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VidCon - Brands & Media Companies - If You Miss It, You Don’t Get It (& You Will Be Left Behind)

VidCon 2014 --  like the 1892 Chicago World’s Fair that heralded a new era of disruptive technology (how do you like that reference?) -- this may be the event upon which we look back and say, for media companies, brands, and marketers, “this was the moment that defined the mainstreaming of premium short form video content and consumer engagement via technology and the fundamental overall transformation of the media and marketing business in general.”

That is no hyperbole -- that analogy is apt, and this sea change is real, very real.  And to “get” -- really “get” -- that fundamental point (from which fundamental strategic shifts inevitably must follow -- or not, at your peril), you just gotta be there.  On the ground.  At VidCon.  You just gotta see and “feel” the energy of the throngs of 10-20 year old kids who scream and swarm -- a la “back in the day” with The Beatles (another bell-weather of things to come at that time) -- every time they saw a YouTube “star”.  Those shrieks -- that frenzy -- happened every 10-15 minutes (or more) throughout the 7 hours I attended my first VidCon yesterday.

And those 7 hours cemented -- even more deeply -- what I had already concluded (but hadn’t really “felt” on a mass scale with the new generation of consumers -- i.e., the kids that media and brands want and need to reach right now).  That you better get on the bus in this transformed YouTube economy or forever be left behind (this picture of the kids with the signs says it all).  I was not alone with the deep internalization of this point.  Long-time digital media exec David Hyman -- who founded MOG music (acquired by Beats Music) and with whom I interacted “back in the day” at Musicmatch when he was with Gracenote (acquired by Sony) -- summarized it perfectly.  In his words, “This Blows My Mind!”  I violently agreed.

But it is not just about the fans.  VidCon brings together industry execs and the creative community together with the fans -- something that is rarely done at industry conferences (Comic-Con is another rare example).  And here’s the point -- all media companies and brands need to have their minds blown.  We are in the midst of a sea-change people.  Fundamental sea-change.  The media business -- and the way that marketers/brands engage with consumers -- will never be the same.

But, the vast majority of media and marketing execs still just don’t “get” it (or don’t want to “get” it and hope to wish these transformative/disruptive changes away).

One glaring example.  YouTube apparently invited the top 100 brands to attend VidCon -- to experience it -- on their dime.  Yes, YouTube offered to pay for all of their expenses.  But you know what?  Only 30 of those 100 brands took them up on that offer!  That is insane!  Those other 70 marketing execs should be, um, demoted!  They will be if they don’t change their mindsets fast, because their worlds are being rocked right now.  And, the pace of this transformation (disruption, or whatever you want to call it) is accelerating.

Here is another example.  These 10-20 somethings “think different” -- they just do.  The world of YouTube has wired their brains differently -- and their sensibilities are just different (and in many ways, refreshing).  Gone are the days -- at least for them -- of the traditional definition of “Celebrity.”  Yes, they still may like the boys of One Direction, but “celebrities” of this new media age are fundamentally different from the celebrities of yore.  They are relatable.  They are approachable.  They are authentic.  They are just simply “regular” kids who somehow amassed a frenzied following using the YouTube platform.  That’s why, no matter how many times they were accosted at VidCon yesterday, they stopped, talked and took pictures with the kids who adore them.  Again, the only way to really “get” this is to attend VidCon -- to swim in that sea of kids -- to watch how they react.  To watch how they cry after meeting their favorite YouTube “star” (yes, I saw several girls crying because that experience was simply overwhelming).  If you have any doubts, just watch these two videos (the first shows screaming girls flock to YouTube “star” Ricky Dillon -- and the second shows fellow stars Kingsley and Lilly Singh take the stage for a Q&A).  VidCon 2014, among other things, was Coachella for Kids! (I coined that, so don’t use unless you give me royalties ...).

