The state of retail

The love of the bargain is what drives them… Click for CNBC’s coverage

It’s a common fallacy to think of a time before a change in status quo as somehow being magically problem-free. A Panglossian world where all was well and nothing needed to change, and wasn’t it a shame that it had to. Similarly, we cannot blithely consign the retail industry of the past to some glorious era when everything was perfect; far from it. The industry has been under continual evolution, with no absence of controversy on the way. It was therefore a timely reminder, as well as being a fascinating article in its own right, when the New York Times provided readers recently with a potted history and a gaze into the future of Manhattan department store stalwart, Barneys. Not only is their past one in which the original proprietor sought to undercut his own suit suppliers, creating a bootlegging economy by literally ripping out their labels and replacing them with his own, but it was also one where department stores served a very different purpose to what they do today. They had less direct competition, not least unforeseen competition in the form of shops without a physical presence. Moreover, today they are run in an extremely different way, with an arguably much healthier emphasis on revenue (though some might say this comes at the expense of a feeling of luxury, in a lobby now brimming with handbags and little breathing room). The problems and opportunities for Barneys could serve as an analogy for the industry of which it is a part.

Despite brief reprieves such as Black Friday (click on headline image for CNBC’s coverage), as well as the expected post-Christmas shopping frenzy, can one of the main problems affecting retail at the moment simply be that it is undergoing an industry-wide bout of creative destruction? Zeitgeist has written about the nature of creative destruction before, and whether or not that is to blame for retail’s woes, the sector is certainly in the doldrums. In the UK, retailers are expecting a “challenging” year ahead. Recent research from Deloitte shows 194 retailers fell into administration in 2012, compared with 183 in 2011 and 165 in 2010. So, unlike the general economy, which broadly can be said to be enjoying a sclerotic recovery of sorts, the state of retail is one of continuing decline. How did this happen, and what steps can be taken to address this?

Zeitgeist would argue that bricks and mortar stores are suffering in essence due to a greater amount of competition. By which, we do not just mean more retailers, on different platforms. Whether it be from other activities (e.g. gaming, whether MMOs like World of Warcraft or simpler social gaming like Angry Birds), or other avenues of shopping (i.e. e-commerce, which Morgan Stanley recently predicted would be a $1 trillion dollar market by 2016), there is less time to shop and more ways to do it. The idea of going to shop in a mall now – once a staple of American past-time – is a much rarer thing today. It would be naive to ignore global pressures from other suppliers and brands around the world as putting a competitive strain on domestic retailers too. Critically, and mostly due to social media, there are now so many more ways and places to reach a consumer that it is difficult for the actual sell to reach the consumer’s ears. This is in part because companies have had to extend their brand activity to such peripheries that the lifestyle angle (e.g. Nike Plus) supercedes the call-to-action, i.e. the ‘BUY ME’. The above video from McKinsey nicely illustrates all the ways that CMOs have to think about winning consumers over, which now extend far beyond the store.

If we look at the in-store experience for a moment without considering externalities, there is certainly opportunity that exists for the innovative retailer. Near the end of last year, the Financial Times published a very interesting case study on polo supplier La Martina. The company’s origins are in making quality polo equipment, from mallets to helmets and everything in between, for professional players. As they expanded – a couple of years ago becoming the principle sponsor of that melange of chic and chav, the Cartier tournament at Guards Polo Club – there came a point where the company had to decide whether it was going to be a mass-fashion brand, or remain something more select and exclusive. As the article in the FT quite rightly points out, “Moving further towards the fashion mainstream risked diluting the brand and exposing it to volatile consumer tastes.” The decision was made to seek what was known as ‘quality volume’. The company has ensured the number of distributors remains low. Zeitgeist would venture to say this doesn’t stop the clothing design itself straying from its somewhat more refined roots, with large logos and status-seeking colours and insignia. Financially though, sales are “growing more than 20% a year in Europe and Latin America”, which is perhaps what counts most currently.

