Just ask Reed Hastings, the CEO and co-founder of Netflix. On Sunday, he attempted to address the decline in stock value his company has undergone since announcing a new pricing structure in July. Following what’s become the standard social media playbook for restoring customer trust after a corporate blunder, he wrote a post that sought to be contrite about past mistakes and transparent about future plans.

The result? On Monday Netflix stock dropped a whopping 7.37% on a day when the exchange it’s traded on only dropped 0.36%.

On second thought, maybe that blog post didn’t actually matter since the last three days of trading saw Netflix stock drop 31.56%. That’s part of a total decrease in stock value of 43.36% since the company announced its new pricing scheme. Granted, this time period includes some big drops in the the composite stock indexes too, but nothing approaching the drubbing Netflix has taken.

Before July, it looked like Netflix had sewn up the market it pioneered by freeing customers from trips to the video rental store. Now, it doesn’t seem unreasonable to ask if the recent missteps have permanently damaged the company’s future as its customers air their displeasure. Even worse for Netflix many of them seem to be leaving in protest, perhaps sampling competing services from Apple and Amazon.

What exactly did Netflix do? First, they raised prices for the popular 1 DVD at a time rental plus unlimited streaming plan by 60%, from $9.99 a month to $15.98. That’s when the first signs of customer revolt started.

Personally speaking, I wasn’t especially concerned about the increase. Yes the percentage was large but the dollar amounts were still fairly small and many of the complaints I heard reminded me of comedian Louis CK’s rant “Everything is Amazing Right Now and Nobody’s Happy”, in which he skewers the human sense of entitlement for things such as complaining about the hassles of air travel instead of appreciating the miracle of flight.

16 bucks a month for unlimited access to Netflix’s streaming library, plus the ability to get DVDs not available online delivered to my mailbox? Amazing! It seemed Netflix was moving us rapidly towards the magical world of “Any Movie Ever Made” that was portrayed in a TV commercial for Qwest broadband 12 years before.

Apparently not everyone shared my lack of concern over the price jump. On September 15, the company issued a note to shareholders (PDF) that warned it was revising its growth projections. In fact it wasn’t projecting growth at all, but actually acknowledging that in the wake of the price increase, Netflix had lost a million customers. Of course a million is a lot, but the company still has more than 20 million who haven’t left. Even if Hastings isn’t worrying about the lost customers, he has to be worried about the lost stock value that has gone with them.

This was the context for Hastings’ blog post of September 18, which was addressed to customers, but more likely intended to appease shareholders by explaining that the price increase was actually just preparation for the company’s masterstroke of splitting itself in two.

…streaming and DVD by mail are becoming two quite different businesses, with very different cost structures, different benefits that need to be marketed differently, and we need to let each grow and operate independently. It’s hard for me to write this after over 10 years of mailing DVDs with pride, but we think it is necessary and best: In a few weeks, we will rename our DVD by mail service to “Qwikster”.

…

A negative of the renaming and separation is that the Qwikster.com and Netflix.com websites will not be integrated. So if you subscribe to both services, and if you need to change your credit card or email address, you would need to do it in two places.

Remarkably, the company that realized there were enormous amounts of money to be made in removing the hassle of driving to the video store to rent a movie now thinks that its future depends on making its own service less convenient for customers. My own experience working on a large e-commerce site was that the business’ needs always press for greater data integration leading to better customer experience. This is why Customer Relationship Management (CRM) software companies flourish — they help retailers do the exact opposite of what Netflix wants to do.

Most business thinkers would look at their customers who only rent DVDs and see them as future streaming customers. Netflix seems to see them as so set in their ways so they’d rather create another company just for them. It flies in the face of what successful e-commerce companies do.

Has Reed Hastings made a terrible mistake? Or could it be he is the ultimate online commerce grandmaster? Either way, this might be a business case study that MBA students study for years to come. My money (figuratively speaking) is on this being a terrible mistake.

The reason CRM is such big business is that for a company like Netflix information about its customers is its most valuable asset. Even if Netflix and Qwikster share data, it will only be sharing. As the post makes clear, they will be run as two separate operations, requiring maintenance of two different accounts if you want the option of either renting DVDs or watching streaming video. And you’ll have to do two different searches, instead of simply doing one search and seeing if a given film is available for streaming, on DVD or both.

