On TechCrunch Mark Suster compares Hulu to the oil cartel OPEC. I’m not sure what this point number 2 has to do with the cartel comparison, but I think it’s one of the more interesting points of the post:
2. Limited “Targeting” of Advertisements: The great promise of the Internet for advertisers was that they were finally going to be able to deliver targeted advertisements to users because they could finally know who you were. This has become a reality with banner ads, search ads, contextual ads and Facebook ads. But not Hulu ads.
Why? They know who we are, don’t they? Yes, they do. But they generally don’t even allow advertisers to purchase ads for a single show let alone ads targeting YOU by reading your cookies on your computer. So we have ads that are even less targeted than those on television. The reason lies in protecting the high price of broadcast & cable advertising rates. They are nervous about “trading analog dollars for digital pennies.” So advertisers have to buy “run of site” ads rather than show specific ones.
It was over a year ago now when I wondered why Hulu wasn’t targeting ads to it’s users. I haven’t run the numbers on targeted ads with lower volume vs. sitewide untargeted ads, but I’d have to think there’s a price point at which you can at least break even. I mean, Facebook’s advertising platform specializes in making it easy to target people based on tons of different criteria. Again, I haven’t run the numbers, but I think Facebook is making a lot of money.
Of course, even running the numbers won’t get to the heart of the reason that Hulu is basically having it’s hand tied when it comes to being able to innovate like other technology companies. For as long as the cable and satellite providers control that major distribution channels, the networks have no choice but to hamstring the efforts of other methods of distributions (even, obviously, ones that they support). Unfortunately (for me and other Hulu users), since the user base of people watching TV via the Internet using Hulu, Netflix, Amazon, iTunes, etc. is still tiny compared to the number of people who pay companies to provide them with TV (while most of the time also paying them to provide Internet access), the networks have to tread lightly when it comes to the user experience provided through these alternate services.
Cable companies (and satellite and other pay-TV providers) are certainly scared pantless when they realize(d?) that something like Hulu could easily make networks more money by showing targeted ads for higher rates (not to mention charging people $9.99 per month without having to hand any of that over to the cable company). But they still have the market share, and therefore, the power, to make sure that networks don’t get too excited about prospects of nearly infinite riches. Netflix has run into the same problem (over and over) in dealing with movie studios who still see DVDs as their major distribution channel (although that point of view is even more short-sighted than the view that cable companies will continue to maintain their dominance in the television distribution market).
This guest post on TechCrunch is a not only a good read, but an awesome example of how to write a blog post. The only thing that’s really wrong is the number of typos. I realize that proofreading such a long post is difficult, but with the amount of effort that went into culling the links and writing and formatting the post, I would think that making sure things like “TechCrunc” wouldn’t slip through the cracks.
Nevertheless, the number of links by itself is impressive, as is the formulation and support of the argument. It’s almost like this form of blog post is a lost art in today’s world of “pump the news out as fast as you can move on to the next big thing”. Thanks, Adam.
First: I Was A Lala User
Second: Why Do Good Companies Ruin Startups?
I Was A Lala User
I’ll give Apple credit for giving a month of advance notice, but on the other hand (that first part was the first hand), why are they shutting down Lala before they launch iTunes.com? I must conclude that it means they’re going to change the business model and neuter features available on Lala.com and they don’t want to have to deal with migrating current users of the outstanding service. How very Apple of them. Not supporting legacy anything is a good deal if you can swing it. And – unfortunately for me – they can get away with it.
Now, I hadn’t bought all that many web songs on Lala, but it was not exactly a trivial investment – especially for someone like me who used to open up multiple BMG accounts to get 10 CDs for the price of 1 and 4 extra for “referring my friend.” I’m happy to give artists money when I feel they deserve it, and that’s precisely why I loved Lala so much. I could listen to every song on there – the full song – and then decide whether I wanted to buy it. For me at least, I think that probably led to more purchases than I’d made in a long time because I got sick of paying for music that I’d never heard and wasn’t sure if I’d ever want to hear again.
Now, I will get an iTunes store credit for the web songs that I’d purchased on Lala… better than nothing, but it kind of feels like buying stock and then having it exchanged for 1/10th of a share in a new company with the same stock price. I’ll use it, because it’s there and I hate losing money… but… then what? Use the new iTunes.com? Or…?
ReadWriteWeb evaluates a few alternatives including MP3tunes, MOG, Napster, and Rhapsody. I’m also going to check out eMusic since I supposedly have 35 free MP3s there… but, in terms of how I use Lala, I think that a combination of Pandora and Amazon will have to fill the gap… With Pandora, I can listen to unlimited full songs for free, and then when I find something I like, I can go over to Amazon and get the MP3. (I could do buy the songs from iTunes as well, since they do sell DRM free MP3s now, but I can’t help but want to avoid Apple since they are the ones who interrupted my music consumption system in the first place) The only issue with my new system is that I can’t just scan new releases, add them to my queue, and then buy the web song for any songs that I want to hear again.
Why Do Good Companies Ruin Startups
I never used Dodgeball so their acquisition and subsequent shuttering by Google didn’t really affect me. But then they took over Jaiku (My posts tagged: Jaiku) and basically shut that down (yeah, it’s still there, but there’s no real support for it any more). Now Apple has bought Lala and is shutting it down. Why?
The obvious answer is: talent grab. Everyone knows that these big companies are basically rewarding the talented developers who started the companies by purchasing their whole company for a significant sum of money. I can’t blame the developers for taking it. And I guess I can’t blame the companies for doing it. That’s just the way the business works. It just sucks for consumers who end up with a crappier end product (eg: Jaiku vs. Google Buzz) because the big company seems to restrict and/or slow the development of the new imitation products. As I mentioned above, the fact that Apple is giving people iTunes store credit for the web songs that they’d purchased on Lala is almost a guarantee that the web songs will not exist on whatever web version of iTunes Apple launches.
Another example: One of my favorite features of Jaiku was the ability to unsubscribe from specific feeds from specific people. So, if I follow someone on Twitter and don’t want to see their imported Twitter feed duplicated in my stream, I could unsubscribe from that and only get their other updates. I have not yet seen that in Google Buzz, and if it’s there, I haven’t seen a place to do it.
It’s tough because, on the one hand, I am very happy for the developers and I do think that they deserve to be rewarded for their hard work. I just don’t understand why, if a site is so successful that it warrants being bought out, it doesn’t continue to be run in that successful manner. Okay, I actually do understand why. I already said it in the second paragraph of this section. The big companies want to pull the talented developers off the successful site to recreate the site for them. So really, what I don’t understand is why the big companies don’t continue to run the successful site and do a better job of integrating it and turning it into what they want instead of just shutting it down and rebuilding.
So, apparently, Warner is letting Netflix know what happens when you, well, you see the pictures. It would seem that giving in to Warner’s demands that they not send out movies within the first 28 days of their release bought Netflix a ramrod straight from behind. It’s as though Warner said, “Oh, did you think we were going to screw over all rental companies with that deal? Nope, if they sell DVDs, then it’s totally fine.”
As TechCrunch has repeatedly pointed out in their coverage of this charade, the internet-streaming-movie cat is out of the bag. Trying to shove it back in at this point is only going to get you some wicked claw marks (and by claw marks, I mean pirated movies).
Or, to put it yet another way (because I love analogies), Warner Bros. is Walter, mistakenly bashing the hell out of a car because he thinks it will get him what he wants. Walter knows that Netflix has got some of his money, but he’s smashing up the wrong car.