The Digital Analyst

What came first – the chicken or the egg?  Rhetorical and slightly annoying, but I think the question addresses a concept that is too often overlooked when analyzing our adoption of digital media.  Thinking about the devices through which we experience media can help us better understand our relationship with that media and the direction that media industries are heading.

First, let’s take a look at the evolution of the music experience.  The 20th century was dominated by the album and the record companies optimized the production and profit they could extract from that media experience, whether it was from vinyl records, cassette tapes or CDs.  These types of physical media enabled musicians to sell collections of their music, which was considerably easier and generated more revenue than selling each song individually.

When people began transferring their music collections onto their computers and eventually their MP3 players, the organization and experience of music changed forever.  The computer enabled you to collect and instantly play music across a number of albums on a single device.  Creating playlists also changes the musical media experience and helped us become accustomed to listening to songs individually instead of in the experience of an album.  Radio also has this effect on our interest in single tracks, but organizing playlists on the computer is a more personal and conscious behavior than passively listening to a radio station that might or might not play a song you enjoy.

By all accounts, the music industry has largely failed to recognize these shifts in consumption preferences and are clinging to old business models that will never produce the same results because even if every file-sharer began purchasing all of their music digitally, they’d likely purchase individual songs, which is not as valuable as someone who purchases a $18 CD.  The good news, in my opinion, is that the music industry does have a chance to regroup and adapt to the new marketplace because I do not foresee another major shift in consumption habits for quite some time.  I think the music industry’s revenues can slowly climb back if they begin embracing multiple digital monetization strategies, but I have very strong doubts they will ever climb back to their once lofty perch.

The music industry was forced through the growing pains of digitization faster than any other entertainment media because the software for building digital music collections on PCs was developed very early on.  Playing them on MP3 players, lead by the earliest iPods, became a very easy behavior for the public to embrace because they were already used to interfacing with portable tape and CD players.

File-sharing has had such a strong impact on the music industry because of their inability to adapt their distribution and profit models to new consumption habits.  Napster, Kazaa, Limewire and later BitTorrent were the only ways for early adopters to fill their MP3 players easily with music they didn’t have on CD and this eventually conditioned a culture that devalues the price of digital media.  Why pay $18 for a CD when you can borrow it from another willing party on a permanent basis?  Copyright infringement does not resonate with the common person and file-sharing can quickly turn into a Robin Hood kind of situation with pirates stealing from the mighty entertainment industry to give to the poor students and young adults who can’t afford to buy their entertainment.

I see hope for the long-form video industries though because TV shows and movies have not yet been optimized for mass digital consumption.  I say that because the TV is one of the most uniquely important devices in our lives.  As a technology, we have become very comfortable with the TV and with time our expectations surrounding the experience a TV delivers has increased dramatically.  The same early adopters and digital media enthusiasts driving digital media adoption are also the primary customers for HDTVs, Blu-ray players and home theater surround sound systems, and there is no way a digital rip or even the paid download of a movie will compare to the experience on their 60″ 1080p LED-LCD with 7.1 Surround Sound.

Digital TV shows and movies are primarily consumed on computers and portable video devices like the iPod Touch, so in order for the TV and film industries to protect their revenue, they need accomplish three things:

1.)  The TV and movie studios need extract as much sell-through and rental revenue as they can from the portable media experiences.  The emergence of portable video consumption could end up giving the video industry the same kind of boost that the music industry experienced when tape players and CD players made it easy for us to listen to our music whenever we wanted.  This boost should not be nearly as big though because the length of a song lends itself to a ‘snacking’ type of media consumption.  The closest parallel to this kind of video experience is YouTube and streaming video, which has been steadily growing in recent years.  YouTube-style video snacking does not do it for everyone though.  There is certainly still an audience for people who want a deeper mobile media experience.  Catching up on a TV show you missed while on the bus or renting a movie to watch on a 3 hour business flight are just two examples of this opportunity.  Luckily, the industry has been developing the mobile video experience and we have legal options now with iTunes, Amazon and other digital distributors.  The iPad will play an interesting role in expanding the reach of mobile video, but that’s another post for another day.