One more glaring example underscoring how the media world has changed for Gen Z took place when legendary media mogul Jeffrey Katzenberg took the stage for a fireside chat following a panel of digital media/YouTube economy execs.  In the words of a colleague who attended that event, “the room was packed, but half the people left when Katzenberg took the stage.”  To be clear, this is no slam on Katzenberg.  He absolutely fills (and overflows) a room in the “traditional” media world.  But, that’s the point.  That world is gone.  Nothing is “traditional” anymore.  For media execs.  For marketing execs.  (Fortunately for DreamWorks, Katzenberg “gets” it -- that’s why DreamWorks is ahead of the curve with its acquisitions of MCNs AwesomenessTV and Big Frame, as well as its recent launch of YouTube network Dreamworks TV (about which I recently wrote)).  Doesn’t mean that “traditional” media has no role in this brave new world -- it just means that so-called traditional media platforms (TV, motion pictures, etc.) are now just part of the overall multi-platform spectrum and world in which we live.

VidCon 2014.  For me, the single most important and “must attend” industry event of the year.  I would argue that it should be the same for media, marketing and brand execs.

MCN Feeding Frenzy Continues, As Food Network Invests In Tastemade

As expected, the MCN frenzy of the past few months shows no signs of abating (a frenzy which I have chronicled in great detail and previously highlighted Tastemade).  Now, Scripps Liberty Media -- the company behind the Food Network -- just announced that is leading a major $25 million round in leading food-focused and LA-based Tastemade.  Media giant Comcast’s venture arm also joins the party.  Obviously, these major media companies -- like the others jumping into the stew in the past few months -- are following the bread crumbs to where the action is.  That means mobile -- where the kids are -- where marketers increasingly are going -- and where we see the rise of short form premium video.

For Digital Music, Size Matters -- Music As The Trojan Horse (Or Not)

What a whirlwind it has been the past few months in the world of on demand music streaming -- and, importantly, the rise (and mainstreaming) of the music subscription model.  All of the “usual suspect” behemoths have thrown their over-sized hats into the ring.  First, Apple buys Beats (and Beats Music) for a cool $3 billion.  Next, Amazon launches Prime Music under a stealth subscription model (no separate fee for the service itself, so long as the user already subscribes to Amazon Prime).  And now, YouTube is expected to soon launch its own subscription service.

And, that ain’t great news for the much smaller, privately-held “pure play” on-demand music streaming services like Spotify, Rdio and Rhapsody (not to mention online radio services Pandora -- more on them later).  Yes, Spotify reports that it now has over 10 million subscribers world-wide (in other words, its reach is impressive), but that is a fraction of the reach of the behemoths mentioned above (and their eventual music subscription traction through their built-in captive audiences, sheer marketing mass and brute force of will and virtual unlimited resources).

One more critical thing -- the behemoths business model is fundamentally different than the business models of the stand-alone privately-held services.  For Apple/Beats, Amazon/Prime Music and YouTube, subscription music streaming is just a means to an end -- it serves to serve the company’s underlying core business model (which is fundamentally different for each of these three behemoths).  In other words, the music service itself is just the Trojan Horse -- the entry or retention point.  That means that music service itself need not be stand-alone profitable, so long as its overall impact is positive.  But, for the pure play services (Spotify, Rdio, Rhapsody), the music service IS the thing.  There is nothing else to monetize.

Let’s take Apple/Beats.  Apple is a hardware company pure and simple.  Apple needed an on demand music service (it saw its core music download business declining), so it looked in the marketplace and found a kindred spirit in Beats, which too is fundamentally a hardware company.  For Apple, Beats Music serves as yet another entry and retention point to drive greater hardware sales (iPhones, headphones).

Amazon’s business model is different.  Yes, Amazon too sells hardware (including the new Amazon Fire phone), but Amazon is not and will never fundamentally be a hardware company like Apple.  Amazon is all about ecommerce -- selling stuff -- pure and simple.  So, Amazon Prime Music -- and the hardware that supports it -- are new important entry and retention points into the world of shopping (and critically, mobile shopping).

And now YouTube Music.  You know what that is.  It certainly isn’t about maximizing the monetization of the new service itself (or apparently pleasing the indie labels with its deal terms).  It is ALL about YouTube and Google’s fundamental business model -- to sell ads.  Google already prints money.  Now its voracious appetite turns to music and yet another reason for all of us not to leave its printing press.

We all know that on demand music subscription service economics are tough -- on all players in the overall eco-system.  But, while Apple, Amazon and now YouTube can flick those issues off of their collective shoulders, Spotify, Rdio, and ever-silent Rhapsody cannot.  They MUST be stand-alone profitable -- or they are gone.

What does all of this ultimately mean for those pure-play services?

