to turn into a very real online community. They
deserve nothing but kudos. Their hard work and moderation has laid the
foundation for this list to remain free from advertising, free-riders
and commercial exploitation.

But the reality is that the community exists because of us. Moderators
help, but we are the community. And as we’ve seen over and over in
electronic communities—and I’ve been involved professionally and
personally with online communities since 1983—whenever self-assembing
communities assemble, moderators organically spring up to safeguard
the open community interaction.

To put this another way: Moderators aren’t the key to making PSP work,
participants are. We are. The moderators who want to be paid now will
be replaced through our own interaction. Don’t misunderstand:
commercial exploitation and “bad posting” is also an organic
phenomenon of online community. However, if we were to move our
community to a new platform, over time, new moderators would emerge to
take the reins of self-censorship. This is essentially the Wikipedia
model, where (as Clay Shirky writes in his brilliant Here Comes
Everybody), “a few users account for a majority of the edits, even if
they make up a tiny minority of contributors.”

Charging for community will naturally result in a smaller and less
useful community over time. It flies in the face of the natural
lifecycle of parenting. Parents need PSP most when first having kids.
By the age of 3 to 5—pre-school—when kids are a little more
self-sufficient and parents a little more confident, there’s less need
for electronic community to tell us how to deal with cranky babies who
won’t sleep. Similarly, classifieds drop off after the pre-school
years: In the early years when parents need the basic newborn kit,
classifieds are a lifesaver, but as babies turn into pre-schoolers,
classifieds drop considerably—probably because people either throw
away or donate old clothes, but recognize they can repay their early
investment on scarce baby stuff bought only a couple years ago.

It may well be that the walled-off paid community that Susan and the
current PSP want is just different from what some/many of us want.
Something free, self-policing, and perhaps intended for a wider
parenting lifecycle. Something that also allows us to share more
including photos, videos, and more. Something that is selfsupporting
via Google Adsense. That community can be started in minutes, for
free, via Ning.com. I’m not interested in being a moderator or a
founder, but if there are enough people who are interested, maybe this
is the time to experiment. Please get in touch if you feel similarly.

I got about 15 responses from that. And yes, I did start a Ning group—with Ning, PSP becomes a real social community, and the listserv rides right along—but I wanted to test the waters first before opening it up. Besides which, as I said, I have enough on my plate right now…

From farfel to Ning

Around 2:30pm yesterday, just as I was putting the finishing touches on the Passover farfel my dad had requested for our seder—check out the awwwwesome recipe in that link—the phone rang and Jennifer Fermino from the New York Post was on the other end. She’d interviewed a few other people about the raging (har) controversy on PSP, and wanted to talk. Of course I explained that it was pesach, but as soon as I finished the haroset, I gave a call back and told her pretty much what I have here…which was then followed by the Gawker version which is even less illuminating. (By the way, add some brown banana to your haroset for an extra hit of flavor, texture, and yumminess.)

So now’s the chance to open it up social media friends. What is the value of moderation? Do the lowered transaction costs of communities rule out or rule in moderation? How big is *too* big? How do we balance the interests of communities with the financial interests of those who run them? What pay model (forget business model) do leaders of ad hoc communities deserve, if any? Are moderators replaceable? What’s the value (in ROI terms) of a moderator? Of a user? Does self-assembly and self-organization really work? Yes, it’s true, Wikipedia is written by a tiny number of people and there are people there who make it their point to be editors—but they aren’t paid. So many of these questions are at the heart of community and hyperlocal news media generation. What lessons can hyperlocal news sites, whether it’s outside.in, the New York Times, or the Tim (now-of-AOL but-of- Google til last week) Armstrong-funded Patch Media learn from this p’tit brouhaha?

And lastly, is there anyone out there with good CSS skills in Park Slope who wants to have some fun with me?

UPDATE: Before I’d even finished this post, I looked at the Ning account and realized that even though it was private, people had already been signing up. That’s enough indication that there’s a need to be filled for me. So I completed the design, and sent out a notice to PSP—they actually sent it out!—and since 6pm tonight, there’s been about 10 new members an hour. If you’re a Brooklynite parent,  please join us. Come visit http://parkslopekids.ning.com/?xgi=dhZER7n and get acquainted.

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Sometime around 2001, after burning through several editor-in-chief jobs during bubble 1.0, I decided it might not be a bad idea to have an MBA. My editorial friends thought I had gone off the deep-end, and not for the first time. The first time was when I moved from print to online; second was when I began to use my biz head to shift from “editorial” (Time Warner, Disney, Ziff) to “consumer” brands (Bertelsmann, Samsung, Citibank); and now business school? Please. Until the MBA I’d been firmly planted on the editorial side of the Luceian wall keeping church from state, business from edit. But an MBA meant moving right over the wall, into enemy camp. And to do what? Everyone knows the business of the media business is advertising. No ads, no revenues, no profits, no jobs. No disrespect, but publishers are by and large glorified salespeople, not strategists. You don’t need no stinkin’ MBA for that.