2.)  The long-form video industry must discover a compromise for teens and young adults who cannot afford media priced for their parents to buy.  One thing people high up in the media industry do not always realize is that $20 to someone over 35 with a steady salary, savings and stability is not the same as $20 to a teen working on the weekends, students on financial aid or young adults who either cannot find a job after graduation or are saddled with so much debt that they pretend ramen noodles is a delicious alternative to a meal.  Young adults do not want to steal, but they also recognize that the experience they download from BitTorrent is not the same as the one on their TV or played through a Blu-ray player and they aren’t interested in paying the big screen price for a small screen experience.  Ignoring this audience could condition the same attitudes toward Movie and TV show ownership that the music industry fostered, creating a culture of free that is unsustainable in the long-term.  Almost more importantly, young people are the media industry’s most voracious, loyal fan base.  The sway they have in the market is too great for studios to treat them like criminals.

3.)  The third thing the long-form video industry needs to  accomplish is protecting their content on the TV.  This is one area where the industry is leading the way.  Although the effect of DVRs on TV consumption and advertising effectiveness is still up for debate, I think there is strong enough evidence to claim that it has lead us to consume an even greater amount of TV than we previously had since we can watch shows at times that are more convenient to us.  In turn, this makes it easier for us to become more loyal to a particularly show because it removes many excuses for missing an episode.

Aside from DVRs though, it is fairly difficult to re-create the experience of watching a show on your TV if you don’t in some way pay for the experience.  There are some of us who are savvy enough to hook our TVs up to a computer where we can stream TV shows for free, but no matter how optimized your system is, this cannot recreate the full TV experience because of buffering, video quality and simple audio outputs.  Free downloads from file-sharing applications played through the TV are much closer to the real deal, but require a deeper level of commitment to the process of acquiring said media.  Trying to consume digital movies on your TV is a very similar experience, except streaming options are limited and usually extremely poor quality.

Media extender boxes like the Netflix Roku player, Apple TV, web-enabled Blu-ray players/HDTVs, and gaming console platforms like Xbox LIVE and PlayStation Network have begun delivering digital TV and movies to our TV sets, but all of those technologies are examples of the entertainment industry responding to consumer needs with technology that safely allows them to transition their business models on their terms.  Adoption and usage of these devices might start off slowly, but they should see acceptance in the market place as the rest of the technology in our livings rooms catch up and normalize into our media experience.  If the entertainment industry can retain control over our TV sets, they should be able to weather this digital transition and find new ways to monetize their products that eluded the music industry for years.  That is, until a technology comes out that displaces or disrupts the dominance of the TV screen in our media consumption, but that will be a mighty throne to topple.

As always, your comments and feedback are encouraged.  The topic I’ve touched upon here is extremely complicated and no single blog post could do it justice, so feel free to play devil’s advocate or expound on a point in the comments below.

My Sister, Mom and I at Christmas Eve dinner.

Shortly after starting this blog, my Mom passed away on January 31^st.  She was diagnosed with ovarian cancer last spring and I moved back to Cincinnati in September to help her through the chemo treatments, but the cancer was very aggressive and came back to claim her life only 4 weeks after she finished up her chemo and I returned to work in my LA office.  She was the most important person in my life and although I had prepared myself mentally for her passing, the timing of it was very unexpected and left me a little shell-shocked.

In the midst of this personal tragedy though, I realized very quickly just how important social networks are in my life.  Simply put, I could not have gone through this grieving process without Twitter and Facebook.  The first thing I did after my Dad called me from the hospital was post this tweet, which in turn updated my Facebook status.  Some might have thought it was inappropriate to announce my Mother’s passing with a tweet, but I did not know any other way to express myself at that time and I could not be more thankful that I turned to my social networks.

It is very easy for a death like this, especially at my age, to feel overwhelming, but the messages of sympathy and support that poured into my inbox reminded me that I wasn’t alone with this struggle.  Knowing I had so many people thinking about me and offering their support, even when they couldn’t really do anything, kept me stable and let me be strong for the rest of my family who did not feel the same level of support.

