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VC at Spark Capital where I focus on disruptive Internet & mobile investments, Husband to Hilary Koyfman, insatiably curious, strategy junkie, brand & design obsessive, art lover.
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technology

GDGT

I’m thrilled to announce Spark’s investment in gdgt and welcome Peter, Ryan and the entire gdgt team to the Spark family.  You can find me on gdgt here.

The technology & gadget category has rightfully been core to the web from it’s inception. Naturally, the early web participants were tech enthusiasts and the web flourished with sites oriented around their needs.

CNet led the way on users reviews and price comparison. Engadget and Gizmodo led the way in content, which Peter and Ryan themselves helped pioneer.

Like in many of the early web verticals however, innovation has not always kept up. gdgt is attempting to bring the best of what the social, user-driven web is all about to this incredibly large category.

At the core of gdgt are real user profiles, gdgt lists and user contributed content. Connecting people with relevant user created content when they are looking to make a purchase or need help with gadgets they already own is where the power of gdgt lies. Ultimately it’s a place where the hard-core gdgt geeks and casual consumers can meet to share information, get advice and help make purchase decisions.

We at Spark are lucky enough to be in business with two of the web’s true gadget pioneers and a phenomenal group of investors. We’re just at the beginning of this journey and very excited for what lies ahead.

Pitchfork: ‘The New Man’

The re-launched Pitchfork.com is flat out excellent.  I’ve been a big fan of the site for years, but it took a quantum leap forward with the recent redesign.  The editorial sensibility is as sharp as ever, the layout is incredibly clean and easily navigable, the use of lists is a great way to synthesize content into smartly digestible bits and the ability to sample more music and videos was sorely needed.  All in all, it is an outstanding face-lift for what was already the gold standard in music editorial on the web.

The Pitchfork redesign and my friend Dan Harris' Tweet to me yesterday asking if Pitchfork had become ‘the man' got me thinking more broadly about the evolution of editorial filters.

Outside of expensive video production and serious investigative journalism, the barriers to content creation are largely non-existent today.  Content is flowing like water on the web.  As a result, ways to filter and curate that content are becoming ever more important for overstimulated consumers.

Technology has enabled new types of open, ‘pull’ filters previously impossible at any degree of scale in a closed, analog, ‘push’ distribution world.  It’s always tough to appropriately categorize and label these things, as the specifics often fall into multiple buckets, but I generally think of two categories for these new curators: Platforms and Aggregators.

Platforms such as Twitter, Tumblr (both Spark companies) and others easily enable me to get a constant flow of great suggestions from friends and other trusted voices.  Folks put stuff out, and I decide what I want to consume. Twitter has effectively replaced my news reader (more on that another day), and I get a ton of music on Tumblr from folks I follow like tuneage, tracks, Andy, Bijan, Fred and many others.

Aggregators such as Techmeme and The Hype Machine present information pulled from editorial sources across the web deemed most relevant to their respective audiences.  They are not purely user-driven platforms, but rather aggregate and curate largely through technology built to measure relevance.

Brands are all the way on the other end of the spectrum and are of course more traditional in their approach to content — they are fundamentally human created and edited offerings.  This is where the Pitchforks of the world reside.

Maintaining and certainly building brands with so much noise out there today is incredibly difficult.  And given the openness of the web, even great brands are reliant on these platforms and aggregators for distribution.  I get Pitchfork updates through Twitter; I read NYTimes content through Techmeme.

And that’s exactly what is so impressive about Pitchfork.  They stuck to their guns through the ups and downs and smartly built and grew a best-of-breed niche web brand from scratch — one that rises above the crowd, leveraging these new distribution points but making it worth spending some real time on the site itself.  For this they will be rewarded with a business that continues to generate revenue, albeit less than what Rolling Stone made in its hayday, but with a much lower cost structure and therefore a profitable, sustainable model.

So to Dan’s question, yes Pitchfork has become ‘the man.’  But I don’t think they sold out.  What they did instead is build arguably the best niche music editorial brand on the web.  How many others in the music business can say anything that positive?

Pitchfork is the new model for niche web media properties.  Well done.

Always Act From a Position of Strength

Nielsen and LRG released their latest media consumption reports yesterday, with some very encouraging results for the traditional media business.

The money stat from the Nielsen Q4 report:

The average American watches more than 151 hours of TV per month, an all-time high.

The key conclusion drawn in the LRG study:

The impact [of online viewing] on traditional TV viewing and multi-channel video subscriptions [cable and satellite] has been “negligible.”