Louis Vuitton’s ‘L’ecriture est un voyage‘ is a good example of experimental thinking and missed opportunities

In the higher world of luxury retail, Louis Vuitton is often at the forefront (not least because of its sustained and engaging digital work). While we’re focusing purely on retail environments though, it was interesting to note that the company recently set up shop (literally) on the left bank of Paris; a pop-up literary salon, to be precise. Such strokes of inspiration and innovation are not uncommon at Vuitton. They help show the brand in a new light, and, crucially, help leverage its provenance and differentiate it from its competition. Sadly, when Zeitgeist went to visit, there was a distinct feeling of disappointment that much more could have been done with the space, which, while nicely curated (see above), did little to sell the brand, particularly as literally nothing was for sale. The stand-out piece, an illustrated edition of Kerouac’s On the Road, by Ed Ruscha, Zeitgeist had seen around two years ago when it was on show at the Gagosian in London. Not every new idea works, but it is important that Louis Vuitton is always there at the forefront, trying and mostly succeeding.

So what ways are there that retailers should be innovating, perhaps beyond the store? One of the more infuriating things Zeitgeist hears constructed as a polemic is that of retail versus the smartphone. This is a very literal allusion, which NBC news were guilty of toward the end of last year. “Retail execs say they’re winning the battle versus smartphones”, the headline blared. What a more nuanced analysis of the situation would realise is that it is less a case of one versus the other, than one helping the other. The store and the phone are both trying to achieve the same things, namely, help the consumer and drive revenue for the company. Any retail strategy should avoid at all costs seeing these two as warring platforms, if only because it is mobile inevitably that will win. With much more sound thinking, eConsultancy recently published an article on the merits of providing in-store WiFi. At first this seems a risky proposition, especially if we are to follow NBC’s knee-jerk way of thinking, i.e. that mobile poses a distinct threat to a retailer’s revenue. The act of browsing in-store, then purchasing a product on a phone is known as showrooming, and, no doubt aided by the catchy name, its supposed threat has quickly made many a store manager nervous. However, as the eConsultancy article readily concedes, this trend is unavoidable, and it can either be ignored or embraced. Deloitte estimated in November that smartphones and tablets will yield almost $1bn in M-commerce revenues over the Christmas period in the UK, and influence in-store sales with a considerably larger value. That same month in the US, Bain & Co. estimated that “digital will influence more than 50% of all holiday retail sales, or about $400 billion”. Those retailers who are going to succeed are the ones who will embrace mobile, digital and their opportunities. eConsultancy offer,

“For example, they could prompt customers to visit web pages with reviews of the products they are considering in store. This could be a powerful driver of sales… WiFi in store also provides a way to capture customer details and target them with offers. In fact, many customers would be willing to receive some offers in return for the convenience of accessing a decent wi-fi network. Tesco recently introduced this in its larger stores… 74% of respondents would be happy for a retailer to send a text or email with promotions while they’re using in-store WiFi.”

These kind of features all speak more broadly to improving and simplifying the in-store experience. They also illustrate a trend in the blending between the virtual and physical retail spaces. Major retailers, not just in luxury, are leading the way in this. Walmart hopes to generate $9bn in digital sales by the end of its next fiscal year. CEO Mike Duke told Fast Company, “The way our customers shop in an increasingly interconnected world is changing”. This interconnectedness is not new, but it is accelerating, and the mainstream arrival of 4G will only help spur it on further. The company is soon to launch a food subscription service, pairing registrants with gourmet, organic, ethnic foods, spear-headed by @WalmartLabs, which is also launching a Facebook gifting service. At the same time, it must be said the company is hedging its bets, continuing with the questionable strategy of building more ‘Supercenters’, the first of which, at the time a revolutionary concept, they opened in 1988.

One interesting development has been the arrival of stores previously restricted to being online into the high street, something which Zeitgeist noted last year. This trend has continued, with eBay recently opening a pop-up store in London’s Covent Garden. These examples are little more than gimmicks though, serving only to remind consumers of the brands’ online presence. Amazon are considering a much bolder move, that of creating permanent physical retail locations, if, as CEO Jeff Bezos says, they can come up with a “truly differentiated idea”. That idea and plan would be anathema to those at Walmart, Target et al., who see Amazon as enough of a competitor as it is, especially with their recent purchase of diapers.com and zappos.com. It serves to illustrate why Walmart’s digital strategies are being taken so seriously internally and invested in so heavily. Amazon though has its own reasons for concern. Earlier in the article we referenced the influence of global pressures on retailers. Amazon is by no means immune to this. Chinese online retailer Tmall will overtake Amazon in sales to become the world’s largest internet retailer by 2016, when Tmall’s sales are projected to hit $100 billion that year, compared to $94 billion for Amazon. The linked article illustrates a divide in the purpose of retail platforms. While Amazon is easy-to-use, engaging and aesthetically pleasing, a Chinese alternative like Taobao is much more bare-bones. As the person interviewed for the article says, “It’s more about pricing – it’s much cheaper. It’s not about how great the experience is. Amazon has a much better experience I guess – but the prices are better on Taobao.”

