2006 Predictions

aka, everyone else is doing it, so I might as well too.

2005 was a very interesting year in terms of new companies hitting the street, new ideas popping up, and new technologies hitting or approaching critical mass. 2006 should be much of the same, but with some new twists. So here is my semi-organized list in response to all the others, for all of you to enjoy:

  1. Audio will take off. No, not just ipod and mp3 sales, but everything related to them. Since almost everyone has an mp3 player of some sort (if they don’t they can get them practically free [heck, my bank gives them away for opening new accounts]). Since everyone will have audio players they will be looking to fill them up even more. So podcasting will REALLY take off.1B. Podcasting: Podcasting will hit mainstream as people associate it more with free content they can get via iTunes and yahoo and maybe AOL (this is another potential buying spree waiting to happen, don’t forget they own winamp). Podcasting numbers will go through the roof, especially when record labels start making deals with podcast networks to license their music as a clip of some kind. This will allow for a wider variety of content and more radio-like radio shows.
    With this new dearth of programming though, someone will have to pay for it…. 😉
  2. Video will START to get big. In 2005 video sharing started to get a lot of players, but still hasn’t hit mainstream. The reason: decent video cameras are still expensive. Now that more digital cameras are getting quick video clip capabilities, then we will see more and more people turning to “flickr-like” services to share these funny little clips. However don’t expect to see a flood of amateur video that has been edited and cleaned up (remember iMovie is still Mac only, for now.)
  3. Blog revenues will not be purely text ads. Bloggers will learn that a good revenue stream is not limited to a sole revenue stream. Also with click fraud skyrocketing, smart bloggers will hedge their bets on other sources, expect more people to build mini-stores using affiliate programs and other contextually relative forms of revenue. Bloggers will also start new parts of their website that bring in more people related to what they are covering (something that they should’ve been doing for ages).3B. ProBlogging will catch on even more. Darren Rowse and company will create their own mini-conference, charging $1000 a day, and keeping o’reilly and the other major companies out of the revenue stream.
  4. VOIP will gain even more ground, phone numbers using voip service of some kind will grow by 50%, but revenues will only grow by 10-15%. The real winners will be those companies that make voip seamless, and show people how to hook up their entire house telephone system to their new voip box.
  5. The spread of mashups for no particular financial reason will slow. However, people will start mashing up other applications into their own (i.e. google/yahoo maps will become expected in an interface).5B. Google and yahoo will start making some serious dough off of these mashups-in-an-app setups. They will also make it practically drag and drop easy to add their services.
  6. Weblogs, Inc. will put out a magazine for engadget, basically a 2 week digest of their posts. It will be published by Time Warner.
  7. Podcasts will take off (I am repeating this because it will have a second wave in the 3Q).

The shortcomings of craigslist

OR how craigslist’s popularity is killing it.

I’ve been a follower of craigslist for quite some time, and have to applaud them for the job they’ve done democratizing the classifieds marketplace (whether or not that was the intention of Mr. Newmark, I will never know, but I suspect it was just a nice by-product of it all). However, there is a major hole in the system, it relies TOO much on the community action to filter out the spam on the sections it doesn’t charge for. These problems are probably eliminated in areas where posting costs $ (San fran, ny, LA, etc.), but it doesn’t help the areas where it is still free.

These free areas are where Craigslist will want to grow its audience and eventually generate revenue from them. Yet this double edge sword also leads to a lot of spammers filling up the sections that would otherwise offer valuable resources to the casual reader. Now I am sure there is a cadre of die-hard craigslisters out there, but these people can only flag so much stuff, there is still a TON of stuff waiting to be cleaned up. So what is craigslist supposed to do about this? The easiest way would be to create a barrier of entry. A simple one page sign-up form before you post would be one way. Then on top of that continue with their posting-authentication system. Maybe even hire someone from each city to sift through all the new postings?

How is any of this revolutionary you ask? Well in all honesty it isn’t at all new, its just a matter of them taking the reigns before the problem gets way out of control.