Further, according to the LRG study:

Among all adults online, [only] 3% strongly agree that they would consider disconnecting their TV service to just watch video online – compared to 4% last year.

These results are certainly great news for an industry increasingly besieged by  forces of change, perhaps still more ‘vocal’ than ‘real’ as confirmed by the latest research.  And they are even more welcome as we face perhaps the worst economic downturn in our history.

I fear though that these results, as they often tend to do, may breed complacency in a media industry that should be bracing for change.  Granted, with all the talk of convergence, the consumer is still not there.  But mark my words he’s coming quicker than you realize.

Peeling back the onion on these two reports, a number of the secondary stats point to clearly shifting behavior:

  • 74 million people watch time-shifted television vs. 54 million people in the fourth quarter of 2007, a 37% y-o-y jump.
  • 31% of Internet activity occurs while consumers are also watching television.
  • Young viewers (18-24) watch video on the Internet and on a DVR at the same rate: about 5 hours per month.

Simultaneous web surfing and TV viewing, the increasing move to time shifting and the growth in online video consumption, especially amongst the younger generation, are harbingers of what is to come — a largely on-demand, networked, social, lean-back viewing experience.  It’s simply a matter of time.

So how should the media industry, and specifically the cable companies (where most of the value in the chain is consolidated) respond?

It is precisely at these times that they should use their existing power with consumers to lead innovation, rather than stifle it.  The cable industry should act from a position of strength, ensuring that they emerge in the wake of disruption as a powerful force rather than a regulated utility.

This will involve some tough decisions and some serious wrangling between content creators/owners and distributors.  But in the end, it’ll likely require some variation of the following (with many specifics of course to be worked out):

  • Full embrace of the Internet as the platform for content delivery.
  • Charge consumers for tangible usage rather than opaque bundling.
  • Redesign content packaging to be useful for consumers rather than to protect sub-par programmers.  Feed the good networks, kill the bad.
  • Embrace third-party innovators and new technologies, such as Boxee (a Spark portfolio company) and others, leading the charge on the consumer front.
  • A potential shrinking of overall revenue.  To protect and grow margins in this new reality will require, in addition to the aforementioned ‘killing of bad networks,’ a reworking of the inflated content creation model and an end to inefficient uses of marketing dollars.

Admittedly this reality is a long way off, perhaps 10+ years before it comes to full fruition.  But the time to act is now, and all parties will be better off when that day comes — cable companies, content creators, innovators and, most importantly, consumers.

Is The Long Tail Too Long?

Martin Peers made an important and often ignored point in his piece on online advertising in yesterday’s WSJ.  Weakness in the online ad market, specifically display advertising, is not simply a current demand issue.  Rather, we have a fundamental oversupply problem in the market that is only going to get worse.

As web publishing continues to be democratized, the same happens to web ad inventory.  And there’s simply not enough brand advertising dollars to satisfy the level of online inventory continuing to grow by the second.  So prices get hammered across the board and smaller sites are simply left out in the cold.

Contrary to Chris Anderson's hypothesis, The Long Tail is simply too long to be that valuable.

So how do we make money given this reality?

On the brand advertising side, it’s all about scale.  The larger a *relevant* audience you can deliver an advertiser, the more meaningful you are to them.  There are a number of sophisticated ways that have emerged to improve user targeting and thereby relevance of audience delivery.  But in the end it must be done at scale to matter to advertisers.  It’s as simple as that.

More important to the future of revenue generation on the web is our ability to tap directly into consumer’s wallets.  Many have been talking about digital goods for some time, but it’s emergence is becoming ever more clear to me.  As we spend more time online, more of our discretionary spend will follow; the more we live online, the more digital goods will look like regular goods.

We are just at the beginning of this migration.  Most of the winners are yet to emerge.  But businesses that tap into this inevitable trend early will have a meaningful advantage in the coming digital economy.  They will build their retail brands on prime real estate before others have an opportunity to do so.  We’re certainly thinking about this a lot across a number of Spark portfolio companies.

Kindle Anticipation & Ambivalence

I ordered the new Kindle 2 this week, and I’m super psyched about it.  Being on the move so much, it should make my reading life a lot easier.  I’m especially excited to see how the speech to text feature works.

But one thing still gives me pause.  Call me old school, but I am a serious lover of the book form factor.  I simply adore books — how they look, what they represent, building my library — and I don’t want to give them up.  Maybe I’ll laugh at this notion one day, but for now I’m not ready to part with them so easily.