At this point, I’m no longer thinking Netflix is so amazing, even though, as a practical matter, there’s not much downside for me in the new plan. I tend to get one movie on DVD and then let it sit unwatched for a year. Meanwhile, my family watches at least an hour of streaming Netflix video most nights, usually more. What bothers me is that my access to easy choice has been removed. Even though I rarely used the DVDs, I now have to intentionally choose to use them or not use them in my search for entertainment. I rarely chew gum either, but that doesn’t mean the local grocery story should take it out of the impulse purchase racks by checkout, and build a separate store next door just to sell gum.

So, if I continue with Netflix, I probably won’t sign up for Qwikster (apparently it’s still 1997 in the mind of whoever thought of that name). But I’m surprised at how much I resent having the decision about not renting DVDs made for me instead of being allowed to make it myself.

What could possibly have prompted such a seemingly irrational business decision? The answer is right there in Hasting’s post:

For the past five years, my greatest fear at Netflix has been that we wouldn’t make the leap from success in DVDs to success in streaming. Most companies that are great at something – like AOL dialup or Borders bookstores – do not become great at new things people want (streaming for us) because they are afraid to hurt their initial business. Eventually these companies realize their error of not focusing enough on the new thing, and then the company fights desperately and hopelessly to recover. Companies rarely die from moving too fast, and they frequently die from moving too slowly.

Reed Hastings is scared. But he’s not scared of competing businesses. He’s scared of himself. He’s afraid that if he doesn’t separate himself from the company he built — DVD rentals by mail — he won’t be able to focus on the company he’s building — streaming video on demand. He’s afraid that in a world where fast moving companies try to take down slow moving ones, Netflix was in danger of becoming slow.

Maybe Hastings is right. Maybe he knows something the rest of us don’t and time will reveal all. But at this point the stock market is betting against his leadership and so am I. Moving fast in a clear direction is smart business. Moving fast randomly because you feel like you need to move or something bad will happen is a psychological issue that’s likely to give stockholders good reason to make some fast moves of their own.

Related Posts

• October 19, 2011 -- Netflix Tangles with Amazon (1)
• April 12, 2011 -- The Flip is Dead, Long Live the Flip (15)
• September 3, 2010 -- Storytelling, the new Studio System and the “Death” of the Web (4)
• June 1, 2010 -- Wolfire Games’ Pay-What-You-Want Experiment Pays Off (0)
• May 18, 2010 -- Is Twitter Financially Viable? (4)

While admitting his online indiscretions, Weiner stated that there was no prior relationship between him and Whatcom Community College student Gennette Cordova, the intended recipient of a photo of him in his boxer shorts:
“Last Friday night, I tweeted a photograph of myself that I intended to send as a direct message as part of a joke to a woman in Seattle…. This woman was unwittingly dragged into this and bears absolutely no responsibility. I am so sorry to have disrupted her life in this way.” (source)

Part One: Reputation Management

The BigGovernment.com site that first broke the story has since doggedly documented a number of online affairs that Weiner has admitted to. From the way publisher Andrew Breitbard has injected himself into the story it seems clear that if he had any evidence of a previous relationship between Cordova and Weiner he would happily share it. But even in the absence of evidence of a relationship, the story is frequently being reported as though Cordova and Weiner had been having an ongoing virtual affair, as in this quote from Time magazine: “…it had been intended for viewing only by a woman in Seattle with whom he’d developed an online relationship.” (source)

At this point the most interesting part of the story is no longer Weiner. The story is now as much about Cordova, the apparent bystander, who seems to have been dragged into the fray more or less at random. That is unfortunate, but also instructive. (Although I use Cordova’s name in this article, it was a difficult choice for me to do so. If her name hadn’t already been splashed about the Internet I wouldn’t have used it.)

Perhaps in part because she is a media-savvy journalism student, Cordova’s response to the situation could be used as the model on how to defend personal reputation through digital media.

The uncomfortable fact for all of us is that, while we may never get associated with a scandal of this magnitude, the current state of online privacy protection in the United States means that we, or people close to us, might well experience it to some degree.

In Cordova’s accounting of the story, she never saw the initial tweet. Discovering that she was being mentioned in a number of tweets referencing it she initially thought a smear campaign against Weiner was underway and she’d been picked out of his list of Twitter followers. So she blocked accounts she found harassing, and made her Tweetstream private.

But, as she later wrote in a public statement, “Within about an hour, however, I realized that I had grossly underestimated the severity of the situation that I had somehow become a part of.” Cordova switched gears and went into damage control mode.

Where it used to be that the only recourse for getting a message out would be to talk through a publicist, or to a reporter you trusted, Cordova skipped the intermediary and refused to talk to the press during the initial frenzy. Instead she again made her Tweetstream public (for several days her Twitter bio read simply “I can’t believe I’m back on Twitter again”) and began talking about the press.