The economics of podcasting

The economics of podcasting has been a hotly contested issue over the past 10-12 month, with every side of the debate weighing in its own opinions. Despite my somewhat vested interest in the format (which I ironically have never recorded a podcast in, but thats a different article entirely), I think there is a lot of confusion out there. I am going to keep this as simple as I can (and use the most simple math and sample rates as I can think of). I am also going to try and give each side of the argument its fair shake for those of you who care.

So let’s begin with the basics: how exactly is podcasting supposed to be monetized? The first and most popular answer is definitely advertising. Advertising? In an amateur audio format? What do you mean? Well glad you asked. The general idea from what we’ve seen here and there is the insertion of 15-30 second spots at the beginning and end of a podcast. Usually this is done by the podcaster himself (if he has access to the media the sponsor wants inserted), if not then maybe the publisher handles this later (a time-waster if you ask me). Ok so now that we have inserted the ads, where do we make our money? Well that is where the big debate rages on. Proponents of podcasting think that this is enough, we’ve charged our advertisers $0.10 per podcast-listener (rough estimate, but gives us an easy number to work with of $100/cpm), and now we can divvy up the money with our podcaster and take our cut at the same time.

That sounds like a reasonable assumption, but what about the costs and other things involved in putting out a podcast? Well if you all would give me the luxury of some very simple math we will see the shortcomings of such a simplistic approach to the idea.

Using the assumption that we are charging ten cents per listener (and the podcaster is hosting his OWN data-files – I’ll touch on this a little later), here is the breakdown of how one could imagine the financials looking in a podcasting business (assume these figures are for podcasts over the course of 10 weeks – i.e. 50,000 listners a week):

  • Sponsor buys 500,000 downloads = $50,000
  • Publisher takes 50% cut = $25,000
    • His 50% cut is eaten up by sales staff, production staff, and management
      • 25% sales staff – $6,250
      • 25% production – $6,250
      • 25% management – $6,250
      • we now have $6,250 to devote to hosting/bandwidth, and R&D not to mention profits (only an idiot builds a business without looking for profits)
  • Podcaster has his 50% cut = $25,000
    • His costs are as follows:
      • Bandwidth: 500,000 downloads average download size of 10MB = 5TB of bandwidth. = $5,000 ($1/GB estimate)
      • Production costs: $2500 (computer, microphones, software, etc.)
      • Time: 5 hours($50/hour)/week x 10 – $2500 (assumption)
    • So now the podcaster is left with $15k for ten weeks work (this is a HIGH assumption, and remind me if I forgot any other costs)
    • This revenue breaks down to roughly $0.03 per listener for the podcaster. Now a realistic podcaster has a better number to work with as far as money they can make from the medium.

Ok, so on this front the podcaster is making some decent loot, but that is assuming he can get 50,000 listeners a week, something that I don’t believe any podcasters are getting yet. According to feedburner, in february (I know, ages ago), the average podcast they managed the feed for was only getting about 15 listeners a week. Thats why on a one to one basis, the business model isn’t there yet.
Sorry for the long diatribe, especially since i haven’t even gotten to the counter-argument, which is that podcasting lacks viable metric measurements. This I would argue isn’t that big of an issue as tv and radio are both passive non-interactive mediums for advertising, so it takes a creative marketer to make it work for them. Who says you need to know the exact number of listeners, not just downloaders? Can’t you spice up your ad to give people an incentive to follow-up later? I.e. make your promo a coupon, only LISTENERS can redeem it. Give each podcast a special coupon code and then you will track how many SALES came from the campaign. Also, lest we not forget that podcasting is a captive audience in a sense, most of the listeners are passively listening to your campaign away from their computers so instant response and performance metrics that are instantly recognizable (like in banner ads,etc.) is not going to be here for a couple of years at least.

So my recommendation to podcast advertisers is, don’t hold your breath waiting for a better medium or performance analysis system to come about, because if you do, you might just miss out on getting in while the prices are low.