One regret I have from the past month is not reaching out to and supporting my Dad more consistently.  He has never responded well to big changes and my Mom’s death sparked a downward spiral of depression that ended with him in the hospital.  While my social networks helped me avoid the overwhelming feelings and some of the loneliness of the past month, he did not have the same support network online or in real life.  I can’t help but think that a network of friends expressing their support would have made even a small difference.

I expect the role of social networks in the grieving process to expand as my generation (Millennials) ages and I wonder what impact it will have on our ability to cope with loss.  Although research has found that social networks do not expand our social circle past the magical Dunbar number (150 people), it does provide a communication platform where we can more easily reach out of our immediate circle in times of need.  I hadn’t kept in strong contact with many of the people who sent me messages of support and I doubt they would have sent the messages or even known about my Mom in the first place if it had not been for my announcement through Twitter and Facebook.

Have you turned to social media during a time of grieving or when you needed emotional/psychological support?  What effect do you see social networks having on our ability to cope with loss in the future?  Please don’t be afraid to be honest in the comments if you disagree or think coping with social networks is unnatural.  I recognize my experience is my own, but I’d love to hear other perspectives on this topic.

This is a guest post written by Brenton Lyle, Senior Gaming Consultant at Interpret LLC.  To give some context, Brenton gave me permission to publish an email he wrote to my office in response to an article sent to our listserv: Who will buy the iPad? I thought the points he made were strong, well articulated and pretty funny, so it would have been a waste if it just ended up in my Outlook Deleted Items.

I think it’s important to look past the day-one reaction of the tech-savvy internet commenter crowd; they’ve proven historically to be impossible to please without creating a product that’s doomed to failure (I imagine a quad-core, Linux-based, open-source tablet with seventeen USB outs and three HDMIs, all for $32 (or $2000), might have had a chance of avoiding the ire of the self-declared gadget elite).

The iPad may succeed or fail, but I think it’s important to know what it is Apple is actually trying to accomplish (conceptually, that is; shareholder value is the literal goal, of course). Jobs decided that room exists for a gadget with a new set of uses – uses you don’t yet realize that you’ll enjoy. If they’re right, this will go next to “Put Arm & Hammer in your fridge” as another famous example of expanding your market by introducing new consumption habits. Do you browse the internet on your couch, or check your email while eating cereal? You don’t, yet*, but Apple is hoping you’ll enjoy doing it.

Jobs said in his presentation that they’re filling the space between phones and laptops. That is actually a simplification of what they’re attempting (it was too obtuse to describe on stage during the introduction). They’ve identified an entirely new type of web-connected, technology-enabled media consumption, that is neither mobile, nor full laptop computing. The whole thing gets confused, however, when one (correctly) points out that a number of devices are already capable of doing these things. The obvious comparisons that spring most readily to mind are the iPhone and netbooks, but the key to the iPad is the fact that these devices were never intended for this type of “casual computing”, nor are they particularly well suited for it, the same way that your daily-driver car can roam the open plains and explore dirt trails, but isn’t exactly optimized for the task.**

This is illustrated below:

The space between mobile and laptop computing

The famous “Blue Ocean Strategy” article (I believe Kim Mauborgne wrote it) said (paraphrasing) that you’re more likely to succeed if you figure out how to sidestep your competitors, rather than beating them in yesterday’s marketplace. Nintendo demonstrated this so soundly with the Wii—woefully underpowered, laughable graphics, and a wildly unconventional and untested control scheme—that Sony executives still cry themselves to sleep 35% of the time. Apple is attempting the same thing with the iPad: cater to an entirely new type of computer use with a device that isn’t a phone, or a computer, or any combination of the two.

People are getting hung up on the fact that, with regard to technical specifications, it is by definition (and parts vendors) a combination of the two: capacitive touchscreen (mobile), A4 processor (computer), icon-based homescreen UI (mobile), etc. But attacking the iPad because of its specifications is like lambasting the Wii because it lacked the 8-cell processor of the Playstation 3: you’ve missed the point.

* If you said “yes”, you’re likely among the netbook hyper-minority, probably hate the iPad, and have likely already written a few comments online about it. You are not actually the market for this device, and I have it on good authority that Steve Jobs hopes you spill cereal on your netbook.