So how can we make for a more flexible shopping experience? One which perhaps recognises the need in some users to be demanding a sumptuous retail experience, and in others the need for a quick, frugal bargain? Some permutations are beginning to be analysed, and offered. Some of these permutations are being met with caution by media and shoppers. This month, the Wall Street Journal reported that retailer Staples has developed a complex pricing strategy online. Specifically, the WSJ found, it raises prices more than 86% of the time when it finds the online shopper has a physical Staples store nearby. Similar such permutations in other areas are now eminently possible, thanks in no small part to the rise of so-called Big Data. Though the Staples price fluctuations were treated with controversy at the WSJ, they do point to a more realistic supply-and-demand infrastructure, which could really fall under the umbrella of consumer ‘fairness’, that mythical goal for which retailers strive. Furthemore, being able to access CRM data and attune communications programmes to people in specific geographical areas might enable better and more efficient targeting. Digital also allows for a far more immersive experience on the consumer side. ASOS illustrate this particularly well with their click-to-buy videos.

As the Boston Consulting Group point out in a recent report, with the understated title ‘Digital’s Disruption of Consumer Goods and Retail’,  “the first few waves of the digital revolution have upended the retail industry. The coming changes promise even more turmoil”. This turmoil also presents problems and opportunities for the marketing of retail services, which must be subject to just as much change. If we look at the print industry,  also comparatively shaken by digital disruption, it is interesting to note the way in which the very nature of it has had to change, as well as the way its benefits are communicated. It is essential that retailers not see the havoc being waged on their businesses as an opportunity to ‘stick to what they do best’ and bury their head in the sand. This is the time for them to drive innovation, yes at the risk of an unambitious quarterly statement, and embrace digital and specifically M-commerce. What makes this easy for those companies that have so far resisted the call is that there is ample evidence of retailers big and small, value-oriented to luxury-minded, who have already embraced these new ideas and platforms. Their successes and failures serve as great templates for future executions. And who knows, the state of retail might not be such a bad one to live in after all. Until the next revolution…

Game Change – How TV stole Film’s Spotlight

In a belated – and very un-zeitgeisty – move, Zeitgeist only got around to seeing HBO’s Game Change this past weekend. The film, which first aired in the US in March, is based on the book by Mark Halperin and John Heilemann. While the film has attracted its fair share of controversy, it has been deemed “very accurate” by those on the campaign trail at the time. Zeitgeist thoroughly enjoyed it; HBO had done it again.

HBO have had a remarkable run of success, producing some of the most daring, innovative and enjoyable TV shows of the past 20 years, from Curb Your Enthusiasm and Dexter to Sex and the City, The Sopranos and Boardwalk Empire. HBO has created a brand halo effect for television, a medium once dismissed by serious actors and directors whose natural home was in movies. Now those professionals, such as Dustin Hoffman, flock to television. Speaking recently with the FT, he commented,

‘The big studios were making films that are only being done outside the studio system today. It used to be you would never do TV.’ That stigma has gone, he says; these days the only creative risks being taken are in low-budget independent films and on well-financed pay TV networks… ‘HBO leave you alone and there’s no censorship. You do the work you want to do.’

The real game change then is in the drift in creativity from the big screen to the small. The world of film is increasingly deemed to be suffering, bombarded as we have been for several years now with iteration after iteration of superhero from DC and Marvel. To rub salt into the wound, The Avengers yesterday passed the $1bn box office threshold after just 19 days, joining Avatar in its speed at reaching said gross. Last month’s Vanity Fair editorial elaborated on the malaise that is slowly descending on film. Graydon Carter notes,

Television offers a range and scope, and a degree of creativity and daring, that the bottom-line, global-audience-obsessed, brand-driven movie industry just can’t compete with… the superiority of television goes beyond drama. Comedy on TV is undergoing a renaissance, far outpacing the bromances that the film business falls back on so much.

