IMARKETING REPORT 07.09.02: Mega Media; TV+PVRs; Music Biz; Consumer Choice
>> "Mr. Ebbers, how much is two plus two?". "My counsel has advised me to not answer that question." - Worldcom Congressional Hearings

Good morning execs,

"BRANDEQUITY: PayPal vs. Citigroup"

I reported on online payment competitors
and said Citi would either beat or buy Pay-
pal if they marketed their online payment
alternative effectively. Well, Citi's been
too busy buying banks and has allowed
eBay to gobble up Paypal for $1.5B. Big
mistake. In fact, I'd even go as far as su-
ggesting the FTA look into this transaction,
as it would give eBay monopoly-like control
over the online payment market. For eBay,
it's a great move, since it gives them new
revenue streams and embeds them deeper
into their customers' lives. And as I repor-
ted last week, how eBay extended company
insurance to their customers, eBay is on an
unprecedented ride to customer nirvana as
they continue to offer their customers ser-
vices that make eBay essential to their lives.
Is eBay Bank next? eBay finance options?
eBay margin accounts? Stay tuned

1. BRANDS&INSIGHTS: Do Mega Media Congloms Work?
2. CONSUMERFOCUS: TV, Don't Be Scared of the Internet + PVRs
3. MEDIA&CONTENT: A Cataclysm in the Music Biz
4. MGMT&OPS: Let Your Customers Decide

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1. BRANDS&INSIGHTS: Do Mega Media Congloms Work?

Go back to January 1st, 2001. Bright
Monday morning. Dot coms were
still valued high. AOL announces it's
buying Time Warner and the promise
of the internet economy flashes before
everyone's eyes. I also wondered how
the heck did that happen. The purchase
was based on synergies and wonderful
old and new economy media
companies could do together. Today,
AOL is falling apart, morale is low, and
they still haven't been able to deliver
much of that synergy they promised.
All this didn't stop Vivendi from pur-
chasing Universal, then USA, in a bid
to become a mega media company
or News Corp, Disney, and Viacom
from launching cross-platform marketing
units to deal with cross-platform ad
deals that were surely going to pour
in as a result of media synergies, but
never fully did. So, do they work?

BOTTOM LINE: The vision is there,
but the cooperation of old line media
big wigs isn't. Think about how the
internet has changed the way consu-
mers receive their content, and how
other media companies have had to
adapt to deliver their content to their
consumers based on their new media
consumption habits. If you're still
following me on this, then you've
realized that all media will converge
and combine into one big interactive
medium where consumers and com-
panies will forever be in constant
contact. Everything from branding
to direct marketing will change as
consumers will only refer to this one
medium for all of their content, for
business or entertainment. Imagine
all your contact points for consumers
being the same medium? How easy
will it be to deliver information the
way you want, when you want.
Entire marketing industries will col-
lapse. So, do mega media congloms
work? No. Does synergy exist?
No. Will all media become one
someday? Yes.


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2. CONSUMERFOCUS: TV, Don't Be Scared of the Internet + PVRs

Last week, I announced my agency's
first analysis on consumer consump-
tion of TV based on their feedback on-
line. In this study, we discovered
cable is more popular than broadcast,
TV broadcasters in general aren't leve-
raging the internet effectively, and TV
broadcasters are not spending enough
in branding themselves, spending too
much on short term promos for their
programming. Well, if you think that
branding yourself doesn't work because
of syndication, guess again. People don't
watch TRL, they watch MTV. Last
week, another study found cable to have
grown in audience share. And in another
study, it was also reported that out of all
the ads viewers hate the most & skipped
on their PVRs, on-air promos of other
programming are the 3rd most hated
type of ads. Funny right? So, you're in
broadcasting, you already have the
challenge of smaller audiences during
the summer, your on-air promos are
hated, and you have to deal with PVRs
and other media siphoning off your
aud. What do you do?

BOTTOM LINE: Hire al berrios, that's
what you do. But seriously, rather than
fight other media and PVRs, use them.
The internet is not your enemy. The people
online haven't stopped watching TV, but use
the internet to enhance their viewing ex-
perience by checking out listings and fan
sites. What your job should be is locating
these viewers WHILE they're using the
internet, and ask them what they want to
watch, when they want to watch it, and
remind them that what they want to see
is on when they want to see it. Although
a really good and expensive banner/email
campaign can accomplish this, iMarketing
can do it even more effectively, for a lot
less. Don't count out the internet. And as
you know from reading IMARKETING
TiVo Sells Out"
, PVRs are experimenting
with a form of advertising.