Yes, Spotify is on its way to an IPO to fill its coffers with new resources to compete.  Nonetheless, its fundamental business model will never change.  That means that ultimately it will be acquired.  White hot gorilla Samsung is a likely candidate (in fact, I have little doubt there is much kicking of the tires now).  Yes, Samsung just recently launched its own music service -- Milk Music -- in partnership with San Diego-based Slacker, but that is just online radio like Pandora.  And, let’s not forget that Apple had its own online radio service before it acquired Beats.  But, online radio wasn’t enough.  Same holds true for Samsung.  

As for Rdio, Rhapsody and others, they too either will be acquired (likely this year) or whither away -- nibbled at little by little by the big dogs.  Same holds true for other online radio services like Pandora, Songza, 8tracks and others.  They just can’t be alone.  They are social creatures that need to partner up. The M&A market will heat up again soon -- and don’t be surprised if the next major move is Google swallowing up Songza (which has been in the rumor mill for some time).  

Crowd-Funding Patreon Scores $15 Million Series A to Support Artists & Creators

Big news for Patreon -- a Bay Area-based digital media company I have tracked closely for nearly a year (since the time I met CEO Jack Conte in the “green room" of Bloomberg TV just before each of us had our respective segments).  The company just scored a massive $15 million Series A round of financing led by Index Ventures (and with several other blue chip investors) (no wonder he is smiling in the picture) -- tremendous validation for a company whose mission is “to fund and empower the emerging creative class.”

How?  Patreon uniquely enables all of us to be patrons of the arts by taking a different spin on crowd-funding -- i.e., giving fans the ability to make recurring payments to content creators (musicians, video creators, artists) in order to support them monetarily on a continuing (rather than “one off”) basis for the art that moves them.  Conte -- a great, authentic guy -- understands the world of artists well (and the challenges to making a living), since he is a musician himself.  I recently profiled him and Patreon as part of my “5 Questions With ...” exclusive interviews (which you can check out here -- very informative).


Here are some recent “fun facts” that fueled this investment:

-- the company’s revenues grew 10X in the past 5 months;
-- the company launched just 13 months ago with 3 creators using its platform; that number is now over 25,000!
-- 180 new creators are signing up every day
-- here is a big one -- the company has sent over $2 million to creators since its launch 13 months ago (with $1 million of that being sent to artists in just the past 2 months)

In other words, Patreon’s platform is working.  And, this $15 million won’t hurt it accelerate those already-impressive numbers.  Good news for Patreon.  Great news for artists (and all of us who support them)!

DreamWorks TV - Bite-Sized Videos for Pint-Sized Kids (aka Let the Down-Streaming of Premium Content Begin!)

2014 certainly marks THE pivotal year for digital video in which our cute little twin babies of premium video content and the overall YouTube economy have grown up.  My friends, we are in the midst of a multi-platform video renaissance.  I have written and spoken continuously about the MCN space – and all the machinations within it (including Disney’s buy of Maker Studios for potentially up to nearly $1 Billion).  (By the way, expect more MCN news and major moves in the months ahead).  And, now formerly “traditional” Hollywood studio DreamWorks has just launched something that is very  much non-“traditional” – something that, instead, is deeply digital, deeply original, and multi-platform.  Welcome to DreamWorks TV.  

Multi-platform digital moves are not new to DreamWorks -- the company has proven itself to be an innovator, bravely going places others haven’t gone before (witness its acquisition of MCN AwesomenessTV over one year ago).  But DreamWorks TV IS different.  With DreamWorksTV, DreamWorks is putting its very own brand – and its own deeply-established and most valuable “traditional” characters like Shrek – onto the SMALL screen in the YouTube context and in a new original package specifically made for that small screen.  In other words, DreamWorks TV essentially re-imagines and re-purposes its greatest hits for the mobile world.    

Think bite-sized videos for pint-sized kids. 

Smart move – and a data point for the new down-streaming of premium content (theatrical motion picture properties) into the new world of YouTube.  From the big screen -- to the smallest screen -- the screen where Gens Y and Z are (and where the marketers want to be).

Why smart?