Within this shift in TV’s prominence, a microcosm of change is also taking place. Ten or fifteen years ago, all the best US programming was being produced by the major networks – NBC, CBS, Fox, ABC – and garnering many a golden statuette at award ceremonies, with cable left to function as auxillary provider of repeats of said programming. This situation has now changed, as cable networks like HBO, FX, Showtime and AMC debut their own quality shows. The New York Times reported on this ‘cable envy’, and how the majors are trying to fight back. It seems a seachange has occurred as the glut of ‘reality’ shows has made way for higher quality programming.

Of course, the other massive shift occurring in the TV landscape at the moment is the way in which we consume television. This has to influence both the quantity and type of media that we consume. Social TV and the ‘second screen’ trend are making the TV-watching experience even more engaging. VentureBeat feature a great infographic of how said landscape has changed.

Damned Lies

In 1894, one Doctor M Price referred at a gathering to “the proverbial kinds of falsehoods, ‘lies, damned lies, and statistics’”. Zeitgeist was enrolled on a stats course back at uni. Zeitgeist grudgingly took said stats course. Zeitgeist does not like dealing with arbitrary integers. Numbers become imbued with meaning once they are put in the context of reality, not when they are being discussed in a lecture hall. Statistical analysis can help shed light on many things. Sometimes, however, they not only fail to tell the whole truth, they mask a reality.

Prima facie, this graph, shown this past Sunday on NBC’s “Meet the Press”, looks like good news for President Obama; the country’s unemployment rate dropped below 9% for the first time since April of 2009. So employment is dropping. How can this be anything but a good thing? Unfortunately, as an editorial this past weekend in The New York Times points out, “the new figures reveal more about the depth of distress in the job market than about real improvement in job prospects”. The editorial continues, stating that “most of the decline” in last month’s figures were because 315,000 people dropped out of the work force, “a reflection of extraordinarily weak demand by employers for new workers”. So what looks initially like cheerful news is in fact worrying and hopeless. It’s enough to make you reach for a stats textbook.

A Lack of (Virtual) Governance

If you’ve been living in or aware of any of the news coming out of the Middle East of late, you’re probably cognisant of the fact that the status quo as we have, for generations, known it, is coming to an end. If you’re living in a major city somewhere in parts of the world governed by more democratically representative institutions, you’re probably aware that similar tremors of discontent our rocking the foundations there, too. Just as important, however, is the state of disarray the internet finds itself in currently.

What began in New York with the Occupy Wall Street movement has since spread, across the US and across the world, including the streets of London, where squatting protesters have led to St. Paul’s closing for the first time since World War II. Social media, as with the protests in Tunisia, Egypt and other regions, has played a significant part. The protests in the West, while photogenically and aesthetically pleasing (the artwork Banksy donated to the London protest being one such example), not to mention emotionally charged and influential, have thus far produced little in the way of results. Perhaps this is due in part to the incoherence of the messages being broadcast from the panoply of protesters.

There are, realistically and practically speaking, for better or worse, few immediately attractive alternatives to capitalism. What matters, however, is the way the capitalism is operated and governed. For though the protest in New York focused on the epicentre of the financial district in Manhattan, the focus is a misnomer. According to a poll shown recently on Meet the Press, more people apportion blame to the government than on financial corporations. So is the problem one of governance then?

While such debates rock the material world, discussions just as important are flaring up surrounding the digital world. Who should be in charge of regulating content in the virtual sphere? Moreover, should some content or users or providers be prioritised over others?

The net neutrality debate has been under discussion for years. Its concerns revolve around the notion that anyone, anywhere should be able to access any content they choose at at the highest speed possible. It favours no particular user or website. The risk is that your access is arbitrarily regulated, both in terms of just what you can see, and also how easy it is to get to it. Some major players, be they countries like China – which recently banned the search term “occupy” – or large media corporations like Comcast, are already breaking this unspoken rule advocated by the founders of the Internet. Last month, the FCC announced new net neutrality rules, which didn’t please either side of the issue very much. Mashable writes that “while new rules do prevent fixed broadband providers from blocking access… they are different for wireless providers”. This latter exception dovetails nicely with Amazon’s release of its latest product, the Kindle Fire, which debuted recently. An article published in Politico last week quotes various pundits who accuse the device – which uses Amazon’s cloud-based servers – of optimising Amazon content over others, essentially making it more attractive and easier to access. Proponents of net neutrality should be wary, but what is there to do without a centralised, independent governing body with teeth to reach out to?