• GennetteC: A lot of these journalists are incompetent hacks… maybe I should reconsider my professional aspirations.
• GennetteC: FoxNews, when did I say that it wasn’t the first time I’d “received lewd messages from the person who hacked the congressman’s account”?
• GennetteC: Thank you, to the writer of the article I just read, for posting my height and weight online. You disgust me.

Even when she addressed her comments to specific publications, Cordova didn’t link to them, denying them easy traffic to their sites from her sudden Twitter visibility.

She engaged directly with other Twitter users who accused her of lying about a relationship with Weiner, pointing them to the stories she found portrayed the situation accurately. The catch-22 that she found herself in didn’t escape her commentary:

• GennetteC: “If u recede from the public, youre accused of hiding something. If u face down your accusers, youre accused of being an attention whore.”
• GennetteC: I was accused of being an attention whore last night. Really? I’ve denied every single interview request I’ve gotten.

Frustrated that the press stories were using snapshots of her taken from social media sites which often showed her in party situations, she agreed to pose for a photographer working for the New York Post. In her telling, the photographer’s assistant proved to be a “Trojan horse,” and actually was a reporter who wrote a story representing their conversation during the photo shoot as an “exclusive interview”. True to form, she called out the Post‘s behavior on Twitter and didn’t back down.
• GennetteC: If I’ve refused to do interviews with credible shows like Good Morning America, why would I give an interview to @NewYorkPost?
• GennetteC: You got that information surreptitiously and then passed it off as an interview… @Newyorkpost
• GennetteC: Then you proceeded to take my quotes out of context and STILL I don’t see how it’s newsworthy!! @Newyorkpost
• GennetteC: Reuven Fenton, who posed as a photog assistant, sleazebag “writer” for the @newyorkpost, I’ll remember the name.
• MartaR73: @gennetteC u asked if people on Twitter have no right of privacy? ans: not if they continue to tweet & stir pot as you do on a nat’l story
• GennetteC: @MartaR73 If calling out publications for their inaccurate/ shoddy journalism is stirring the pot, so be it.

Because of Cordova’s tweets, the ethics of the New York Post story became something of a story in its own right.

One interesting way Cordova has approached managing her reputation has been to actively curate her tweet history. After engaging in a testy exchange with another Twitter user, she frequently goes back later and deletes her tweets. As she must know perfectly well from what happened even after Weiner deleted his tweet, her exchanges aren’t gone — in fact, I’m sure everything Cordova has said lately is being thoroughly cataloged by a number of people with various agendas — but the act sends a message about what she thinks is truly important and what is just a distraction.

After almost a week of holding the press at bay, Cordova willingly spoke to the New York Times. The resulting article, “In Reckless Fashion, Rapid Online Pursuits of Political Admirers” was not about her, but quoted her as a source on Rep. Weiner’s pattern of sexting behavior.
Although the situation she was in began because of someone else’s use of social media, Cordova’s ensuing social media use was unique and instructive. A reporter I spoke to, who has also been watching Cordova’s Twitter stream, remarked that it’s common to see celebrity accounts used for reputation management, but in those cases the tweeter is almost always a paid PR person. The reporter could not recall ever seeing anyone take on the task of managing her own reputation so directly.

Ben Smith, a reporter for Politico, openly expressed his admiration for Cordova’s skillful handling of an unimaginably stressful situation:
• benpolitico: .@gennettec, again, only person in this mess to have played her media hand perfectly.

The social media disaster that Rep. Weiner kicked off is going to have a lifelong impact on the woman he sent a picture of his junk to. The worst of it will fade quickly, but there’s always going to be someone who will remember something about her and the scandal that ensued and the evidence of the scandal will always be archived somewhere and just a few mouse clicks away.

The question is: which version of the story will they remember? Will it be the one about a party gal who had a cyber affair with a congressman, or will it be the one about the journalism student who was the innocent recipient of a crude photo and used Twitter to set the record straight? Are the skills that she has shown in actively managing her reputation skills that emerging generations will find useful in managing their own media-mediated lives?

Part Two: When Is a Flash not a Flash?

In a previous career, I got paid to write in a snarky tone about entertainment and media news. At times it was sort of a dream job for a smartass like me. Back then, a story like “Weinergate” would have been a golden opportunity to squeeze every drop of adolescent humor out of an fleeting moment of absurdity–then add one clever twist at the end that provided something approaching thoughtful commentary or, failing that, at least a capstone of double or triple-entendre.