** If you drive an off-road SUV in Los Angeles, we cannot guarantee that people aren’t laughing at you in the Whole Foods parking lot.

Brenton can be contacted directly at brenton.lyle@interpretllc.com.

Steve Jobs introduces newest member of the iFam

It’s time to welcome a new member to our digital family of gadgets.  Apple’s iPad is like the middle child, stuck between the iPhone and MacBook wondering what it’s place is in this wild and crazy mobile computing world.  The iPad isn’t the first tablet computer, but the hype and momentum behind it make it sound like Steve Jobs sucessfully redesigned the wheel.  While I’ve seen many apple fanboys disappointed that the iPad is essentially a jumbo iPod Touch with 3G, this OS is precisely why I believe it will succeed where so many other tablets have failed in the past and find a place in our lives.

The reason tablets have not succeeded in the past is because they always tried to force a square block into the round hole where their operating system should have been.  One of our biggest problems when venturing into uncharted digital space is that we try to force what’s in front of us into a frame of something familiar to us.  Early tablets tried their best to be an alternative to laptops with an operating system you were already familiar with on the PCs around your home and work, but the interface is so unique on a tablet that they never quite lived up to expectations.

If early tablets tried to force a full-on PC operating system without success, many will argue Apple is committing the same error in forcing their tablet to mimic their other portable devices with an iPhone OS.  My take on this argument is that the OS Apple designed for the iPhone and iPod Touch is actually better suited for a device the size of the iPad, especially when it comes to reading eBooks or other content online.  I’ll be upfront and say that my iPhone is probably the most essential device in my life and I feel lost without it sometimes.  I use it for reading email, news and other blogs, but the limitation of reading on a phone’s smaller screen means I’m constantly zooming in, switching to landscape and squinting to make things out on websites that aren’t optimized for mobile browsing.

One issue two co-workers and I got into a heated debate over yesterday is the role that the iPad will play in our gadget lineup.  They both were disappointed that the device was essentially a blown up iPod Touch and thought that the inability of users to multi-task on the iPad would severely limit its utility and reach in the market.  I think they fell into the trap I described earlier, hoping the iPad would be something it is not – a replacement for the netbook.  As Steve Jobs said in his keynote, “netbooks aren’t better at anything”.  The reason they aren’t better than anything is because they try to be everything to everyone.  They’re the early versions of the tablet PC with a smaller screen and tiny keyboard.  I’ll admit, those two changes make a big difference and I do think there is a place for the netbook as a mobile productivity platform for people who need to take their work with them, but they are not an apples-to-apples comparison because the iPad is not trying to replace the functionality of a laptop.

Apple understand it’s corner of the PC market is precisely that… the personal computer.  They make great computers for you to use at home.  They’re easy to use.  Plain and simple.  They’re also easy on the eyes and carry a level of sophistication missing from most Windows-based PCs.  However, unless you work in film editing or graphic design, Apple’s products are not designed for work-style productivity.  Their version of Microsoft Office, especially PowerPoint, is tough to navigate and I personally find them borderline unusable compared to the Office suite of apps for Windows.  I’d address iWork except that I don’t know anyone who actually uses it.  The iPad is also aware of its role in your personal computing life.  If you need to research online, review spreadsheets and work on a presentation, the iPad is not the device for you.  I would argue the netbook is too small to handle those tasks with any ounce of grace, but if you need to do mobile work, it’s the best solution because laptops are too big and expensive to easily carry around.  Bottom line, the iPad is NOT a netbook and it isn’t trying to be one.

