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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What do Steve Ballmer and Steve Jobs have in common these days?  It’s an odd question considering how frankly Steve Jobs has expressed his distaste with Microsoft and their business approach.  That’s why I had to chuckle the other day when I heard Jobs’ comments on Apple’s earning conference call the other day.

…Apple strives to the integrated model so that the user isn’t forced to be the systems integrator. We see tremendous value at having Apple, rather than our users, be the systems integrator… And we also think that our developers could be more innovative if they can target a singular platform, rather than a hundred variants. They can put their time into innovative new features, rather than testing on hundreds of different handsets.

In other words, Apple wants to make it as easy as possible for developers to create applications that iPhone, iPod, and iPad users download from the “integrated” iTunes store. Jobs is arguing that their “closed” platform means “integrated,” while Google’s “open” platform (and at least one prolific developer challenges whether or not Google is really open) actually means “fragmented.”  Apple is creating an ecosystem that will thrive based in large part on the diversity of stuff you can do with their devices.

Microsoft (founded by a couple of developers) understood this point from day one:

Windows was successful in large part because they deliberately created a developer-friendly ecosystem that led to an explosion in application development for their operating system, eventually becoming the de facto standard.  Some may argue that Microsoft is more similar to Android than iOS because it still wasn’t very tightly integrated and while there is a valid argument to be made there, I’m referring more to the business strategy than the technical realities.  After all, this blog is really about inbound marketing.

Speaking of which…

So What’s the Inbound Marketing Takeaway?

This whole point crystallized for me when I read “Is an App a Tool or a Behavior?” by John Jantsch on his Duct Tape Marketing blog. Jantsch wrote the forward for a book titled “App Savvy” that provides guidance for building apps that people will want to use.  He is encouraging us to think of apps in a different way than perhaps most of us do:

When you come to view your app ideas and execution with a “feeding a behavior” mindset, ideas and the carrying out of those ideas will flow more freely.

So here’s the bottom line: apps are another channel that help you spread your ideas.  They’re another means for achieving the third step of inbound marketing, promotion.  Think about the gifts you can offer to your target market and ask yourself, “Is there an app for that?”

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Google is moving the goal posts again. This is not a complaint, but an observation. This post isn’t about the ins and outs of their new  Instant Search feature going live. There are lots of bloggers taking the opportunity to opine about the irrelevance of SEO or the death of the long tail search. I recommend reading at least a dozen or so posts to get a wide view of the potential impact. There is one thing everyone seems to agree with; we won’t really know the impact for a while.

So what is this post about? It’s a life lesson for search engine marketers, articulated in memorable fashion by Ferris Bueller on his day off. “Life moves pretty fast. If you don’t stop and look around once in a while, you could miss it.”

Are You Insane?

Albert Einstein is credited with the quote, the definition of insanity is “doing the same thing over and over again and expecting different results.”  If you haven’t thrown out your search marketing playbook this year but are expecting the same results, you may very well be insane.   There have been so many game-changing events in the last twelve months that it’s critical to a) understand their implications and b) modify your strategies and tactics accordingly.

Search Engine Marketing Is Changing

Google Instant is going to change the way organic search and pay per click campaigns behave as well as how they’re measured.  Right away, the very definition of the word “impressions” has become a lot more complicated.  This will have a trickle-down effect on all of the click stream metrics you’re watching.  In engineering terms, we call this event a discontinuity.  I’m fond of using the phrase, “I do not think it means what you think it means” for many of my blog posts, and that concept can be applied here also.  You simply cannot compare (some of) your historic metrics to those being collected as of yesterday.  They are apples and oranges.

We’ll also need to start thinking about the impact of what I’ll call “attention deficit searching.”  Early observations suggest that instant search is going to favor established brands and trending topics/searches.  This means that if you have optimized for a given long tail keyword search, a person who may have intended to type in that entire search phrase could get distracted by a recent news event and never make it to your website.  Let’s use a fictitious example…  Assume for a moment that your website is optimized for the long tail search, “bubble bath pillows.”  Then one day, the Internet goes nuts with stories about “bubble bath pics of Angelina Jolie.”  Many of your searches could experience “searchus interruptus.”