The comedic approach is so appealing because it is distancing. The Weiner story is a trainwreck: It not only involves left vs. right, it also gets into thorny issues of sexual mores and personal privacy. Comedy allows us to express opinions while giving shelter against the offense the humor might cause. Let’s face it, a guy named “Weiner” posting pictures of his autonymic parts online really is funny.

Without comedy, wading into ongoing scandals can be dangerous. Trying to analyze the ethics of what happens to the players in these scandals is to invariably risk offending someone.

So, here I go.

People break society’s rules all the time, and we judge them based mostly on our perception of the severity of their actions and how dumb the transgression is. It’s probably safe to say that Weiner’s admitted extramarital “sexting” is less transgressive than the arrest of the International Monetary Fund head and presumptive next president of France for alleged rape, or the former Governator of California revealing that he concealed having fathered a child with a housekeeper for over a decade.

But what if Weiner and his sexting partners were engaging in the exact same acts while sharing a physical space? It feels like the transgression is greater. But why? Does the mediation (in this case through Twitter) of a transgressive act changes how inappropriate it is?

What about the unasked-for sending of a photo that borders on obscenity? Certainly a Congressman dropping trou while standing in front of a woman might well cause a firestorm. But is doing the same thing online equally offensive? In real life, such an action might suggest imminent physical danger to the woman, but when mediated, that threat is largely nullified.

Does that mean the online act is not the moral equivalent of the physical one?

Like humor, media can have a distancing effect on what we observe. Our reactions to images, behaviors, and ideas expressed in mediated forms can be much cooler than our reactions to those identical things would be in real life. As we increasingly live significant parts of our lives online, what effect will this distancing have on the way we interact in real life?

When talking about Congress legislating media law—like net neutrality legislation—people often point out that we are asking our legislators to make important decisions about emerging technologies. In some cases these are technologies with which the Congressperson may have little practical experience or understanding.

Most states have enacted laws that extend consumer protections to online purchases, and also have laws making cyberbullying, cyberstalking, and cyberharassment equivalent to their real-life counterparts (source). Gennette Cordova has pointed out, probably rightly, that in the aftermath of Weiner’s tweet, a number of Twitter users have engaged with her in ways that might meet the legal definitions of stalking or harassment.

But when US News took up the question of whether Weiner’s actions were illegal, they only looked at whether he had used government computers in his sexting and didn’t even raise the issue of whether flashing a stranger online is a form of harassment (source).

Perhaps that’s as good an indicator as any that our society has silently accepted that behaviors that would be considered unacceptable in real life are less so online–although still potentially offensive enough to cost a congressman his seat.

Related Posts

• October 17, 2011 -- Slow News in the Twitter Age: PBS NewsHour Correspondent Meets with MCDM Students (2)
• May 11, 2011 -- What Gladwell Got Wrong: International Nonprofits’ Strong Digital Ties (11)
• April 7, 2011 -- Will the Revolution be Tweeted? Power and Money Still Rule the World (1)
• February 17, 2011 -- Could Online Political Activism Ignite the US like it did Egypt? (17)
• January 26, 2011 -- Social Media Fuels Egypt’s Largest Protest in Years (6)

Begun as a blog for students to share lessons learned in a Winter 2008 MCDM video class, FTM continued on after the class ended and evolved into the news journal you are reading now. Living on Internet time, Flip the Media has gone through several iterations in the past three years and will continue to change just as the digital world around us changes.

Is there a lesson to be learned from the fate of the Flip camera? What does the end of something that showed quality video could be made with something that fit in the palm of your hand tell us? Drawing grandiose conclusions from Cisco’s action might be premature. Yet, for those of us who don’t sit in boardrooms or study corporate balance sheets, the speed (two years!) with which the company went from spending $600 million to buy the technology to dropping it like hot potato is startling.

On the other hand, once quality video cameras became standard fare on Apple and Android cellphones, the Flip became redundant to most of its’ target market.  That moment coincided exactly with Cisco buying PDT.

Perhaps the lesson is this: If you always chase after the latest thing, you’ll spend all your time chasing. In a blog post published (perhaps coincidentally, perhaps not) at the close of this year’s South by Southwest Interactive, digital pundit Seth Godin makes the argument for not focusing on the next big thing.  Godin instead encourages us to use established technologies to do real work–even when those technologies have been declared “dead” by what he calls the “drive-by technorati.”