A recent article in The Economist noted that the internet is “shambolically governed”. This is due in no small part to the fact that at its inception, those who founded the world wide web could never have dreamed it would grow to become the network of networks it is today. However that is no excuse for action not to be taken now. One drastic notion was recently mentioned in an article appearing The Financial Times. Ori Eisen of 41st Parameter, a security company that defends banks against online crime, believes that efforts to create a wholly secure environment online are “in the long run… essentially hopeless”. Vint Cerf, described in the article as “one of the fathers of the internet”, has voiced his own concerns about the lack of security online, saying that more should have been done at the outset. He concedes that he is “actually quite interested in the clean-slate ideas”. Mr. Eisen has set out plans for Project Phoenix that revolve around creating an Internet 2.

“Included in his blueprint are biometric identification, encryption of all keystrokes and virtual machines created for every transaction.”

Such a radical overhaul has piqued the interest of Michael Barrett, head of security at PayPal, and the Pentagon’s DARPA – whom Zeigeist have written about before – are also passing around ideas for a redesign. Any such redesigns though would “be doomed without a government mandate or a consortium of banks or telecommunications companies stepping in”. This leads us on to our investigation of governance.

While the regulation of the internet may be chaotic, it has also helped foster a great deal of innovation in the absence of restrictive regulation. In keeping with this freedom of expression, the 2,000 people from 100 countries who met in Nairobi this week for the Internet Governance Forum “all had the same right to take the floor… decisions are made by ‘rough consensus’”. While the American-baked ICANN currently regulates the internet address system, other countries such as China and Russia are pushing for alternative bodies to be created, the upshot being that national governments have more of a say in how the internet is run. This kind of thinking is dangerous, but it does remind us that currently the system is almost entirely under the purview of the US government.

For the world outside the internet, the opportunities for change and development in democracy are not encouraging. The protesters at St. Paul’s cathedral in London have been allowed now to stay until New Year. Then what? What will it take to happen for the inchoate protesters to consider their work done? Any such practical remedies to be taken will surely involve government investment and expenditure. Yet this is precisely what the government is in short supply of. In the US, the judicial system is becoming underfunded to the extent that the process and execution of the law is becoming weakened. Emergency loans are having to be made by courts, so that processes that currently take twice as long as they should, do not end up taking three times as long. This lack of government is effecting lives now. The situation is similar in China, where suddenly workers in the private and public sector are finding themselves without pay;

“Work has all but ground to a halt on thousands of kilometres of railway track, and many of the network’s six million construction workers have been complaining about not being paid for weeks or sometimes months.”

One bright light might be suggested, of all places for a democratic wellspring, in Russia. Wikivote allows users, with particular priority given to heavy users and invited experts, the chance to reshape, comment and question draft laws and vote on the suggestions.

What the internet needs, suggests The Economist, is “a proper constitution, complete with a bill of rights for stakeholders and a separate board of review”. The difficulty will be in first creating such a document and body that functions efficiently without drowning in compromise. More importantly, it will have to ensure that the rules it enforces do not hamper the very innovation that has made the internet one of the most creative, inventive and revolutionary mediums ever.

How to master social media, the Conan O’Brien way

Conan the Television Host, a Harvard alum who back in the day wrote many an episode of The Simpsons, found himself at the centre of controversy last year, a victim of NBC and its admiration of Jay Leno. When the latter’s contract on his 11.35pm nightly show expired, Conan, who had been waiting in the wings for so long in the 12.30am talkshow slot, finally had his dream come true when he took over the coveted Tonight Show spot, which in the US holds a nostalgic place in many people’s hearts, as well as being a significant place for advertisers to plug their wares for a young demographic with money and time.

As Oscar Wilde once said, however, “When the gods wish to punish us, they answer our prayers”. After much dithering, NBC decided to bump Conan off the Tonight Show and return Leno just six months later. Conan was not impressed. A significant part of his fanbase felt motivated enough to rally in protest about the move, both online and on studio lots. After having his fun running up costs on the show and being paid $30m to leave, Conan transitioned to Twitter, which he used intially to promote a tour. He currently has 1.8m followers. After months of pithy and hilarious tweets, and rumours of courting by Fox, O’Brien eventually revealed he was transitioning the lesser-known network TBS.

