Verizon's Pivot From Stodgy Old Telco To Sexy Millennial Ad Brand Isn't Going So Well

from the you're-not-built-for-this dept

We've noted for some time now how Verizon desperately wants to pivot from dull old broadband provider to sexy, Millennial-focused video advertising juggernaut. To accomplish this task, Verizon acquired both Yahoo and AOL, smushed them together, then hoped this would be enough to compete with the likes of Google and Facebook. The effort distracted the company from upgrading or repairing much of its fixed-line broadband footprint, since investing in networks isn't profitable enough, quickly enough, for many on Wall Street.

But Verizon's pivot hasn't been going so well. The company's Go90 video platform, which was supposed to be the cornerstone of the company's effort, recently fell flat on its face after Verizon spent $1.2 billion on the effort. And the company's Oath ad network, the combination of AOL and Yahoo, hasn't been doing much better, with Tim Armstrong (formerly of AOL) now heading for the exit (warning: annoying paywall):

"Mr. Armstrong, who came to Verizon in 2015 when it acquired AOL and helped steer its purchase of Yahoo two years later, had tried to combine the two internet companies to challenge Google and Facebook Inc. in digital advertising. But those efforts so far have failed to generate much growth or make the unit, called Oath, more than a side note in the wireless giant’s earnings."

Everyone (including Verizon) tends to forget that Verizon usually fails when it wanders outside of its core competencies (read: running networks and lobbying to kill consumer protections and hinder competitive threats). From the company's arguably terrible VCAST services to its failed app store, Verizon has long engaged in "me too" efforts that don't last because they're simply not good. And they're generally not good because, as a government-pampered telecom monopoly, Verizon simply isn't good at innovation, creativity, competition, disruption pr actually listening to your users. They're alien concepts to most Verizon executives.

The company's failed streaming partnership with RedBox was another such example, and who can forget the company's attempt to launch a news website dubbed Sugarstring that collapsed in embarrassment after critics pointed out Verizon tried to ban writers from talking about net neutrality or surveillance.

Ironically though, part of the reason given for Verizon's problems getting Oath off the ground (at least according to the Wall Street Journal's sources) is that the company wasn't willing to be snoopy enough:

"Verizon and Oath executives, however, have disagreed over what some employees within the digital ad unit see as an overly conservative approach to using wireless subscriber data to boost Oath’s advertising revenue, people familiar with those discussions say.

Senior executives within Verizon are wary of potentially alienating lucrative wireless customers in the name of adding incremental advertising revenue, these people said. Oath contributed less than $4 billion in revenue during the first half of the year, compared with the wireless business’s $44 billion.

Verizon agreed to share with Oath anonymous information on subscribers’ age, gender, phone language, and data plan size, for example. But these people say the carrier refused to share information on the apps customers used and their web browsing activity unless users explicitly opted in.

Verizon, you'll recall, was one of the key players responsible for killing FCC broadband privacy rules last year. It also faced a major privacy scandal after it was found the company was covertly modifying user wireless packets to track users around the internet without telling them or providing working opt out tools. It took security researchers two years to even discover this was happening, and another six months of public shaming before Verizon made it possible to opt out.

Gun shy from that experience, and wary of courting additional scandal as it rushed to kill consumer oversight (both on the national and state level), Verizon subsequently made Oath's snoopiest systems opt in. And the result pretty clearly highlights why ISPs and marketing folks hate the entire opt in paradigm:

"Given the choice, most of Verizon's 116.5 million wireless subscribers decided not to take the deal. Just 10 million of them have opted into the data-sharing program, known as Verizon Selects, according to the Journal."

Again, it's pretty ironic that Verizon only went the opt in route because it was wary of courting additional scandal after it was caught spying on all of its wireless users without its permission. But it really also can't be over-stated at how terrible government-pampered monopolies are at actually building innovative and competitive products. You'd think that eventually, Verizon would realize its best bet lies in doing what it's good at, be it running wireless networks, or lobbying the government to screw over competitors and consumers.

Filed Under: advertising, internet, portals, tim armstrong
Companies: aol, oath, verizon, yahoo

EMI Sets Up Its Own Online Store As YouTube Tries Selling Music

from the try,-try-again dept

Lots of folks are trying to figure out new business models in the music space, and here we have two separate big companies testing out ideas that seem unlikely to work all that well. First up is EMI, the big record label that keeps insisting that its going a different route but can't seem to reign in its lawyers from taking the same old route. This time around, it's launching its own music download site, where it's promising lots of extras and goodies -- including some stuff for free. It will be interesting to see how the actual site is set up, but the idea of setting up just a label specific site seems destined to fail. People want a one-stop shop. They don't want to have to know that the music they like is on EMI. Imagine, back when people bought CDs, if they had to go to a different store for each record label. Maybe there's more to it than what's being described, but at first pass, this sounds like more of the same: a big record label sticking a square peg into a round hole, covering it with shiny paint, and talking about how awesome it is.