“Dead technology” is a different concept for hardware than it is for software. When Cisco stops production of the Flip, it will be dead in a way that the Web will never be dead.  This despite Chris Anderson and Michael Wolff’s incendiary front-cover obituary that Wired published last year. But the lesson is the same: By trying to be au courant, Cisco ended up with nothing. In a drive-by purchase, Cisco –perhaps blinded by the shininess of a disruptive product–bought something with no long-term future.

As a noun, the Flip may be no more. As a verb, we can all continue to “Flip the Media” by ferreting out the real value of technologies and applying those technologies to the work we do. There are lots of shiny objects out there. What the world needs more of are people with the ability to distinguish the shine from a gold nugget from that of a rock wrapped in aluminum foil.

Related Posts

• September 19, 2011 -- Netflix Moves Fast, but at What Price? (17)
• November 21, 2008 -- Crowdsourcing: Name the New MCDM Center! (37)
• May 4, 2008 -- Using the Flip for enlightenment (0)
• March 9, 2008 -- Bike cam (0)
• February 24, 2008 -- Marathon weekend (0)

South by Southwest 2010 Logo

Hola devoted readers! We’ve been remiss in bringing you the dish from the south — not to mention from the South By Southwest Interactive Conference — in a timely manner. But have no fear, your gossip needs are going to be satisfied beginning … right … now !

If we didn’t already know that SXSW is a big ol’ pumped up party, we do now. Blow by blow, here’s a glam report on our glittery digitally star-studdedly fantastic trip to Austin, hot off the presses just for you.

Thursday we flew in via Dallas/Fort Worth where we made the best of a two-hour layover by sitting in chairs … made of carpet scraps! But wait … who was that we saw back at SeaTac boarding the same flight as us? Could it have been MCDM’s own @deanero? It is a small world after all!

On the ground in the host city, we took a cab to our hotel, from where we could have seen the conference happening downtown, if only our name were Hubble Telescope! Our late-night arrival in a place as hoppin’ as North Austin just off IH35 was made even better by the generous hospitality (and portions!) offered by a charming local dining joint named Applebee’s. (Note to self: Next time, book for SXSW early to get a better location …)

Good thing we had Friday on our mind, because when we woke up that’s what day it was! Item number one on our social circuit: Get registered! Smooth and efficient at 10:00 a.m., registration was an enormous line snaking throughout the convention center by noon. Whew! Dodged a bullet on that one.

Next on the agenda: Get to a session. The organizers provided a plethora of ways to choose sessions. There was a printed program with more ads in it than a year’s subscription to Vogue, and a pocket-sized version of the same, with fewer ads. But if we wanted to know anything more than time and title for each session, it was online for us. The my.SXSW Web site provided session descriptions and panelist names as did the iPhone app version. We settled on the iPhone for most of our scheduling needs, despite the app’s surprising amount of #usabilityFAIL. Chief among our complaints was the lack of time-awareness, which meant on Tuesday we still had to thumb-scroll through hundreds of session titles starting at 9:00 a.m. the previous Friday. The icon labeled “ maps,” which we eagerly pressed when the time came to find our first session, showed us all of Austin instead of the map of the convention center we expected. And holy corporate sponsor, Batman! The map was from Mapquest!

Speaking of hashtags (did you notice we were speaking of hashtags?), no one was happy with the official tags for sessions. Rebellion filled the air as session after session ignored orders to use abominations like #rightwaytowireframe in favor of less character-hogging versions such as #rwtw. That meant that the links to Twitter searches on my.SXSW went nowhere. Between you and us, we never met anyone who cared   about my.SXSW as a social hub — we were all too busy self-organizing instead. (Note to SXSW: The Twitterati can tell when the agency you hire doesn’t understand your users!)

The Austin Convention Center was apparently designed by M. C. Escher. Most of the shiny topics that caught our eye were on the first and fourth floor, but more than once we did join the wandering lost souls on the third floor. There were lots of sponsored lounges on floor three, but truth be told, we were always so busy rushing to our next session that we never set foot in one. (Note to readers: Our tweet sums up our eventual navigation strategy: “Going to the first floor so I can go to the fourth floor … #sxswi”)

Our session choices were idiosyncratic to our employer’s needs and best described elsewhere (Note to Google: Now is a good time to index Brook Ellingwood’s South By Southwest Tactical Takeaways), but there was a little something for everyone in the keynote speeches we attended (see below!).

