Jon DiPietro is Domesticating IT

This is the chart no industry wants to see:

From "Publishing in the Digital Era" from Bain & Company

The Motion Picture Association of America (MPAA) and Recording Industry Artists of America (RIAA) would have you believe this is the effect of piracy. But let’s dispel that right out of the gate: Digital music piracy has steadily declined for the past five years and is nearly half of where it was in 2005.

Is it just a coincidence that music theft began to decline at exactly the same time revenues fell off a cliff? I don’t think so.

In the Beginning…

In the beginning, Publishers created the record and the CD. Now the Internet was formless and lifeless, darkness was over the surface of computer monitors and the Spirit of Tim Berners-Lee was hovering over the wires.

During this dark age before the Internet, music consumers had two choices; the single or album. Once cassettes and CDs took over, however, even that choice disappeared. Consumers frequently had to buy twelve songs they didn’t want in order to get the one they did. There wasn’t any other choice, so we sucked it up and (more often than not) bought the CD.

And Tim said, “Let there be a world wide web,” and there was a world wide web. Tim saw that it was good and he separated the interface from the data. Tim called the interface a “browser” and the data he called “hypertext.” And there was Netscape and there was Lycos – the Internet.

But it wasn’t only the Internet that led to digitization. Inexpensive computers with CD drives that could burn songs into a compact format were also required. Once consumers acquired a taste of freedom to separate the songs from the album, piracy was born. Napster came on the scene and sparked an explosion in digital theft. Although Napster was shut down relatively quickly, new services and technologies popped up in the never ending game of “Whack a Mole” between publishers and pirates.

Yet, around 2005 piracy started to decline and music sales began to fall off of a cliff. Hmm… Wha happa?

Let There Be Downloads

I remember clearly sitting in front of my computer in 2003, calling a friend over to show him the announcement of a new online store that would sell individual songs and let you download them straight to your iPod. “This is great! I’ll never by another album again!” I exclaimed. My friend looked at me and deadpanned, “The record companies will never let that happen.” Well, you know what happened. In fact, take a look at what happened right around 2005 (click on the image for full size):

Downloads exploded but revenues fell off a cliff. Consumers were liberated from having to buy stuff they didn’t want. Meanwhile, the MPAA and RIAA spent enormous time and effort battling the white elephant of digital piracy and started sending their customers to jail. They were caught in a business death spiral.

Newspapers and magazines are battling a similar mirage. They think that the enemy is bloggers who are stealing their content and giving it away for free. In reality, consumers want their content in tiny, hyper-relevant bites. But so far, publishers haven’t figured that out and continue to try to force-feed us the all-or-nothing options on a shiny new object.

Freedom!

The chart at the beginning of this post is an illustration of what happens to an industry that has enslaved its customers when they are finally liberated. In his blog today, Seth Godin addressed the issue of “pricing power.” He suggested that there are two reasons why you aren’t getting paid what you think you’re worth:

1. People don’t know what you’re worth, or
2. You’re not (currently) worth as much as you believe

Most businesses refuse to believe #2 could be true. If it’s not, you have a marketing problem.

If it is, you have bigger problem.

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Weekly High Five lists the most interesting, compelling, and/or useful links of each week.

This week’s High Five is a grab bag of internet marketing topics.

#5: ACTA Draft: No Internet for Copyright Scofflaws

Regular readers of this blog will know that I often talk about net neutrality and copyright issues.  This article discusses efforts by the U.S. to convince other nations to develop protocols for copyright protection that would make it the responsibility of Internet Service Providers to police copyright infringements and immediately suspend internet connectivity  and terminate “in appropriate circumstances.”  In addition to raising costs for ISPs, this will almost certainly result in a “shoot first, ask questions later” policy in order to reduce their risk.

Link: Wired

#4: WSJ on iPad for $17.99 a month, magazines to be at or near newsstand prices?