I had a different idea. I’d been up close and personal on the biggest disasters of Web 1.0. The Titanic (the implosion of Time Warner’s Pathfinder.com). The Hindenberg (Disney On Line). Pearl Harbor (Thomas Middelhoff’s brilliant, insane campaign to buy or beat Amazon.com and Barnes & Noble.com with BOL.COM). And let’s not forget little skirmishes such as Ziff’s eShopper, a webshopping glossy piggybacking on the already sinking Yahoo! Internet Life franchise, just as bubble 1.0 was bursting. After eight years of this, I came to realize, as Bill Goldman once said of the movie business, that “No one knows anything.” (And that definitely included me.) I watched young MBAs and V/alley entrepreneurs (not usually MBAs but typically accompanied by one or two) make a cult of what they called Dot Com—how I hated that expression. I saw random people I knew mint millions. I saw good guys founder in desperate search of a “business model”—some meaningful, logical path to profits—while bad guys gulped more more and more marketing dollars for projects that everyone knew sucked and never worried about business models.

B school gets a C

B school was my attempt to grapple with media’s failure to reckon with digital innovation. The key, I believed—and still believe—is to bridge the church/state divide, the ignominous wall separating edit from business. And because it was futile to ask bizheads to innovate with editorial and digital media—but I could easily imagine innovating editorial with digital business models—an MBA seemed like a good place to get my feet wet. Boy was I wrong.

My cohorts—at least half my class—couldn’t give a rat’s ass about business innovation or for that matter business models. Newsflash: You go to b-school to make money. In fact, you can’t learn to build a business model at Stern; it simply wasn’t, probably still isn’t, taught. I had to take courses in the part-time Langone program to learn how to actually put together a marketing budget and do DCFs (discounted cash flows) on media companies. As one profesor put it to me, our [business schools'] job is to create dumptrucks full of bullshit and serve up thumblefuls of the tastiest morsels to you idiots. (He actually used that word.) Such is and was the defecatory triage of the MBA environment.

Despite appearances, this isn’t a rant about b-schools and MBAs (although that might be fun to do in another post). What’s interesting is growing discussion about the death of print and the growing disconnect (in just a few places) with innovation at the level of product creation. You can’t fix the business model if you don’t have a clue what kind of a product to create. The problem is the raw limits on innovation within media, the constraints of history and prejudices of touch and feel—and class and age—print conveys. Innovation, either in business models or product management, is stuck, can’t even get into first gear. (And if you’re pissed off about it, you’re a  whiner.) First hand experience tells me that b- schools have nothing to teach in this regard, that the focus on finance, slicing and dicing and arbing, reinforces selfish impulses; second-hand experience—for example, this wide ranging debate at HBR.com—confirms that most of the conversation is misguided, that innovation doesn’t even have a seat at the table! J-school seems like it’s in even worse shape; a similar debate is brewing there, but at a much lower temperature, perhaps because j-school is more or less a victim while b-school comes closer to being a cause.

Umair Haque says that business model innovation—digging into costs, revenue streams, efficiencies—is “exactly the wrong thing to focus on right now…Business model innovation amplifie[s] value destruction.” Of course, business model innovation—Securitization, the structured aggregation, bundling, and slicing of mortgages or any other underlying security—was supposed to be the big breakthrough for finance. Instead it’s brought us to our knees. For Haque the dirty word is Monetization: “It blinds us to value creation, at the expense of value capture. When we seek to monetize, we end up chasing the same old lame competitive advantage. I win, you (and you, and you) lose. Put another way: ‘monetizing’ toxic junk — from CDOs, to Hummers, to McMansions, to Big Macs—is how we got into this mess.”

In media terms, this is Zell territory, Zell Hell. But not just. When you’re trying to save your ass, all the innovation you can afford is tied up in value protection and efficiency: whether it’s the NY Times’s leaseback of its new building, saber rattling with unions, or what I think is the ruinous, lemming-like decision to shutter editorial brands because equityholders don’t have the patience to figure out a new business model.

Can’t anyone here play this game?

Of course, it’s not business models that are at fault. Even Haque, here again, from the same article, makes the distinction that some business models—those based on innovation—are more equal than other. “When we can make valuable stuff, there are a plethora of business models to choose from, some old, some new, some untested, some tried and true. When we can’t, no amount of business model innovation can save us from implosion.”

So the question l want to ask here—and will be asking over the next few posts—is: Can’t anyone here play this game? Why does it seem nearly every editorial brand is packing its bags and going home—just when there is more opportunity than ever to slice, dice, curate and aggregate the content surrounding these brands? Granted, some media brands may be playing in “red oceans” of rivals that are just too infested with competition to be worth pursuing. Blender, for example. One can make the argument—one of my b-school professors did —that there’s just no sense fishing in markets that small, that saturated. Marketing just won’t do any good here, he said. It’s missionary work. To which I raised my hand and said, No that’s the missionary position—right where most of media is right now, getting fucked (excuse my French) without any real love for winning new customers or satisfying as yet undefined customer needs (what I later learned—after b-school—are so-called “blue oceans.”) Instead it’s all blow cards and blow jobs (okay, PR.) What about the mass of niches under each of those supposedly saturated markets? Were they untouchable? Was there no way to reach them either? Mr. Marketer’s reply was that there might be, but you’d have to prove your point to management that they were worth reaching. In other words, you’d have to show a path to net return-on-investment after spending all those marketing dollars.