Search Engine Marketing Is Personalized

This aspect isn’t new, but Google Instant will up the ante even more.  Google has told us that, “Even when you don’t know exactly what you’re looking for, predictions help guide your search.”  These predictions are going to be personalized for the person conducting the search, which means that no two people will (theoretically) see the same results.  Further complicating this is the fact that this is going to occur dynamically as the person types, which is likely to change their behavior.  At the end of the day, it’s possible that this will end up improving the quality of click-throughs to your site since they are going to have to survive this new vetting process.  However, it means that intelligent web analytics are an absolute must now!  Since there is no such thing as a generic search anymore, the results and outcomes will have to speak for themselves.

Search Engine Marketing Is Dead

Okay, that’s a blatant and transparent sensationalized headline.  SEM is no more dead than the web, despite Wired Magazine’s own sensational headline that “The Web Is Dead, Long Live the Internet.”  In “Search Engine Marketing: I Do Not Think It Means What You Think It Means,” I wrote that…

Your entire Internet marketing strategy may be based on a mirage. Many companies are focused on search engine optimization and pay per click campaigns. This is all well and good as long as Google remains the gatekeeper of the Internet. But here’s the thing; there’s a new sheriff in town and the entire 18 year old ecosystem of the world wide web is in danger.

The reality is that “walled gardens” like Facebook and iTunes are increasingly closed off to search engines and their influence is even stronger than Google’s.  The volume still favors search engines right now, but Internet marketers need to be aware of this approaching tsunami.

Search Engine Marketing’s Bottom Line

Things are changing really, really quickly.  Like many situations, this favors the agile, forward-thinking organizations.  Keep your eyes open and your powder dry, but most of all…

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Everything was so simple then… When search engines ruled the Internet, all we had to do was optimize our web sites to get some love and we’d turn up at the top of the results page. The most effective way to rank highly was to have high quality links pointing to our web pages. These inbound links were the coins that were deposited into our SEO piggy banks. They were the currency of Internet marketing.

Why is this conversation in the past tense?

Because of so-called “walled gardens” like Facebook and iTunes, that’s why.

Earlier this week, I wrote “Search Engine Marketing: I Do Not Think It Means What You Think It Means” in response to Wired magazine’s article, “The Web Is Dead. Long Live the Internet.” Their point was the Internet is simply a collection of pipes that form a content delivery system. The “Web” is essentially HTML sites that do not block search engines. iTunes is an application, not a web site. Facebook is (mostly) private and can’t be crawled by search engines. They are walled gardens.

This means that search engines aren’t as omniscient as they used to be.
…Which means they aren’t as influential in Internet marketing as they used to be.
……Which means that links aren’t as valuable as they used to be.

During JitterJam‘s weekly Creative Coffee session this morning, we were talking about how to identify influencers in social media. As we kicked around various ideas and returned from tangents, one of the ideas that crystallized was that in our brave new world of social media, the coin of the realm is changing from links to people.

In Malcolm Gladwell’s book, “The Tipping Point,” he examines the phenomenon of messages going viral. One of the main ingredients to an epidemic, he suggests, is a set of people with specific gifts:

• Mavens are “people we rely upon to connect us with new information.”
• Connectors “link us up with the world … people with a special gift for bringing the world together.” People tend to think of the Internet as a single, enormous, amorphous glob of people when, in fact, it is a series of groups. Connectors act as the information conduits between these groups.
• Salesmen are the charismatic persuaders.

As we try to establish our own influence online and spread our ideas, we still need to be doing SEO and collecting links. But we need to leave room in our piggy back for the new coins of the realm also; mavens, connectors, and salesmen. They are the ones with the keys to the walled gardens in which search engines are persona non grata.

P.S. If you’re in NH, I encourage you to stop by JitterJam on Friday mornings (8:30 – 9:30) for Creative Coffee. It’s a great forum for idea exchange. Today’s session included Ric Pratte, Marty Watts, Michael Conway, Joe Merrow, and Karen Grimmett.

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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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