It’s becoming clear that the print publishing industry is looking at the iPad as an opportunity to start with a clean slate <rimshot>.  The horse has already left the barn in terms of providing free content on the internet, and so it seems that they intend not to make that mistake again.  From the outset, several publications are intending to at least begin their subscriptions on the iPad at very near news stand pricing.  Given Apple’s strict control of the content application rules on their platforms, this should not encounter the technical hurdles publishers have faced on the internet.  This time, it’s personal.

Link: engadget

#3: 5 Quick Ways To Improve Your Facebook SEO

Lisa Barone writes one of the best internet marketing blogs on the internet, in my opinion.  She is a frequent guest writer on Small Business Trends and this article provides five simple, yet solid tips for improving the search engine optimization of your Facebook fan page.

Link: Small Business Trends

#2: Are Marketing Dollars Shifting? Exhibit Industry Down 12.5%

There’s not a whole lot to tell for this one.  While the decline of the exhibit industry isn’t shocking, I was a bit surprised at the steep drop from last year.  More evidence that marketing dollars continue to flow from traditional channels like trade shows to inbound marketing.

Link: Hubspot

#1: Facebook Foreshadows New Features With Privacy Policy Tweaks

It’s time for our monthly Facebook privacy policy fire drill!  They are proposing a couple of new (and potentially disturbing to some) tweaks that will be made to their privacy policy.  The first is the integration of automatic geolocation features.  Applications like foursquare provide a fun way to localize social media and meet new friends, but they also broadcast your activities to the world and provide criminals with a possible blueprint for tracking your whereabouts.  The second change is the implementation of the new Facebook Connect policy, which may automatically sign you into sites and share your public information simply based on the presence of a cookie on your computer.  Given the fact that many Facebook users still don’t fully understand the implications of the “Everyone” default sharing mode on their wall, this has the potential to get a little nasty.

Link: TechCrunch

Feel free to provide your thoughts and/or contributions…

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The Guardian posted an article that provides eyetracking results, showing that users are ignoring the much hyped Google “real time” search results.  The article goes on to postulate as to why this is, and in doing so makes some clever references to hidden gorillas and characterizes the problem as one of “presentation.”

I beg to differ and would suggest, instead, that this is a problem of authority.

You Will Respect My Authoritah!

Any quest for answers, especially those involving Internet search, is entirely based on authority; namely, the authority of both the referrer and the source.  We have all grown to lend a certain degree of trust to the search engine of our choice.  That is, after all, why we’re using Google as opposed to Bing, or vice versa.  We understand that their respective algorithms or ranking processes have pre-qualified these results and judged them to be the most relevant to our search.  However, we also understand that the machines are imperfect and so we scan the results and try to judge for ourselves which of the individual sources appears to have high enough authority to warrant our attention.

In the South Park episode “Chickenlovr,” Cartman pulls over a speeding vehicle and discovers that just because he is wearing a uniform, it doesn’t mean that he has authority.

The problem with real time results is that the sources come from social networks that are decidedly outside our circle of trust.  If I see a list of Tweets from people I don’t follow, my gut reaction is to say, “I don’t follow that person, therefore what they have to say is not important to me.”  It’s a defense mechanism as much as anything.  On a certain level, we feel like we need to protect our social network by not admitting that outsiders have anything of superior value.  As Ani DeFranco sang, “God forbid you be an ugly girl, ‘course too pretty is also your doom, ’cause everyone harbors a secret hatred for the prettiest girl in the room.”

And so it goes with so-called real time search results.  Since you are not in my circle of trust, you are either too ugly or too pretty – but either way I’m not buyin’ it.

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Weekly High Five lists the most interesting, compelling, and/or useful links of each week.

This week’s High Five is about protecting and promoting content.

#5: DMCA Muscle Kills DVD Copying, for Real

I’ve been covering several different lawsuits in which the RIAA (Recording Industry Association of America) is prosecuting a scorched earth assault against its own customers guilty of piracy.  While those arguments are about the punishment fitting the crime, this story is much more disturbing because it deals a serious body blow to the “fair use” aspect of copyright protection.  This is the principal that makes it legal to make a copy of a CD (music, program, or otherwise) for your own personal backup purposes.  However, in this case a judge has ruled that the crime exists in the breaking or bypassing of any encryption.