I can’t speak for everyone, but I’ll try to give you a sense of the role I envision for the iPad in my life in order to expound on the features that I think will help it succeed.  First, my current setup at home is that I have an iPhone I carry around everywhere and a PowerBook that sits on my desk or is used in the living room to project movies.  This arrangement has worked for a while, but my laptop is on its last leg, so I’m currently considering the optimal device combination for my life.  After much debate, I believe I’m going to replace my PowerBook with a new iMac in my room.  I almost always leave the PowerBook sitting on my desk, so it’s essentially a desktop anyway at this point.  My iPhone covers almost all of my daily mobile computing needs, so I don’t feel a need to lug around a device that is very expensive to replace in a worst case scenario.  If my iMac sits on my desk and my iPhone goes with me when ever I leave my apartment, then the iPad is my everything in between device.  I’ll primarily use it in my apartment, although I will certainly take it on trips to read books or watch movies.  Like many tech-enthusiasts, I consume an inordinate amount of reading online, but I don’t always like doing it from my computer.  The iPad will untether that consumption, allowing me to read more easily in my living room and bed.  I spend so much time reading in front of a computer, it’s almost weird to think that I can read the same content while sitting in a big comfy chair or couch.  I’ve tried taking my laptop to the living room to read on my couch, but there’s never a good way to sit with it and it overheats my legs too quickly.  While just using the device to read and surf the net doesn’t sound like a lot, it’s probably the primary reason I use my computers at home.  I don’t think the iPad will replace most of my computer usage, but I do think it’ll transform the way I interact with social networks and think about the Internet.

What role, if any, do you see tablet computers playing in your life?  Where do you think a device like the iPad fits into your daily routine?

If we analyze the evolution of technology in the same way Darwin studied our biological evolution, the adoption of new technology starts looking more organic than we might have originally thought.  The genetics of our digital evolution is the actual hardware and software available to us, but many people make the same mistake as those just starting their study of evolution when they place too much emphasis on the technology available and not enough on the environmental factors affecting the expression of that technology in the marketplace.  The environmental factors affecting the evolution of tech are primarily economic in nature, but also include our ability to understand and assimilate new technology into our everyday lives.

Earlier technological developments like the printing press and even the television when it first came out were not as universally available due to their high cost of entry.  Technology like these changed human life profoundly, but not as ubiquitously as the effect that the Internet will have in our lifetime.  Whereas the printing press made it easier for us to transfer knowledge and the television provided a window into another world outside our own, the Internet combines the power of those two devices by mediating knowledge transfer in a world that both exists outside our world and all around it.  The Internet is no longer relegated to being a glorified yellow pages and encyclopedia.  Mobile and wireless technology is integrating the internet into nearly all aspects of our experience.

We are creatures of habit and the integration of the Internet into our home, work and social life can leave many feeling lost in the change around them.  Habits are healthy for us though.  They are grounding and help us understand exactly who we are and how we relate to our environment.  They are an ounce of stability in the sea of change that we call our lives.  However, they are also stubborn and create frames of reference that are hard to break, even when confronted with overwhelming evidence.  Digital technology adoption is difficult for most people because it challenges the very framework of how we view and live our lives.

One concrete example of technology challenging the framework in my life is my foray into Twitter and location based services like Foursquare.  Even though tweets are similar to text messages, it took a while for me to understand the public relationship I wanted to have with my followers and friends on Facebook.  I’ve become pretty comfortable with Twitter, but as soon as one technology is assimilated, another emerges to challenge you.  The latest challenge to my frame of reference is the location-based game, Foursquare.  For those who are unfamiliar with Foursquare, it’s a game you play with your cell phone where you get points and badges for checking into stores, restaurants or areas you visit in real life.  The controversial part for most people is that it can broadcast your location to anyone you’re friends with in the game, or post it as a status update to your Twitter account (and to Facebook in my case because my tweets update my status there).  I’m slowly figuring out which information I broadcast and which I keep private, but it has certainly been a challenge to find the balance.

What technology has challenged you recently?  How is technology changing the way you live your life?

Welcome to my blog! My name is Zak and I’m the digital analyst. The posts here will cover a wide range of topics relating to the way we interact with technology in our daily lives. I hope this forum not only addresses the major digital issues of the day, but also shines a light on the movements that will affect our tomorrow. My goal is to write at least a couple posts per week, but I am new to blogging and recognize there might be a couple lulls here and there until it becomes an ingrained habit. Interactivity is certainly a pillar of the digital revolution we are experiencing, so please feel free to comment if you are inspired by or disagree with my analysis.

Thanks for your support!