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3. MEDIA&CONTENT: A Cataclysm in the Music Biz

This is huge folks. Music industry has
finally realized that they can't win the
MP3 piracy battle and are quickly coming
up with ways to sell music online or li-
cense out their libraries to legal distri-
butors online. The big stink was that
they didn't want to offer their music to
consumers one at a time since the bun-
dling music on cds and lps biz is so lu-
crative. But consumers don't care,
music is a lifestyle product, and the
longer the music industry waited to de-
velop a plan, the less value it was able
to keep. I believe music is becoming a
commodity. But a closer look at the
music-as-a-commodity argument is very
revealing: let's look at HipHop. HipHop
is still growing, yet all other genres are
experiencing massive losses and declines.
Why? I believe that the majority of con-
sumers of HipHop music only have access
to dial-up access and don't have the time
to use anything faster. For many still, the
cost of monthly access for broadband to
download music faster far outweighs it's
use. Those 33MM(?) people who do have
broadband access also aren't necessarily
strictly fans of HipHop genre either. That's
not to say HipHop doesn't have lots of fans -
on the contrary, the only reason HipHop
has been the only top performer is because
so many fans continue to purchase music,
rather than download it for free.

BOTTOM LINE: So how do you make
money on music on the internet if it's turning
into a commodity, and when consumers only
want one tune at a time? 1) Accept the fact
that consumers will probably continue to
download, burn, and trade music for free.
So the only thing people will pay for is the
convenience of getting quality music, includ-
ing all the variations, without viruses, in one
easy to download package. 2) Invest in
compression technology so that dial-up
consumers can download faster. When
you're the only one offering fast downloads
over dial-up, you've got a market. 3) Leve-
rage the p2p networks by advertising heavily
on them, releasing new releases first, and
having service staff scour the networks
hyping up artists. This would ultimately mean
eliminating some other music biz marketing
tactics like "wrapping a van". 4) Invest more
in putting out new artists, and having your
current artists on a schedule to release more
music. Restricting supply is no longer the
way to make music valuable in this new
model, so flood the market, and offer the
service of aggregating only what people
want for fees. 5) Develop better cross-
promotions amongst artists on singles, so
that fans of one artist can discover another.
6) Interactive music videos and 7) voting-
for-top-music-processes that allow more
consumer interaction. Finally, a prediction:
HipHop will continue to be a strong force
for keeping music valuable to consumers.
It will become the #1 genre eventually in
terms of sales, until either HipHop producers
follow the instructions above or HipHop
consumers begin downloading like all other


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4. MGMT&OPS: Let Your Customers Decide

"The percentage of adults who said
they read a daily newspaper on an
average weekday fell from 60.7% in
1997 to 54.7% in 2001 in the 85 metro-
politan markets... ...overall even papers
like The New York Times and The
Washington Post are still struggling for
readers because of the splintering of
media outlets and fewer disposable
." The point of this fact was to
demonstrate the effects of winning a
Pulitzer, journalism's highest award,
awarded by a panel of over-educated
peers. The New York Times and The
Washington Post have won tons of
Pulitzers, but yet their readership has
decreased. Other than self-adoration,
do awards really contribute to the bottom
line? Or better yet, do consumers care
if you've won an award or not, especially
since they didn't vote on whether you de-
serve it or not? Here's another nutty
myth, in advertising: highly acclaimed ads
are usually the poorest performers with
consumers, and the least creative are
the ones that make the company money.

BOTTOM LINE: Why do industry peers
judge excellence? Shouldn't it be judged
by the consumer? After all, these are the
people that don't understand how the bu-
siness works, so they're objective, but
they're also the targets of work that won
the award? Well, recently, M&Ms held
a global vote for consumers to choose the
next color for their m&ms candies. They
used the internet to bring together the entire
world, and using one of the most amazing
displays of a corporation seeking input from
their consumers, they based their next cor-
porate decision on what their consumers
voted on. Consumers got what the majority
wanted and Mars/M&Ms saved tens of
millions in an offline global survey for a
new product launch that will contribute to
their bottom line, not their creative egos.

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Disclaimer: The recommendations, commentary and opinions published herein are based on public information sometimes referenced via hyperlinks. Any similarities or likeness to any ideas or commentary from any other sources not referenced is purely coincidental. al berrios & co. cannot control any results occurring from advice obtained from this publication nor any opinion(s) conveyed by any reader of this publication.

(c) 2001-2005. All Rights Reserved. al berrios & company, inc. Published by al berrios & co. This Report may not be reproduced or redistributed in any form without written permission from al berrios & co., subject to penalty.


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