March 13, 2005
The Rise of the LMNO
InfoTrends/CAP Ventures projects that worldwide camera phone shipments will grow from 178 million units in 2004 to over 860 million units in 2009. By 2009, camera phones are expected to account for 89% of all mobile phone handsets shipped.
We will soon live in a world with a billion people walking around with mobile connected camcorders. This will precipitate significant changes to how we think about media. The deep impact on privacy, copyright, the current media incumbents and society in general will radically alter our world and everyone in it. From the simple concept of converging a mobile phone with a camera will emerge a multibillion dollar industry that will be built on disrupting existing value chains and shifting media to the farthest edge of the network: the mobile producer/consumer (or prosumer) with a PMD (Personal Media Device.) The market leaders able to capitalize on this opportunity will dominate the media landscape of the future and consolidate value as Location-aware Media Networking Operators (LMNOs.)
A Brief History of Media
The media business models of our time have until now been based on scale of consumption. Media evolved from the industrial era based on economy of scale. You have one very expensive printing press and to make money you have to make as many of the same newspaper as you can because every time you want to change the front page, the whole machine has to be shut down, which costs money. Homogeneity is key, and the value is in physical distribution. Put more newspapers on the stands and you make more money. Same with Radio or TV: Put your antenna on the hill and shower your signal down upon the people. The radios or TVs receiving your signal, the less your signal costs per receiver, and the more you can charge for advertising. The record industry was the same way: Print one master, then run off as many copies as you can and sell them everywhere you can.
This last example shows particularly well how shifting sands can disrupt your business model. When the internet took away (wrongfully or not, it does not matter now) the physical distribution part of the record business, it negatively affected the business model. In fact, when your media business is based on economy of scale, it requires you to control as much distribution as possible. The record business was forced to realize they are not just the record business anymore – they are the music business, and distribution works a lot differently now. Technology has the power to disrupt the physical distribution business model of any media company if that media can be digitized and beamed anywhere instantaneously. The MPAA is now fighting against the “napsterization” of their industry the same way the RIAA did during the roaring ‘99’s of the MP3 era. It will be interesting to see how many more lawsuits will be brought against the new generation of 12-year-old file swappers.
The Future of Media
As disruptive as it is, the biggest threat to existing media companies isn’t the wholesale theft of their valuable assets via P2P networks. The biggest threat to media incumbents is the teenage girl with a mobile connected camcorder producing her own reality mobiseries. Media companies of all sizes compete for their share of consumers’ time, attention and wallet. It is one thing to lose a customer to a competitor, but it is another thing entirely for your customer to turn into a competitor. Every time an erstwhile consumer crosses the line and produces a piece media, they dilute the value of every other piece of media that exists in the world. It is a function of time and our capacity to consume the available media. But, most importantly, the value of the media they create is an order of magnitude more valuable to them than any other media available.
The Prosumer at the Edge
It really gets interesting when the consumer, no longer satisfied with sitting back and letting the cable television wash over them, turns into the prosumer. When people participate in the creation of the narrative of the story being told, an interesting thing happens. The expectation of quality decreases. Low production value is offset by the reward of having participated in the creation of the media. There is an inherent authenticity to amateur content that enables a deeper level of empathy for the characters in the story. If Media (big M) is created at the center of the network and distributed outward, then user-generated media is created at the edge of the network and distributed along the outskirts of the network, and usually via a series of overlapping personal networks.
All of the images the world saw from the devastating tsunami that ripped through Southeast Asia was amateur footage. These were simply people in the wrong place at the right time to record the disaster. What made it particularly heartwrenching was the shaking hand of the amateur videographer or the repeated cries of “oh my god” which made the moment more real for those of us trying to comprehend the scale of the impact. It didn’t matter that the production quality was low. In fact, given that every summer we are barraged with slick Hollywood disaster movies, we are desensitized to the portrayal of tidal waves and fires and earthquakes, and the grainy reality of amateur video jolts us into reality.
Now think about why those people grabbed their camcorders and started recording. They wanted to share the experience. They wanted to communicate the sheer magnitude of what they were witnessing, probably feeling on some level that mere words would never do it justice. This wasn’t “media” the way the large incumbents carefully package it, it was communication – raw, stream of consciousness created to connect with the world. I received no fewer than a dozen emails with attachments of various pictures and video from people I knew wanting to share the experience, even though it was a secondhand experience.