Was that dr. danah boyd leaving Chief Twit Evan Williams‘ Sunday keynote after only a few minutes of the CEO being interviewed by Umair Haque? Maybe the lowercased one set a trend because by talk’s end only an estimated 20 percent of the audience was still in their seats. Much of the talk was conversational and focused on Twitter’s values (can we call them “twalues?”) as a company, which might have made for a compelling session, but for a keynote it was, well, uninspired (can we call it boring?). Williams introduced Twitter’s new offering , dubbed @anywhere, at the talk’s outset, but color us unimpressed. As we tweeted then: “Takeaway so far from #sxswi keynote: Twitter is more interesting to use than talk about.” (Note to corporate decision makers: We know JavaScript developers who could use Twitter’s own API to make @anywhere’s functionality, but we’d never ask them to: The increasing use of apparent hyperlinks to embed things like word definitions and now Twitter profiles into Web content is threatening to break the Ur-usability feature of the Web itself, leading to annoyed customers choosing not to return to your Web sites. When you click on linked text, say a company’s name, you expect to go to their homepage, not get a little modal dialog box with their Twitter profile embedded in it. )

And while we’re on the topic of keynotes and danah boyd, was there some irony in boyd standing in front of the entire population of Southbysouthwestistan discussing the future of privacy in Saturday’s opening remarks? Her appeal was a passionate denunciation of the idea that privacy is dead, and we left with the image of an upcoming generation casually using proxies to mask their locations seared into our head. Our own enchantment with Foursquare has waned more from boredom than discretion, but the good doctor is clearly onto something as she publicly shares her privacy thoughts.

We heard that Spotify CEO Daniel Ek fared better than Williams in his Tuesday keynote interview, but we missed it because we had a plane to catch. (Note to @bookido: Thanks for the laugh and catch-up just before we left for good!) The European online music service is rumored to be entering the U.S. market soon, which somehow puts us in mind of this quote from SXSW Managing Director Roland Swenson in an article in The Guardian, “Is the digital world eating the music world? Probably. The music people need to take more time paying attention to the business side.” But on the flip side, SXSW Creative Director Brent Grulke adds “And the interactive people need to spend more time on the rock ‘n’ roll.”

Part of the mystique of SXSW is socializing into the wee hours. Every night five or six parties are open to anyone with a conference badge, and we can’t begin to guess how many private events we didn’t get invited to.  Without further ado, the Chronological SXSW Party Report:

Friday night, we deemed ourself too cool for the big opening night festivities at The Speakeasy and instead partied it up big time alone in our hotel room with a bottle of NyQuil and a 10:00 bedtime. (Note to forensic Twitter detectives: This was the day the fire alarm made us leave our last session early. We did accompany @cknafelz to a bar and took ourselves to an early dinner – we highly recommend the enchiladas de mole at Manuel’s – but such activities do not a party make.)

After spending Saturday constantly blowing our nose at the Convention Center, we met our brother, who had driven up from San Antonio and hit Austin’s famous 6th Street strip for some hard-rockin’ good times! A couple of hours later, after a plate of acceptable Mexican food – we swear we don’t even remember what it was – and an immoderately swigged quantity of agua pura, we begged a ride back to the hotel where the blessed NyQuil and a 9:30 lights out awaited.

For us, the one must-do social event was Sunday Night’s shindig in Austin PBS affiliate KLRU’s famed “Austin City Limits” studio. So, devoted readers, when we woke up Sunday morning even sicker than the night before, we went back to sleep until after noon. The strategy paid off, and by late afternoon the cold was in retreat (although a week later it continues to linger as stubbornly as Internet Explorer 6), and we were ready to go meet some public media compatriots and see some live music already. Among the highlights: “Hi, I’m Liane Hanson from NPR.” (Note to the inclined: The live acts were Nicole Atkins and Band of Skulls – we spotted ourself in a video on the PBS @SXSW player (in a KCTS 9 wrapper!), which means we are famous!)

Having proven that we could get our sorry self out of the hotel for a party, no matter how sick we were, we duplicated the feat Monday night, motivated in part by the promise of free copies of Windows 7 and in part because the party was at The Speakeasy and actually we were secretly disappointed to have not gone there opening night. We mingled, noshed, and imbibed vertically, from the first floor to the rooftop, but we entered the front door ten people too late to get a free operating system. We did see some cool demonstrations of Microsoft Surface, and tip our hats in the direction of Redmond for the slickness of the interface.