After a saucy, Paris Hilton-esque ad debuted promoting the new show last week, Conan O’Brien and his production office bombarded YouTube for 24 hours straight yesterday, live from their humble abode in Southern California. This included an aerobics class at 4am PST given by bears, a puppet show (see below) and many, many other bizarre things. This all in aid of his new show, which launches early next month. The stream incorporated tweets and Facebook mentions, and periodically staff (mostly interns), would put questions asked over the platform to various members of the production office.

In his continuing dedication to exploiting all that social media has to offer, Mashable reported recently that the first guests to be on Conan’s new show may be decided by a popular vote on Twitter. Throughout October, a giant blimp has also been plaguing the East Coast of the US, emblazoned with the word “Conan”, that, of course, you can check into on Foursquare to earn a badge. Unnecessary, but inspired and fun. Three words which might well be used to describe the institution that is Conan O’Brien.

Intellectual Property ReBoot

The British Library corrals some bright sparks and lights some fires over copyright protection.

At the Emmy Awards recently in Los Angeles, emcee Conan O’Brien bemoaned (or rather, celebrated, see above) the demise of old media, in particular his erstwhile host, NBC. While media fragmentation has played a significant role in this, many in the industry also complain of piracy. Intellectual Property Rights [IPR] are not sufficient they say. At the end of last month, the British Library published a paper under the Creative Commons license entitled “Driving UK Research. Is copyright a help or hindrance?”, in which 13 scholars, journalists and artists, all intimately familiar with IPR, advocate for a more relaxed approach to incentivising and regulating.

“There is a growing tension between laws designed to protect the intellectual property of writers and performers and their desire to capitalise on their own copyrighted material.”

The above quotation is from author and journalist Richard Donkin, featured in this report. The original purpose of copyright as set out in the United States is to incentivise people and to encourage innovation. Zeitgeist would argue that these original aims have been lost in a orgy of corporate overindulgence. As discussions continue on lengthening Europe’s current 50-year copyright term to equal the 95-year length in the US, one issue that many of those writing have difficulty with is the issues of ‘fair dealing’, more commonly known by it’s US term, ‘fair use’. According to this paper, it currently allows little scope for sampling for educational or critical purposes. As Professor Lionel Bently comments, “the publisher insists that I and my co-author have the consent of the copyright owner. But identifying and locating the copyright owner is not at all straightforward.” It is often very hard to track down the rights to a work as attributed to a particular person – especially if this person is no longer among the living. One of the contributors to this paper argues that people should be actively encouraged to register their copyright, rather than just assuming it as the work is created. This would not only give some authors the option of immediately making their work rights-free, but would also make the identification process that much simpler. The labyrinthine complications are echoed by Dr. Estelle Derclaye, who calls issues of IP law a “daily dilemma to some researchers”, constantly worried that photocopying this extract or inserting a video into a presentation would bring them (or the institution they work for) a step closer to a lawsuit.

‘Fair dealing’ also states that “[t]he copying of an image to make a presentation [on PowerPoint] is an infringement, as there is no statutory exemptions”. This is quite remarkable, and indicative of an anachronistic copyright structure. The notion is also hampered by issues of semantics. Professor Nick Cook writes that there are “specific problems” with ‘fair dealing’, one of which being that they “do not fully cover sound and film”, allowing only small excerpts to be reproduced. There is, however, no clear definition of ‘small’. This is stunningly inadequate. Until matters like this are cleared up, those creating, using and critiquing content will face confusion as to their rights. Cook continues,

“[P]erhaps the greatest problem… is ignorance of the law on the part of researchers (who frequently ask for permission they don’t need), publishers (whose copyright guidelines are often needlessly restrictive, and rights holders (a number of music publishers, for example, claim that fair dealing does not cover printed music – a claim for which there is no legal foundation.”

