Category: Digital Culture

Talking Branded Entertainment with Filmmaker Amy French (Podcast)

There are a lot theories and a lot of experimentation with regard to independent filmmaking, the digital age, and the prospects for redefining the ways in which filmed entertainment can be funded by sponsors and distributed over the web.  I thought it would be interesting to talk to Amy French, an old friend who is a writer, filmmaker, and actress who has experience in the world of traditional TV commercials, in independent feature filmmaking, and is now working in the world of branded entertainment. Amy and her colleagues just released her first project in this format — a humorous mockumentary style  series for California brand Umami Burger. You can watch Episode 1 of “The Fifth Feeling” below and watch the rest of the series at funnyordie.com.

I spoke to Amy in Los Angeles via Skype.  See podcast player below.

For more information about Amy and her work, visit www.ameliafrench.net.

Pandora Isn’t Exactly Struggling

Yesterday, on Capitol Hill, the House Judiciary Committee held a hearing to discuss the Internet Radio Fairness Act, a bill largely backed by Pandora Media, Inc. and opposed by a growing number of musicians and songwriters.  In fact, I recommend Chris Castle’s excellent synopsis of the message taken to The Hill by a handful of songwriters.  If you want legal context for understanding the IRFA, I’ll direct you to Terry Hart’s Brief History of Webcaster Royalties, but if that’s more nitty and gritty than you want to know, consider this:

In defense of Pandora’s position that internet radio services should pay lower license fees to musicians and songwriters in the interest of “fairness,” you’re likely to encounter the bullet point that “Pandora isn’t even profitable yet,” conjuring an image of some fledgling, innovative enterprise trying desperately to survive within an outdated system.  But as a guy who grew up around the motion picture industry, knowing something about the shenanigans of some producers, I know that literal profitability ain’t necessarily the same thing as everybody making buckets of money.

Keeping in mind that Pandora, like so many internet-based services, is basically a means by which software delivers a product that someone else has invested to produce, I had to wonder what kind of costs other than licensing Pandora has to cover while it is supposedly staggering toward profitability. Not surprisingly, according to the income statement on Yahoo Finance, the Operating Expenses shows two lines:  R&D at a mere $130k and Selling General and Administrative at just over $249 million.  This is from January 30, 2012 against revenue of just over $274 million.  Presumably, the cost of licensing music is part of this second line item along with basic overhead like rents, servers, etc.  But the rest is salaries and bonuses.  What else do they have to pay for?

Now, when an ordinary entrepreneur thinks of a business that isn’t profitable yet, he thinks in terms of continually reinvesting in his business, keeping his own and any other founders’ salaries in check while growing that business and pouring in a ton of sweat equity.  It just so happens that this is exactly what a songwriter, performer, or emerging new band does most of the time.  But web entrepreneurs have a history of making money while losing value.  Remember the Dot Com bubble?  There was plenty of loss, but plenty of start-up founders also made out like bandits in the process.  Failing with a few million in one’s pocket would be an artist’s dream because the nature of the work is so fickle, but I digress.

The top five executives at Pandora, not including founder Tim Westergren, earn combined salaries of just under $3 million, although CTO Thomas Conrad had exercised stock options of $5.9 million as of the January 30 report.  Mr. Westergren is worth an estimated $100 million.  According to Pandora’s own statements, it paid “50% of its revenue in fees” last year.  Assuming this is true, that’s $137 million, plus the $3 million in top executive salaries, plus some unknown number to Tim Westergren, but let’s estimate that there’s at least $100 million or so left for other expenses, including the salaries of 530 employees.  Divided evenly, which of course it is not, that would be annual salaries of over $180k per employee.

So, there is a world of difference between a company being profitable and those in the company making lots and lots and lots of money.  If Pandora fails because, as it claims, the licensing fees are unfair, then many people involved with the company will walk away having failed upward.  Meanwhile, it won’t take long for a new internet radio service to appear — one that can be profitable without exploiting the people and companies who make the real investments in the products that make radio function in the first place.

Are digital-age tools creating more advertising-immune consumers?

Photo by KV Mithani

I heard this statement on NPR last night about millenials and brands in context to food products, but it seems to be the prevailing wisdom based on several articles like this one that indicate the millennial generation is less likely to be brand loyal than previous generations. Most analysts cite economics — that millennials generally can’t afford to be choosy right now and are therefore driven by price more than other considerations. But I have to wonder if something else is not at play. Is it possible that while the gurus of Web 2.0 have made gazillions promising advertisers that they can segment the market into digestible, predictable, accessible little data points, that the very tools they’ve built to achieve these goals also foster a consumer who is more immune to advertising and branding? I don’t know, but if we think about millennials as consumers, it’s entirely possible.

The first obvious reality about the next-gen consumer is that he’s media saturated to the point of ADD. It is well understood that this demographic consumes both entertainment and advertising in an asymmetrical, fragmentary way; and while many theories and experiments have emerged to “cut through the clutter,” as advertisers fervently hope, it’s entirely possible that the clutter is winning. In fact, the explosion of Web 2.0 applications and social media environments has fostered a marketplace that advertisers may wish, at least for some time, that they had not pursued. The bottom line when it comes to effective media buying is knowing where your consumer is (e.g. dutifully watching Seinfeld on Thursday at 8:00pm), and it’s tough to build a relationship between a consumer and a brand when that consumer is everywhere and nowhere at any given moment. It’s advertising according to Werner Heisenberg.

Also, thanks to the digital age, I personally believe millennials are gaining a media intelligence that is different from those of us born, say, in the early days of color television. Even the least sophisticated ten-year-old growing up with YouTube as the norm very likely has a meta-intelligence about the workings of communications that is both conscious and unconscious. If so, this makes her a much tougher nut to crack with traditional advertising and media tools. Plus, the new tools have the potential to dissociate the advertising from the brand even further than in pre-internet models.

Remember the “Where’s the Beef” campaign? Award winning. Funny. A cultural icon. And it didn’t move the needle on Wendy’s market-share one bit. Making entertaining ads that don’t translate into sales is a perennial challenge for advertisers; but now, the landscape is even more complicated with so many advertisers chasing the dream of “going viral.” On the one hand, we now have a market in which a TV spot for instance can be so entertaining that people will watch it on purpose and even share it through social media. “Cha ching,” thinks the media buyer. “That’s reaching more people for free!” But the same tools for this kind of diffusion can also disconnect the advertisement from the brand, spreading the message so far outside its intended targets that it can even result in a net loss. Just because something goes viral doesn’t mean it won’t invite comments like, “Great spot. Laughed my ass off. Worst product ever!” Because let’s face it, the Web brings out everyone’s inner troll at least a little.

Regardless, relationships take time, and this is just as true for consumer/brand relationships as it is for interpersonal ones. And one thing that cyber life and social media certainly does not foster is a greater investment of time into the messages, comments, memes, videos, news items, and mundane gibberish that updates every second of our lives. There is certainly opportunity within these models to build brand loyalty — P2P is a powerful way to market — but it’s entirely possible that businesses will have to work harder to offer real value in order to maintain relationships that can theoretically be broken with a single tweet. Brand identity alone may be losing some of its sheen for the next generation; and the marketing promises of Web 2.0 make me wonder if advertisers aren’t trying too hard to grasp every grain of sand.