Modern Marketing - Blog by Collaborate PR & Marketing

Second Life 'Economy' Grows 65%

Second Life is still going strong and its latest 'Economy Wrap-Up' shows how sophisticated it has become: 'Here's a look at 2009 - through the lens of the US dollar value of gross earnings made by Second Life Residents during the year.   In 2009, Second Life Residents in the aggregate earned approximately US$55 million in real money, growth of 11% over 2008. This represents the sum of all US dollars transferred "out" of the Second Life economy by Second Life Residents, and into PayPal accounts, and then to bank accounts and wallets.  We call this figure "Gross Resident Earnings" and it represents the sum total of processed credits for Second Life Residents.  This works as follows: when a Resident business accumulates a Linden dollar (L$) balance through the sale of virtual items or other economic activity, they can sell their Linden dollars to other Residents on the LindeX or the Xstreet SL Exchange, creating a US dollar credit on their account.  Note that we are not including activity from third party exchanges as LindeX and XStreet SL exchange comprise greater than 90% of credits processed.   When a Resident with a US dollar balance on their account moves that balance to PayPal, we record and track that amount as a "processed credit."  Taken as a whole, "processed credits" are a reasonable proxy for Gross Resident Earnings, as they represent surplus Linden dollars gathered by a Resident business and turned into US dollars. In 2009, US$45 million of "processed credits" came from Second Life accounts and US$10 million came via Xstreet SL accounts.  Note that many Xstreet SL merchants also have significant inworld businesses, and use Xstreet SL to collect earnings from their inworld businesses as well as their Xstreet SL businesses, accounting for the fact that processed credits on Xstreet SL are greater than the volume of the Xstreet SL Marketplace and Xstreet SL Exchange.'

Scary Signals

'P2P is a demand signal from the market,' says Cory Doctorow.  If that's the case, what are we to make of The Pirate Bay conviction last week?  For those who don't know, Pirate Bay is one of the world's largest Bittorrent search engines.  It allows people to search through the gazillions of TV shows, films and other entertainment that sit on the web.  This content is broken up into tiny parts and stored across distributed networks of computers, until someone makes a viewing request at which point Bittorrent or another P2P technology will draw the pieces together and put them back in the right order, ready to watch as a film or TV show.  The problem, of course, is that this distribution method is not sanctioned by the people who make and own the content, most of which appears without any advertising.  That's the advertising that pays the wages of the people who make the films and TV shows in the first place.  In the Pirate Bay case these good folk were represented by the IFPI (aka Hollywood).  So why does the world's entertainment industry persist with legal recourse, instead of listening to the 'demand signals' being sent to them through P2P?  The main reason is that P2P file-sharers have been seen as people who steal valuable IP. They must, therefore, be treated as thieves.  But that's misreading the signals.  The real driving force behind the growth of P2P is that it's convenient and gives people what they want, when they want it.  What if you don't want to wait a week to see the next episode of 24?  Or maybe a friend abroad has told you about a great new movie and you want to see it now so you can discuss it?  And, vitally, P2P is also a way for regular folk to distribute their own content and pursue the rock star dream.  Furthermore, with one third of all broadband users worldwide admitting they use P2P there's a massive network effect in place.  One that the entertainment industry will probably never be able to reverse.  However, the truth is that all of these signals are just too terrifying for people in the industry to listen to.  As Mark notes about the latest Digital Britian bashola, many executives in the entertainment industry and beyond, 'are paid to keep the current model going and just don't want to see the digital technology as anything but a means to turbo-charge the current model. It's just too scary to contemplate anything else.'  And this is why Pirate Bay is just one part of the massive bout of creative destruction occuring in our time.  After all, there are plenty of others perfectly happy to listen to the market signals if the uncumbents are too scared.  And despite this court case, Pirate Bay and others like it just keep on rolling, allowing people to create personal media platforms and services of their own design.  As Doc Searls says, 'in networked economies the demand side supplies itself'.

'UK Online Is Nowhere' Says C4 Boss

I went to NESTA this morning to hear Andy Duncan, C4's boss, describe his vision for a Digital Britain.  Duncan said that big UK media should, 'collectively be embarrassed', about fighting each other over vested interests and consolidation while missing the impact of the web.  Rows which have been partially responsible for the UK being, 'commercially nowhere', when it comes to the global online geography.  'We are in danger of being like the US railroad operators at the end of the last century, which found themselves looking excessively inward - and then the car came along'.  The weighty speech came ahead of the long-awaited Digital Britain report from the UK Government's DCMS (which today the FT says might include Universal Broadband) and the next stage of Ofcom’s Public Service Broadcasting Review.  When considering its strategy to reignite the country's economy, said Duncan, the Government should recognise that the creative industries 'fluffy' image belies its value to UK PLC, two million jobs and sixty billion quid to be precise.  In fact, he said that the UK's media industries could replace the gap left by the country's decimated financial services sector.  But only if there is some very serious change.  In a world, 'where children don't differentiate between content they see on the web and TV', the C4 boss said, 'broadband and broadcasting' are effectively the same thing.  Now that the media ecology has changed to be no longer just content but, 'content plus tools' that allow citizens to 'create services of their own design', the UK could create a, 'digital tools industry' of great value building on its creative excellence.  As ever it comes down to the numbers.  Duncan's financial shorthand is that, 'ten years ago television advertising market in the UK peaked at over £3.5 billion'.  While online advertising didn't exist.  Today the TV market has shrunk to £3bn making it the same size as the online market.  And most of that cash goes to US companies (and one in particular) not into, 'quality British content'.  Inspiring stuff.