Now, devoted readers, we’re certainly no conference neophytes. Our basement is filled with giveaway totebags and untouched swag from more conferences than we’d care to admit to having attended. We’ve seen conference parties before, and the parties at SXSW trumped them all. But what about the conference itself? If we were truly a gossip columnist , we would be justified if we wrote no further, but the problem is we aren’t – we are an Interactive Producer/Experience Architect. We must answer this question: Did my nonprofit employer spend hard-raised cash just so we could go have a good time (when we weren’t completely miserable with our cold)?

Our view is this: SXSW Interactive provided more substance with far less pose than any conference we’ve attended. Granted, we kept ourselves on a focused, tactical track as we navigated the enormous sea of sessions. Certainly, it would be possible to go only to conceptual sessions (and had we paid our own way, we might well have!), but our experience is that when someone else pays the bill, you’d better be able to tell them what they got in return. Of course, some SXSW veterans tell us last year was better: Perhaps it was, but if next year is only 50 percent as good as this year, then it’s still the best conference value we’ve ever seen for real-world interactive media workers.

But if we do go next year, we will give serious consideration to spending our own hard-earned cash staying after the Interactive track ends and experiencing what SXSW was started to be in the first place: a music festival. (Note to our boss: Remember what Brent Grulke said: “… the interactive people need to spend more time on the rock ‘n’ roll …”) If this is media convergence, then we, for one, are ready to converge.

Free t-shirts are never good things.

Related Posts

• March 23, 2011 -- SXSW Interactive: Why I’ll Be Going Back (3)
• April 4, 2010 -- MCDM-Inspired Music Panel at SXSW 2010 (1)
• October 28, 2008 -- Live From the Conference: The Twitter Report (0)
• April 4, 2008 -- The Future of the Internet Conference (1)

In addition, community and social media strategies are maturing. For instance, many more of the businesses surveyed are capturing data on “lurkers” (internet users who merely observe interactions without actively participating in them) than in the past in order to learn more about how these individuals derive value from these online communities.

Still, the study also shows there’s a significant gap between how companies would like to use social media and how they actually use it. Businesses’ stated goals for online communities included increasing word-of-mouth, customer loyalty, awareness, idea generation, and improved customer support quality; but in practice, actual usage usually looks a lot like traditional marketing, just delivered through social media channels.

“While we are seeing signs of maturation in this year’s study, there are still plenty of companies who do not realize the power of communities, and others who have not yet figured out the proper approach for leveraging communities as part of their business,” said Francois Gossieaux, partner with Beeline Labs and a senior fellow with the Society of New Communications Research. “Businesses are truly become social again, and companies should look to leverage the collective wisdom of their employees, customers and partners in order to innovate faster, reduce costs, and bolster their bottom lines.”

Cut now, lose later

To anyone who weathered the online industry’s travails during the previous recession, the news that companies are keeping up spending rates on social media may be a surprise. Back when social media was just a twinkle in the Internet’s eye and advertising was pretty much the only means of online customer contact, hard times translated to a 12% drop in Internet advertising in 2001, followed by another 17% drop in 2002.

Given that history it’s surprising that in this current recession it’s not just social media where companies are putting their money. Through the financial uncertainty of 2008, the spending on Internet advertising hit a record high, followed by only a small drop-off in the first half of 2009. The online advertising numbers are even more impressive if you consider that combined advertising expenditures dropped 15% in the first half of 2009, after a 2.6% fall in 2008.

I think all those numbers look very good for social media as part of every company’s customer communications toolkit. In the recession of 2000, a lot of companies still hadn’t internalized the Internet. Dubious plans by self-styled experts produced little short-term return on their investments. So, when the economy went soft, online spending was an obvious target for cost savings.

Unfortunately for the companies that cut back, not all of their competitors were as quick to do the same. Companies that kept working at online communications and Internet advertising began to find better models. Those that continued their active online advertising programs were positioned to grow as the economy turned the corner, while the cost-cutting companies had to start all over again.

This time the recession is much worse, but many companies remember the lesson they learned last time: Cut online spend now, and pay the price later. Now, however, Internet advertising is far better understood. The pricing structure is far more reasonable than it was in 2000, and vastly improved metrics make it easy to find out the return on investment. With real data backing up their tactical decisions, advertisers feel more like they are shooting at clear targets and less like they are trying to smack a piñata while wearing a blindfold.

On the other hand, companies are still struggling to understand what ROI measurements can be applied to social media. At this point, company forays into social media are a less sure investment than the simplicity of online advertising. I can only speculate that companies are becoming involved in social media out of fear, or because they think it’s a way to be competitive with their peers, or that they are interested in new communication channels, or because they truly believe that openness and two-way communication provide the best, most profitable, path for customer service and loyalty.