Blender cover

Of course I have no way of knowing what kinds of shenanigans were behind Blender’s shuttering. (And what a tangled web of intrigue it seems to be with ex-Rolling Stone publisher Kent Brownridge convincing Steve Rattner and his p.e. firm Quandrangle to pony up $250 million—$190 of which were borrowed—to buy the titles in the first place.) But leverage ain’t everything. You have to wonder, like the good, grim reaper of the magazine death pool does nearly every day now—why titles that were once print innovators or at very least well-established brands couldn’t (can’t) be bothered to think through their digital strategies until it’s too late. Why is it easier to shut down and forfeit a brand than find a new play online, than to find the nexus of journalistic narrative and the broad path of tagged knowledge, inside and outside the boundary of a title’s digital assets? Perhaps “missionary position” is right: when you’re up against everyone from MOG to Hypem, not to mention rollingstone.com or even spin.com, staring at half-naked chicks on your cover is a lot more fun than thinking through the issues of value creation and customer service—yes, customer service, even for media brands! What a thought!

These are questions of innovation that, to my knowledge, just aren’t being considered even now. What would customer service via digital innovation, first at the level of editorial technology and then at the level of business model, look like for Blender, or for that matter, Hallmark or Domino or BestLife, or half a dozen other print titles that you know are in trouble?  When these magazines fail are their publishers saying that the value of circ plus shrinking CPMs (not to mention the scant revs from their retardataire web strategies [sic]) just ain’t worth it, that it’s just not enough net IRR (internal rate or return) to sustain the investment? Or are they saying the brand is worthless, that even a sale of the assets (brand, lists, archive, talent, website) amounts to a pile of beans in a firesale, and so ought to be walked away from—like a foreclosed house in some oversold condoglut Las Vegas zombieland? My guess, sadly, is that the private equity guys believe it’s the latter. They just don’t know how to fix it, said one of my buddies, although it turns out Blender is going to be kept alive as a website.

Editors don’t get it either

And they may have a point: because, sad to say, outside the Times (which is doing an admirable job of throwing up one innovative idea after another to see what sticks), the editorial teams don’t know how to fix it either. They don’t understand that the toolkit isn’t just a better mix of articles, or more “service” —in journalistic terms, that’s usually listicles—but rather a broad and everchanging mix of social media/community, content strategy (taxonomical and SEO-driven information architecture), curation and aggregation, user generated content, ecommerce, etc—all combined with and told through great storytelling, big hairy audacious narratives. And that’s what’s finally doing a job on media innovation. The editors are fumbling with lawn chairs on the Titanic, cutting staff, making efficiencies, and playing with Twitter and blogs—i.e., more content creation—while the business side is out selling. Meanwhile, no one’s watching the store.

There’s no attempt to rethink the enterprise or the brand, in competitive terms and through the customer base of actual customer needs, of user personas, of learning to add value to people’s lives. No attempt to rethink the idea of service by (at very least) getting a grip on what users actually want in digital terms and how that distinguishes a brand from its rivals journalistically. No attempt to think through web-based innovation instead of  business model games. No attempt to play in what Jarvis calls “the mass of niches”; it’s still all about the generalized reader, the mass and print’s equivalent of gross rating points, distilled via CPM and CPC. It is it any wonder what we get from this are flashy, flimsy brands with a few blogs (which of course are disconnected from published work) and (if we’re lucky) some author-side metatags—if we’re lucky: most media companies still don’t publish in end-to-end XML and XHTML so that’s not a whole lot of good. (Wordpress is still far more sophisticated than most magazine’s CMS today.) It’s still brand by editor-in-chief, not brand by customers-in-charge.

And so the number of magazines and newspapers continues to dwindle. The other day, it was announced that there are now fewer magazines than ever before: just 17,000 mags to go before they turn off the lights. Now I’m not saying every every media brand (notice I do not say magazine title) is worth saving: we didn’t really need Trader or  Genre or King or Financial Week, and there are lots more out there that are going to fail simply because they think that web-based media is inferior to legacy edtiorial. On the other hand, the value of these brands is real and quantifiable (upon sale), and can represent real audiences that have real forward value. The question is: Are you ready to save them? Are you ready to tap into the community that already exists for your brand, to bring it to life using these tools? Are you ready to listen? Call this social media if you like: servicing your community through the tools that already exist out there, Twitter, Facebook, Myspace, even Plaxo. I call it customer service. (Forget Nordstrom and Disney, think Google.) Haque calls it the “I win, you win” question—as opposed to the revenue driven  “I win, you lose.” And of course there’s Jarvis: What Would Google Do [with your brand]?

These are the innovation questions beyond the missionary position. Over the next few posts—and probably over the course of whatever I write here—my theme will be media innovation: how and why it works, has failed, can transform media brands through design and technology into lovebrands consumers truly take to heart and companies truly profit from: a kama sutra of media innovation.

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