Then there's Google, which has been struggling mightily to come up with ways to make money off of YouTube. At the same time, record labels have been complaining about how much "music" (accompanied by videos, of course) is available on YouTube, and the folks at Google put two and two together and will start offering options to buy the songs you hear on YouTube at partner sites such as Amazon or iTunes. While it's not a bad idea (why not offer people a chance to buy if they want it), it's hard to see this really getting that much traction. Some people may go ahead and buy out of convenience, but it's hard to see people actually doing that much music "shopping" this way.

Filed Under: advertising, clickthroughs, music, portals, selling
Companies: emi, google, youtube

Time Warner Takes Steps To Finally Spin Off AOL

from the a-bit-late dept

As part of Time Warner's earnings conference call, the company noted that it will be splitting AOL into two parts: cutting the rapidly shrinking access subscriber business from the content/advertising business. Many folks are assuming this is in preparation to finally sell AOL off. Of course, like so much that AOL/Time Warner has done over the years, this is too little too late. Remember the happy days in the 90's when AOL would come out with a press release announcing every million new subscribers? Funny that they don't do that for every million lost subscribers... However, it's been those subscribers that have hindered AOL's ability to adjust. For years, they were afraid to do too much with free content to lose that subscription base, even as that subscription base was figuring out that they could already go elsewhere and get the same content for free (and buy access for much less). So, when the company finally adopted a free model, it was too late to simply throw the doors open. People just weren't that interested. The same is true now. Time Warner had a chance to salvage AOL years back, if they had aggressively tied it to a broadband strategy rather than competing with itself and giving lip service to a more complete strategy which never actually seemed to happen. Finally separating out the dwindling access business is hardly going to catapult the rest of the business forward, as most people have simply moved on to other sources. While the sheer size of AOL's traffic can hold it up for a while (and may make it an attractive buyout for someone looking only to buy some traffic), it's lack of innovation and growth have pretty much doomed it to also-ran status.

Filed Under: broadband, mergers, portals, spinoff, strategy
Companies: aol, time warner

Hey MySpace, Aren't You A Little Late To The 'Portal' Bandwagon?

from the retro dept

Brian Stelter opens his piece on MySpace on a generally positive note, suggesting he was intending his write-up for the New York Times to be a sympathetic look at the company's relationship to its corporate parent, owned by Rupert Murdoch. But the article ends up painting a picture of a site without a clear vision of its future. In probably the most damning paragraph in the article, an advertising executive says that the MySpace's parent company had envisioned the site as a portal, but that he "thought they would be much further along with that today." For about a decade, websites have tried to mask their lack of focus by labeling themselves portals. A decade ago, that strategy worked pretty well for Yahoo! in 1996, when it had enough content to really make it stand out from the crowd. But it's hard to imagine that a similar strategy will work in 2008. Users have many more choices and more sophisticated tools for finding the content they need, so the attraction of a one-size-fits-all portal is much lower.

I suspect that the fundamental problem is that it just doesn't make much sense for an "old media" company like News Corp. to own a tech startup like MySpace. They key to MySpace's success in the years before the acquisition was precisely that the company didn't need to produce content; users created "content" of their own by swapping messages, posting pictures and music, etc. Social networking sites are fundamentally technology platforms that enable users to share their own content with one another. Trying to produce "original content" for the site is a step in the wrong direction. There's no way they can satisfy the diverse tastes of their millions of users, but they can waste a lot of money trying. And while MySpace focuses on becoming more like the mainstream media, its competitors—especially Facebook—are working feverishly on enhancements to their underlying technology platforms. Meanwhile, the MySpace user experience continues to deteriorate. I regularly get spam from other MySpace users (although this has become less common in recent months), the site is littered with gaudy banner ads, and I encounter error messages a lot more frequently than I do on Facebook. These are the sorts of problems that an 80-year-old newspaper mogul like Murdoch just isn't going to know how to deal with. He is, by all accounts, a brilliant businessman, but he's not a technologist, and it was probably a mistake for him to buy what was fundamentally a technology company.

Filed Under: content, portals, social networks, technology
Companies: myspace, news corp.

South Korea To Fine Portals If Their Users Upload Porn

from the that's-gonna-backfire dept

While we have problems with plenty of US laws when it comes to innovation and the technology industry, one thing this country has gotten right is making sure that service providers usually aren't blamed for the actions of their users. Between the safe harbor provisions of the DMCA and section 230 of the CDA (both of which are mostly awful laws other than those small points within them), it seems that our laws recognize that an individual who does something on the site of an online service provider is responsible for those actions, rather than the service itself. This makes plenty of sense. You don't blame the phone company when someone uses a phone to commit a crime. You don't blame the highway department when a getaway car drives off on the highway. You blame whoever actually committed the crime. There have been efforts underway in the US to change this -- mainly because the service providers are easier to find and they often have a lot more money -- but that doesn't make it right.

Other countries haven't been as clear on this, and it appears some are going in the opposite direction. South Korea is looking to start fining web portals that make pornographic content available. Fines will also go to those who uploaded it, but clearly this law is targeted at the service providers. Apparently, explaining to the government that it's pretty much impossible to manually check every uploaded video isn't particularly convincing, as the gov't appears to have responded with "hire more people." Somehow, I get the feeling this won't do much to actually stop porn online, but could make things more difficult for various web portals in South Korea.

Filed Under: liability, portals, south korea