What remains clear, however, is that no one has yet figured out a way to measure what simple communication is worth. If the return on talking with customers can ever be quantified, it will provide great benefits for companies and social media experts alike.

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Media sits at the top of every org chart

For example, go to a retail store and check out the cash registers: The old mechanical adding machines have become media experiences, not unlike Web sites. Cash registers now have multiple screens, capable of showing inventory, customer purchase history, and more. Behind the scenes at the warehouse, workers move products from truck to shelf and back again in the inventory system. Information is provided to them via wireless computers worn on their wrists, giving the process a cyborg-like feel. The work is still physical, but now there is a media layer on top of the classic ergonomic issues — a forklift driver’s minute-by-minute performance can now be negatively impacted by poor information design.

At headquarters, too, the product that is being moved about is information. Everyone is on e-mail, managers have company-supplied Blackberries, the company’s Intranet provides access to forms, department information, company news and announcements, and electronic tools. It’s all a media experience, but very little of how it was originally set up was overseen by people with media perspectives.

Every modern company is, in very real terms, a media company. Media isn’t just for marketing and ecommerce anymore. Nearly every job in the modern workplace is to some extent a media job, which means that companies will need employees with keen insight in their organization’s media experience, which goes well beyond getting ten thousand followers on Twitter. Studying media can help us understand the benefits of applications like Twitter—as well as the drawbacks—and allows us to apply that knowledge to media problems wherever they may arise.

Anyone can learn how to Tweet the company news, but can you see how to reduce errors by tying cash registers to an internal micro-blog that allows checkers to choose which other store employees they follow in real-time while they work? Can you demonstrate that a forklift driver posting his observations on how much longer it took to retrieve a pallet of popular items compared to three pallets of less-popular items can lead to improved efficiency? Can you improve Intranets so they will actually be used?

The media tsunami has already hit the workplace, and a lot of people are struggling to stay afloat. Whether or not companies start to consciously understand they are now in the media business, they will eventually notice who solves media problems for them. Understanding how media experiences shape what people do is going to be an increasingly useful skill as companies begin to recognize the role of media at all levels of business.

Brook Ellingwood is a Media Producer, Information Architect, and User Experience Developer. His own social Web can be followed using brookellingwood.com as a starting point.

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Terms of Use Update

Today we announced new opportunities for users to play a meaningful role in determining the policies governing our site. We released the first proposals subject to these procedures – The Facebook Principles, a set of values that will guide the development of the service, and Statement of Rights and Responsibilities that governs Facebook’s operations. Users will have the opportunity to review, comment and vote on these documents over the coming weeks and, if they are approved, other future policy changes. We’ve posted the documents in separate groups and invite you to offer comments and suggestions. For more information and links to the two groups, check out the Facebook Blog.

The wording of the last TOS update seemed to include Facebook taking ownership of users’ uploaded or posted material, which was the source of the uproar. My own take on it was that Facebook had no intent of actually claiming ownership, but that its legal counsel was making the claim out of a sense that it would protect them from being sued for being a conduit for misuse. For example, if you upload a picture of yourself, and someone at an ad agency then copies it and uses it in an ad on the side of bus, you might sue the ad agency. But you might also sue Facebook, because they provided the mechanism by which the picture was used without your permission. Facebook’s lawyers recognize that if you surrender the ownership of the picture when you upload it, then you can’t sue Facebook for what the ad agency does. I predicted that these sorts of Terms of Service (which are very common, and people agree to every day without batting an eye) would someday be challenged in a class action lawsuit, forcing lawyers to find more subtle ways to protect their companies.

I might have been wrong.

With the new transparent approach Facebook claims to be taking to rewriting the Terms of Service, it’s possible that the human element actually will be factored into the legal element this time. And if it works, it could become a model for how other companies that rely on the goodwill of their users do business.

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With Obama now officially President, the White House site has been redone to reflect the new administration’s priorities. Of special interest to those of us in MCDM is the Technology Agenda page. While it’s filled with important information, two things that jumped out right away for me were:

1. Protect the Openness of the Internet: Support the principle of network neutrality to preserve the benefits of open competition on the Internet.
2. Deploy Next-Generation Broadband: Work towards true broadband in every community in America through a combination of reform of the Universal Service Fund, better use of the nation’s wireless spectrum, promotion of next-generation facilities, technologies and applications, and new tax and loan incentives. America should lead the world in broadband penetration and Internet access.

These two combined can help ensure that Internet continues to be an incubator of innovation and the jobs innovation creates. Good policies for media professionals.

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