A new brief out from Forrester Research predicts that 2001 will be the year for rich media. Jim Nail, a senior analyst at Forrester, says that economic changes are forcing sites to be more accountable to advertisers. Rich media’s capacity to be more effective in fulfilling advertisers’ needs through better tracking and enhanced functionality plus the general maturing of rich media technologies themselves will “sweep away the barriers that have held it [rich media] back for the last two years.”
For that to happen, the successful companies that produce rich media technology need to make a New Year’s resolution:
I will finally decide whether I’m a technology or media company.
This question has troubled more than one rich media company over the last year, wasting valuable resources and time.
For a historical perspective, we can look at the radio industry: The earliest broadcasters were also the radio manufacturers. To sell more radios, broadcasters had to have something on the air worth listening to. So by default the technology providers became media companies. As radios became mass-produced commodities with thin profit margins, a focus on the media component made better business sense.
For companies such as RealNetworks and Macromedia, the transition from being a technology company to being a media one can be seen as a logical extension of (and reward for) what they’ve built. Both started as technology companies that focused on building a platform (RealPlayer and Flash, respectively) and tools (servers and development software). However, a large part of their marketing efforts went into the development of media portals (Real.com Guide and Shockwave.com, respectively) that showcased their technology. The end result of this strategy is that they syndicated and/or competed against their own customers’ content.
Whether they can morph themselves into full-fledged media companies remains to be seen. At the present time, they still define themselves as technology companies.
This self-awareness does not come easily, however, to some of the newer, smaller companies out there that want to have it both ways. The brass ring — being the next Yahoo or AOL — dances in their heads, often with disastrous results. They would do well to ask themselves, “Who’s my customer?” This is a question that some fledgling companies never seem to have considered. If most members of your staff are engineers and you spend most of your marketing dollars on reaching publishers and advertising agencies, chances are that you’re a technology company.
A Sticky Dilemma
Take Sticky Networks, for instance, a rich media company that closed its doors last month after being open for less than a year. The technology behind Sticky Networks was a Java applet that acted as a visual navigation interface for web sites, much like a Post-It. note. This technology allowed an image, such as a photograph, to be divided into its component parts, and each region of the image could contain a unique drop-down menu of information and links.
A static image of a dining room setting, for instance, could be subdivided so that different menus appear under your mouse pointer at various locations. Click on the diner plates, and receive information about the dish pattern. Click on the table lamp, and go to the section of the site that sells lamp accessories.
When I spoke with Robin Johnson, the company’s CEO, a month or so before the company’s demise, he was insistent that Sticky was a media company. Even the company’s name reflected its focus on becoming a “network.” This is not really surprising because Robin spent 20 years as a media guy, first at Time and later as the CEO of Infoseek.
But by identifying itself as a media company, Sticky found itself on the horns of a dilemma. To be a successful media company you need distribution and control of your channel. AOL, for example, tightly controls its channel, acting as the gatekeeper to the Internet for millions of people. If you ask the people at AOL who their customers are, they’ll tell you they’re the more than 20 million subscribers they have. Their business is predicated on selling access to those millions of eyeballs.
Sticky, on the other hand, did not have a distribution channel to call its own. Like Blanche DuBois, it relied on the kindness of strangers: web publishers and e-commerce sites that would implement or license a “Sticky” in exchange for some type of consideration.
On the other hand, because technology was not its focus as a company, the technology it did create was not particularly proprietary in nature. In other words, web developers impressed with it had little to discourage them from creating something similar. This meant, of course, that they wouldn’t have to pay licensing fees to Sticky. As a result the company found itself being a media company without an audience and a technology company without a barrier to entry.
Tough to survive in such an environment.
Until next week, keep it rich!