(1) DreamWorks TV expands the company’s business beyond its core motion picture business (a business which is notoriously fickle and high risk);

(2) it is low cost in terms of production and development – a very efficient proving/training ground/farm club for development;

(3) these new easily-produced mini-Shrek-isodes keep franchises alive during gaps in traditional development and production windows -- and for continuous monetization for merchandising, theme parks, and more;

(4) this move is an opportunity for DreamWorks also to “upstream" new properties and personalities developed in the YouTube world to more traditional platforms (TV, motion pictures, merchandise, gaming).  Think of it this way -- Shrek (and other major DreamWorks properties) are the Trojan Horse to get the kids into the gates of DreamWorks TV.  Now that the kids have entered, DreamWorks can tempt them with all kinds of new candy -- new characters, new programming.  And, if the kids bite on that candy, then DreamWorks may have a future more “traditional” hit on its hand when it takes those new properties into the traditional platforms (motion pictures, TV).

DreamWorks has already demonstrated that it “thinks different” in our brave new multi-platform world.  Cases in point -- the acquisition of MCN AwesomenessTV one year ago and mini-MCN Big Frame earlier this year. 

Now, DreamWorks leads the way to the down-streaming of major motion picture and television properties and characters to the wonderful world of YouTube.

And, where DreamWorks goes, others most certainly will follow ... precisely because this brave new world is THE media world.  And, it is better to get ahead of the curve ....

4 “MUST WATCH” Vertically-Focused MCNs - Stylehaul, MiTu, DanceOn, and TheWhistle

As my readers know, I follow the world of multi-channel networks (MCNs) very closely -- and share my views frequently (via my own blog, but also in other national and international media outlets).  This is my recent post in which I give a lay of the land of what I find to be the most interesting MCNs (all of which are logical acquisition targets in the current MCN M&A environment).

Here are 4 leading vertically-focused MCNs that I find to be particularly interesting for myriad reasons, including (i) critical mass (I order these in terms of audience size), (ii) executive teams, (iii) investors, (iv) vision, (v) market opportunity, and (vi) strategic partnerships.  I don’t discuss leading gamer-focused MCN Machinima here, because that pioneering MCN is one that you likely already know well.

(1) Stylehaul -- the leading fashion, beauty, lifestyle MCN (with 13+ billion network views to date; CEO Stephanie Horbaczewski is a powerhouse -- and the company’s monetization opportunity is somewhat unique and compelling, since the vast majority of its revenues come from branded content (rather than Youtube-based ad revenues); and, of course, fashion and beauty travel well internationally;

(2) MiTu -- the leading Latino-focused MCN (with 6+ billion network views to date); another impressive team, this one deep with major media experience; this is yet another major international opportunity for a frequently underserved market; among other things, this MCN has a compelling opportunity to “upstream” talent and programming to more traditional media outlets like television;

(3) DanceOn -- as the name says, the leading dance-focused MCN (think of it as the “MTV of Dance”, with 2+ billion views to date); CEO Amanda Taylor has that “it” factor you want in a CEO, and the blue-chip media investors (including “So You Think You Can Dance” and “American Idol” creator Nigel Lythgoe) can accelerate the company’s growth like no others could; this is another branded content play that travels well internationally with a deeply passionate audience; this type of content also has deep potential to “upstream” to more traditional media outlets; and

(4) TheWhistle -- the leading sports-focused MCN (just launched in January, but already crossing the 1 billion + view mark and just featured in Variety yesterday); strong management team includes top former YouTube talent who deeply understands the YouTube sports playbook, as well as others with deep relationships with top sports leagues and athletes; in fact, the company already has impressive partnerships with the NFL, MLB and others; sports, of course, are a massive potential international opportunity in this multi-platform world.

My Guest Article in Billboard - The Online/Offline Connection for Live Music

This past Friday, Billboard published my most recent guest article about the online/offline connection for live music events/concerts -- how virtual services and technology can enhance live music experiences AND, importantly, help artists and other stakeholders can monetize those live events more significantly with new revenue streams, etc.  It is titled “Digital Tech, Helping Monetize and Expand the Live Music Experience.”  In it, I discuss geofencing and sound technology, wearables, and other new services offered by innovative companies such as Wham City Lights, Sonic Notify, Estimote, Audience Entertainment, Lively, WillCall and Mobile Roadie.

I previously wrote about the online/offline connection in general -- and opportunities to monetize around it -- for WIRED in an article titled “Media’s Online-Offline Nexus: Connecting Virtual, Physical Worlds.”