Link: Wired

#4: Bogus Copyright Claim Silences Yet Another Larry Lessig YouTube Presentation

This story is a preview of things to come.  In previous “High Five” posts, I’ve linked to articles about legislation that could threaten net neutrality by compelling Internet Service Providers to police their user base for copyright violations.  If forced to do so, it will lead to several undesirable side effects.  First, and most obvious, it will increase prices as these service providers will have to invest in additional resources to police their own customers (not to mention insurance policies for increased risk).  Second, it will lead to far more restrictive policies as their terms of use will no doubt give them final say in what is or is not acceptable – legal standards will not be applicable because they will be more concerned with avoiding litigation than their own users’ rights.  Finally, this story is obviously an example of an automated software application that is simply looking for digital footprints and stomping them out with extreme prejudice and no room for fair use.

Link: TechDirt

#3: Apple Stacks The Deck Against Amazon’s Kindle App

It’s no great secret that the true source of success for many devices is the “killer app.”  The most famous example is VisiCalc for the Apple II.  The real secret to Apple’s domination of the personal MP3 player market was the iTunes store.  This article discusses the potential impact of the iPad’s e-reader application being directly linked to the iStore, and how a couple of mouse clips could be a serious impediment to Amazon’s Kindle Reader application.

Link: Business Insider

#2: How The Newspaper Business Killed Itself

John Dvorak is no shrinking violet, and has been making bold assertions and predictions for many years.  In this article, he makes the case that the New York Times’ decision to begin charging for online access is another example of the industry shooting itself in the foot.  Like most brash pundits’ predictions, the vast majority of his predictions prove not to be true and I actually disagree with his opinion on this latest move by the times.  So why am I including it?  Because in describing the newspaper business’ past sins, he uses the simplest and single best metaphor I’ve read on the subject.  After describing how publishers reacted to declining revenues as a result of underestimating the effects of online classifieds by laying off beat writers, he concludes that “It was like attempting to fix a flat by letting the air out of the rest of the tires.”  Perfect.

Link: PC Magazine

#1: What The Heck Is Inbound Marketing (and how you can maximize it) With Brian Halligan

“Inbound Marketing” is the single most important concept that will determine the degree to which businesses, associations and individuals will be able to spread their ideas and gain visibility.  In this interview, David Garland speaks with Hubspot CEO Brian Halligan, who literally wrote the book on Inbound Marketing.  If you take the time to watch this video (and I hope you do), I encourage you to think about the concept of inbound marketing for your own personal online identity as well as that of your organization’s.

Link: The Rise to the Top

Feel free to provide your thoughts and/or contributions…

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This post is one in a series that discusses the results of the Online Footprint Survey results.  For a complete index of questions and topics, refer to the Online Footprint Survey Results post.

The results showed that 48% of respondents did not own their own name or a reasonable facsimile.  I had, actually, expected that to be a higher percentage.  Be that as it may, this is something that is important now and going to get very important in the near future.

Here are three reasons why you need to register your :

1. There are several billion people on the planet and not nearly enough domain names to go around.  This is leading to what I labeled the “21st Century Land Grab.”  It means that time is quickly running out and the longer you wait, the less likely it is that you will be able to register anything resembling your name or personal brand.
2. We live in the Age of Content, where more and more, the content you produce will shape others’ first impression and lasting perceptions of you.  Owning your own domain name is the most effective way to centralize and control this first impression.
3. Hosting your blog or personal web page as a subdomain on a third party service (for example, jondipietro.blogger.com) is the Internet equivalent of being a tenant at will.  You don’t own the property, can’t implement your own improvements, and could be kicked out at a moment’s notice.  It’s too precarious a position to hold your online identity.

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