There will always be examples of coincidental amateur footage that is instantly relevant to a great many people. But more often the media people create is valuable only to a few other people. But when millions of people are creating media and sharing it as an evolved form of communication, the required audience for any one piece of media diminishes to the point where a market of one person is a viable model.
Enter the PMD
Call it what you want, but the “mobile phone” in your pocket isn’t really a mobile phone anymore. It is a Mobile Connected Media Production and Consumption Device. MCMPCD is hard to say, and I think PMD is sufficient. Whether you believe in converging or diverging devices, the PMD is the future. We’ve all heard about the fabled wireless iPod. That’s a PMD in my book. How about a DV cam with a DO chip in it? PMD. We are putting the equivalent of a film studio, radio station and broadcast network into the hands of a billion people.
There is no shortage of demand for self-expression. Give prosumers a tool to express themselves and their self-expression will expand to the limits of the tool and then push it to another iteration as they think of ways to use the tool that were never originally conceived.
And now we are able to instantly create text, pictures, audio and video from a device that fits in our pocket and is with us everywhere we go, giving us myriad opportunities to evolve our communication to include rich multimedia so that we can more meaningfully connect with other people and the world around us. The only thing missing is the marketplace to transact our media.
The LMNO
“By 2010, today's consumers will be among the leading creators of all forms of high-quality content. The companies that are able to make the greatest advancements in the area of contextual search relevance and search utility will lead the pack." - Gartner |G2
The Media Networking Operator (MNO) already exists. If user-generated media is being created to communicate, or network, with other people, then the MNO's are the companies that give prosumers a place to post their content, make it findable and operate the platform that is the glue to make it all stick together in a relevant fashion. Here is an example from my User-Generated Content Value Chain: Blogspot is a place to host your blog. Google is a search engine that makes it findable. Blogger is the publishing platform that makes it all possible. By operating on the three links on the value chain that enable consumers and prosumers to connect, Google (which owns Blogger and Blogspot) is an MNO.
Location matters, though, because it is a key meta-tag for creating the directory of user-generated media. Take the example of the tsunami again. When I heard about it, I went looking for content on Google. The number one most relevant result for “tsunami” according to Google’s apparently very well developed algorithm for searching the gigantic internet content cloud was www.ess.washington.edu. Now why would that be? I mean, this was on January 1st, when relevance for the word tsunami was generally agreed to be highest for a particular event. It is because the concept of simplifying search to a few keywords only works if you know enough about what you are searching for. Did you know at the time how to spell Banda Aceh to better specify to Google what you were looking for? Providing location as context, both on the creation and consumption sides of this media model, provides relevance for a type of media that is created by people at the edge of the network at a place in time.
At the intersection of the PMD and the user-generated media trend is the LMNO. With very few exceptions, the marketplace for prosumers to create and post their content directly from their PMDs has been missing. Today we announced our first product, Rabble, which is our answer to the need for a marketplace for media produced by people using their PMDs. I’ll talk more about it and the LMNO and the mountain of user-generated media that is being built now and how we might be able to turn it into the basis for a new kind of media company in a new kind of media industry.
Posted by Shawn Conahan at March 13, 2005 10:36 PM
Comments
Shawn, how far away is the US market from having GPS built into phones so that my cell phone will be truly aware of where I am?
Posted by: Lucas Jackson at March 13, 2005 11:42 PM
Several carriers already have LBS (location-based services) deployed in many markets. Nextel uses GPS, for example. Other carriers in the U.S. use cell site triangulation to pinpoint a user's location. Generally speaking, some sort of LBS is deployed on the majority of U.S. carriers today for the purposes of routing E911 calls. So it is likely that your phone already knows where you are. The commercial availability of handset-based location information is the next step to rolling out consumer applications such as fleet location and management, driving directions or a simple "find me" tool on your phone. Every major U.S. carrier is expected to roll out or begin rolling out some form of LBS later this year and the majority of those are expected to provide to developers the APIs to create applications around location information. Rabble already has the hooks to receive location information automatically - a user would simply turn this feature on or off. Get ready now for 2006 when we will see a huge number of LBS-based consumer apps.
Posted by: Shawn at March 22, 2005 10:28 AM