The danger of this last example of overprotective rights holders is that content does not find its way into the public domain and hence does not become used. Everyone from Picasso to Dizzee Rascal has used previous works to create their own content. Works “that people cannot access create no revenue for anyone”, comments Cook. This is no mere hypothetical abstraction. There are currently many, many films literally rotting away in the basements of various film studios in Los Angeles, waiting for their copyright limits to expire. Inaccessible, and not making any revenue for anyone. Journalist Mike Holderness argues that an alternative revenue stream could be set up to compensate creators of works for making their works available online and to anyone

The irrelevance or mere disdain people have for IP laws today is abundantly clear. Marshall Mateer, Education Consultant for the National Education Network, writes simply, “[t]oday copyright often becomes a barrier standing in the way of what it should be enabling”. Dr Gabriel Egan points out that the effort to get people to stop pirating content purely by enforcing Digital Rights Management software has failed spectacularly (not least because there are always loopholes in software). Taking an educative stance by trying to convince people of piracy’s moral corruptibility rather over-stated the case, and rather too late as well. Egan points out,

“Trailers in cinemas warning that copying a film is theft, akin to purse-snatching, strike most spectators as manifestly untrue. Stealing deprives someone of the use of their property, while copying something only adds to the number of copies in existence. The supposed loss to a rights holder is notional and dependent upon the untestable hypothesis that a consumer prevented from copying something will buy it instead.”

Richard Donkin, perhaps optimistically, writes that “[w]idespread disregard is often a prelude to legal reform”, arguing among other things that the copyright term needs to be shortened to around 20 years. It would be nice to see Mr. Donkin’s dreams come true.

As seen (only) on TV

Product placement has been rampant in the US for sometime; Zeitgeist has commented on it before, as well as its close cousin, contextual advertising. Part of the Zeitgeist team thinks the show 30 Rock is consistently the funniest thing to ever grace their torrent-hungry laptop, and in the episode Generalissimo, the LatAm tendency for “branded-entertainment projects” is gloriously parodied (see a Latin Alec Baldwin, above).

While the UK continues to struggle with implications of such things and Lady Gaga’s new music video makes her a ‘product placement lady of the night’ the New York Times reported yesterday that the Spanish-language network Telemundo is “expanding” the idea, by having new products created specifically for the show that will then be available to buy.

“Telemundo already works with advertisers like… Ford, Subway, T-Mobile and Toyota… The new deals will create products that would not otherwise exist for viewers to buy. The first products will be jewelry, made by the Richline Group… which is to be worn in an episode of the telenovela “El Clon” (“The Clone”) to be broadcast on Telemundo at 8 p.m. on April 22. The jewelry is already available for sale on the Telemundo Web site (telemundo.com).” PSFK comments, “The beauty of this announcement is that it reflects the increasingly targeted capabilities available to brands via product integration, if they choose to exercise that option.”

A very interesting idea, and one that Kellogg’s and M&S have recently implemeted on a much smaller scale in the UK. This article is sponsored by the Sheinhardt Wig Corp.

Regulating Media Consumption

From the July Zeitgeist…

As Brian Lowry wrote recently in Variety, both TV and newspapers are struggling to respond to the changing ways people are consuming their media. “Both are communications media, and each faces a conundrum regarding what to do about the free online consumption of their product that’s rocking their respective worlds”.

Both industries have become subject to massive arbitrage; absent of a consistent way of protecting themselves, these two media are trying all sorts of varying methods to make money: FT.com allows you to view a select amount of articles a month before asking the user to register to their details; most general news on WSJ.com is free, but the more niche articles on the markets are charged at a weekly subscription rate.

On television, there is a similar discrepancy. In the US, Disney, Fox and NBC have all aggregated their content on a free-to-air, ad-supported platform called Hulu. The site is tremendously popular, although debate rages – recently between The New York Times and eConsultancy ‐ as to its efficacy. Other networks like CBS offer free, ad‐supported
content too, but only through their website. UK networks operate under this latter mantra; you can watch our shows but only on our own proprietary website. And a long‐gestating proposition to aggregate all TV content across the BBC, ITV and Channel 4 under Project Kangaroo (exactly like Hulu) has recently been blocked by the Competition Commission. Regardless, Hulu is carrying on with plans to launch it’s services in the UK in the coming months*. If all this sounds confusing, that’s because it is.

Both media recognise that the way users consume their respective content has changed dramatically in just a couple of years. However, their collective response has been mostly in fits and starts; uncoordinated and uncertain. Consumers will not rush to embrace any model (profitable or otherwise) until there is uniformity and simplicity across a medium, and for this to happen companies must work together.

*For more news on the increasing amount of video users are consuming online, click here.