I would think I’m not the only one that feels this way, so I was surprised to find that Amazon does not offer a reasonably priced bundled purchase option for the print and kindle versions.  I’m buying the book already.  How much can it cost to beam me a digital copy at the same time?

I hope Amazon offers this package soon.  Otherwise, I may end up paying twice for my favorite books.

Thinking Differently

My friend Jeremy Philips penned a timely review in today’s WSJ of Steve Knopper's new book, Appetite for Self-Destruction.  The book chronicles the precipitous decline of the once mighty music business.

Jeremy sums up the music industry’s grievous error and the subject of the book’s investigation pretty succinctly:

The music industry’s big mistake was trying to protect a business model that no longer worked. Litigation would not keep music consumers offline.

Broadening the point to the more pressing issue of the day for media companies, Jeremy notes:

Consumers will not wait for businesses to catch up. Media companies have to reinvent their old models while continuing to harvest (but not blindly protect) their core businesses. Television networks, for example, are now selectively providing shows to free Web sites, despite the risk of undermining the networks’ own ratings and revenues. The companies’ long-term success depends on their ability to find a model that will give consumers what they want and earn some money, too.

Refreshing to hear from an EVP at News Corp.  And nowhere is this more true than in the video world.  Consumers want to get video content where they want it and when they want it.  Like the music business, this evolution is inevitable.

Young, nimble technology companies such as Boxee (a Spark portfolio company) are helping lead the charge on the consumer experience front.  It is incumbent on the existing distributors and content creators to recognize the inevitability of this change and work together with innovative technology upstarts to help consumers get what they want, while allowing everyone to “earn some money, too.”

Otherwise, we will see what we saw in the music business — value destroyed not just for the the existing players, but for the entire industry…including the artists we rely on to make all the great stuff we want to watch.

This time, let’s harness innovation to create value rather than destroy it.

rickyv:

This picture reminds me of something I’ve been occasionally pondering lately — experience vs. capture. Notice not one of the kids in this photo has their eyes on the President and his wife (woah, that felt good to type), but on the tiny LCD screen on the back of their camera. Are they missing out on anything? When all is said and done, what’s a lifecast worth on a deathbed?
I think we’re going to start seeing this go one step further over the next few years, with documentation leading experience, instead of the other way around like it’s been forever. People will choose what activities they do in the physical world based on how it will appear to their friends in the virtual world via their Twitter/Tumblr/Flickr/Facebook/etc.
Pics or it didn’t happen, indeed.

Been thinking about Ricky’s very astute post for the past week or so.  What I do know is that this phenomenon is very real.  What I haven’t yet figured out is whether it’s good, bad or doesn’t matter.  I guess we’ll just have to watch and see…
rickyv:

This picture reminds me of something I’ve been occasionally pondering lately — experience vs. capture. Notice not one of the kids in this photo has their eyes on the President and his wife (woah, that felt good to type), but on the tiny LCD screen on the back of their camera. Are they missing out on anything? When all is said and done, what’s a lifecast worth on a deathbed?
I think we’re going to start seeing this go one step further over the next few years, with documentation leading experience, instead of the other way around like it’s been forever. People will choose what activities they do in the physical world based on how it will appear to their friends in the virtual world via their Twitter/Tumblr/Flickr/Facebook/etc.
Pics or it didn’t happen, indeed.

Been thinking about Ricky’s very astute post for the past week or so.  What I do know is that this phenomenon is very real.  What I haven’t yet figured out is whether it’s good, bad or doesn’t matter.  I guess we’ll just have to watch and see…

rickyv:

This picture reminds me of something I’ve been occasionally pondering lately — experience vs. capture. Notice not one of the kids in this photo has their eyes on the President and his wife (woah, that felt good to type), but on the tiny LCD screen on the back of their camera. Are they missing out on anything? When all is said and done, what’s a lifecast worth on a deathbed?

I think we’re going to start seeing this go one step further over the next few years, with documentation leading experience, instead of the other way around like it’s been forever. People will choose what activities they do in the physical world based on how it will appear to their friends in the virtual world via their Twitter/Tumblr/Flickr/Facebook/etc.

Pics or it didn’t happen, indeed.

Been thinking about Ricky’s very astute post for the past week or so.  What I do know is that this phenomenon is very real.  What I haven’t yet figured out is whether it’s good, bad or doesn’t matter.  I guess we’ll just have to watch and see…

Tagged: #Technology