Sharing Is Caring

Splendid stuff from the peerless TorrentFreak, in an interview with a UK musician : “Let’s consider this more closely - a person who values our music has kindly made a copy of a CD and gone out of their way to spread the word about us. That recipient has then bought both a ticket to see us and a CD on the night.” So it’s obvious that being a pirate doesn’t exclude people from being a fan, they just aren’t paying at the point of piracy - but they will, when the circumstances are right.  Steve also believes that ’sharing’ really is ‘caring’, which is refreshing in these ’sue-em-all’ days: “You may call this process ‘piracy’ if you wish - for me it is an act of generosity and it both increases our audience size and record sales. And as I always say on the night - if you’re going to do it anyway you may as well feel good about it!”

MDAS + YHOO - Who Needs Search?

Search is massive but it isn't a replacement for ALL marketing activity.  Since my visit to the Microsoft mega-bash in Paris last year where the company laid out it's vast new media platform - MDAS - it has been clear that Microsoft are pursuing a different strategy to Google.  Yes, Google is an amazing platform driven by Search dollars (aka The Database of Intentions).  But that's all about text.  And the web is changing from a text-driven environment to an everything-driven environment, including video, which is a much, much bigger playground than just Search.  Famously, Google tried to suck up the video area by buying YouTube.  But that's had limited success to date - from an advertising perspective.  And subsequently the company has gone after TV, print, mobile and other audiences.  But text-driven search dominates its revenues.  However, MDAS is a mixed basket of marketing offerings that goes way beyond text.  And, crucially, it's one that can support branding activity.  One problem for MS is that MDAS is at an early stage, whilst Adsense is already up-and-running and purring away.  But that could change as MS is hardly about to run out of cash or engineers.  And if Ballmer and Co can get the heart of MDAS running (effectively aQuantive but specifically Atlas) and plug it into the vast Yahoo global audience they can start hoovering up mega-marketing budgets.  Then - who needs Search?

[Update: SVI throws further weight behind the MDAS aspect.]

The Deep Waters Of Second Life

Deep End is a phrase Johnnie and I use when helping brands understand how modern web technology and cultures can quickly take them out of their comfort zones and into powerful currents.  Likewise, there's plenty of warm, shallow pools where they can splash around safely to their heart's content.  The problem is judging the depth of the water from the sidelines.  Some very inviting streams actually run quite deep and diving in without checking the tides can mean losing touch with shore.  Second Life is a case in point and Wired has a great article about brands that have dived into the metaverse, only to find it less than refreshing.  At first sight SL looks like a fun, albeit fantastic, manifestation of the modern web and a perfect place to splash around.  However, as I've mentioned before,  it's really an alpha-geek paradise run by a hardcore of freedom-loving hackers - not exactly mainstream retailing heaven.  Furthermore, they come tooled up in the shape of the Second Life Liberation Army, which undertakes disruptive action, including hiring mercenaries  to carry out L$1000 (virtual) hits on content developers bringing brands into SL.  "I felt like I was in The Shining," Wired reports a marketeer from Coke as saying after a recce of the metaverse.  The modern web is a wonderful, diverse environment.  But before diving into the next bright and shiny waters, make sure you know where the bottom is...

Lego's Listening Factory

Yesterday, I attended a great talk by Helen Venge from Lego Factory - a giant experiment in the world of user-innovation.  She started by saying that when she joined Lego she was struck that, in comparison to her previous role at Levis, she hardly ever heard the word 'brand'.  Her colleagues just spoke about customers and users all the time.  Internally, Lego Factory is seen as a start-up within a corporation - one designed to explore the new territory of customer collaboration.  Right at the heart of this innovation is that Lego Factory allows users to design and publish the products they would like to see - and that other people can see them and buy them.  So we are not talking about Nike-ID personalisation - but a marketplace. Helen explained that Lego had always been aware of a large 'shadow market' of customers collaborating creatively among themselves.  For instance, the amazing Brickfilms and Brick Journal.  But only with the development of a broadband world has it become conceivable to address this spectrum of niches as a commercial opportunity.  Key to Lego Factory's success is the sophistication of its customer collaboration.  No lazy customer profiling here...

Content Kings Look Away Now

TorrentFreak gives us a figure sure to chill the blood of content kings everywhere: "75 percent of all traffic on the Internet is due to file sharing, with 59 percent of that file sharing attributed to people swapping video files. Music tracks account for 33 percent of the file-sharing traffic. E-mail, it turns out, accounts for just 9 percent of the total traffic. The total internet traffic is a brain-twisting 40 petabytes - a 4 followed by 16 zeros."

Hallam Foe Screening

Hugh has kindly invited me along to his latest marketing-venture cum social-experiment spreading the word about the film Hallam Foe.  You can see all about it on the HF blog which covers different aspects of the film from the shoot, to the actors, to the soundtrack, to the marketing.  It's a great example of attracting people's interest by opening up a process and offering a sneaky-peek at something they wouldn't normally get to see.  In this case a bunch of dudes putting a film together.  I've been involved with a few film projects and what has always struck me is that there's great drama involved in the endeavour - even if it just seems like grinding pain to the people involved - and that drama is intriguing to others.  In some ways the end product (ie the film) is just the finale.  To kick things off Hugh has arranged a screening of the film's rough cut and drinks for a few blog-oriented individuals who can then begin the discussion....

We Sell Or Else

Adliterate has a great starter-for-seven and thread going about the problems that occur when marketeers are primarily focused on internal processes and measurement techniques that reflect upon his or her CV-in-progress.  This is a view that is sometimes linked with wooly ideas about brand-building rather than commercial impact.  Modern marketeers know that the world isn't like that anymore.  An eager audience is now willing, ready and able to let a company know...