Online media planners and buyers lost at sea

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It’s tough to be an online media planner or buyer right now. Nearly every planner or buyer that I talk to is swimming in an ever-deepening pool of data and demands. Over the past few years, the number of publishers and ad networks vying for their attention has increased dramatically. Engaging audiences through advertising has become more difficult as consumers increasingly ignore traditional display ads. Reaching those audiences at scale is more challenging because consumer attention is fragmenting across a growing number of online properties. Finally, advertisers have become more demanding about efficient allocation of their ad budgets given the assumed measurability of online media and all of the various forms that online advertising can take (display, search, contextual, behavioral, CPM, CPC, CPA and on and on). All of this is happening while agencies come to the realization that it’s impractical to separate planning and buying from creative development for online advertising.

Despite all of this rapid change, the tools that agencies use to determine how and where to spend money are still largely the same as the ones that they used early this decade. comScore, AdRelevance and @Plan (the latter two from Nielsen//NetRatings) remain the standard tools that most agencies rely on for online planning purposes. Buying is still largely a manual, time-consuming process, despite efforts to streamline the process with products such as MediaVisor. And forget about trying to optimize creative or spend on the basis of actual business results or ROI. Without the emergence of more useful tools and services to aid agencies in planning, buying, measuring and optimizing, the share of ad budgets allocated to online media (7.5% today according to Yankee Group) will continue to lag consumption of online media as a percentage of total media consumption (20% today). Innovative products and services are critical to the many businesses that are counting on ad revenue to survive. New ad-supported businesses will have a hard time seeing ad dollars flow their way without help for agencies that are dealing with a flood of opportunities and data. Today, agencies use the approach of clinging to the sites and formats that they already know. The entire industry needs to help agencies (and advertisers) navigate increasingly turbulent waters so that they in turn can find and justify throwing lifelines (in the form of ad dollars) to fledgling online properties.

Fortunately for agencies and advertisers, entrepreneurs who have lived and breathed online advertising during its early years are now recognizing the opportunity to help address these problems.  VisualIQ, Quantcast, Balihoo and Covario are examples of companies that are attempting to provide more data to agencies and to increase the efficiency and effectiveness of their processes. I’m eager to see additional tools and services and the widespread adoption of them by agencies and brands. Only then will agencies, advertisers and ad-supported businesses be able to collectively withstand the waves of change that they are facing. Please let me know if you have come across any interesting products or services that help agencies or advertisers plan, purchase and optimize online media. All of us in the online media industry will sink or swim together!

Quick hits: Target, ad networks and the Super Bowl

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I’ve been remiss in posting on some fascinating things that have taken place in the digital media industry over the past month. Fortunately, the two major reasons there has been a delay are because of closing an investment that we announced early this week and because of my total engrossment in the transformation of my New York Giants from playoff afterthoughts to Super Bowl Champions (which I’ll comment on below). I’ll do better going forward (I hope). Without further ado…..

Target and customer dialogue: Last month, Amy Jussel of ShapingYouth.org published a blog post in which she shared an opinion about a recent Target billboard advertisement. She also called Target several times, to which Target responded in an email by saying that “Target does not participate with non-traditional media outlets.” Now whether you agree with Amy’s perspective or not, I think we can agree that corporations are doomed if their response to feedback from customers, in any form, is to dismiss it outright. If Amy had written a letter or sent an email, would Target have responded similarly? My guess is only if the customer service representative wanted to lose his or her job. The impact of customer service on word-of-mouth, brand perception and profits can’t be overestimated, particularly in a digital world where switching costs are negligible and customer acquisition costs can be sky high. Emerging companies like Satisfaction and Bazaarvoice (a Battery portfolio company) are focusing on the dialogue between and amongst brands and their customers to create new commerce and service opportunities. Leveraging consumers’ increasingly visible and explicit perception of brands and products in this way is just beginning. In addition, we’ve already seen that the empowering of consumers via digital media can save television shows and change company policy. Undoubtedly, we will eventually see an online consumer uprising that results in a tumbling stock price and executive job losses. The companies that fail to take advantage of the availability of consumer data and to engage in an open dialogue with customers do so at their own peril.

OnMediaNYC and ad networks: I had the pleasure of speaking at the OnMediaNYC conference at the end of January. One of the major things that struck me coming out of the conference is the incredible challenge that advertisers and agencies face in sifting through all of the various media outlets and ad networks now vying for their ad dollars. And that is exactly why scale matters so much. With multi-million dollar budgets to deploy and limited human and research resources, advertisers and agencies can only purchase media in so many places. And the simple rule of thumb is to pay attention to the outlets that can provide them with the most reach. Until there are better research, buying and analytical tools (if you know of any, send them my way!) for them, advertisers and agencies will only spend time with the largest publishers and networks. The challenge then for the publishers and networks is to achieve the scale necessary to rise above the noise and get the attention of potential buyers. Too many of the ad networks that I saw at OnMediaNYC focused on nifty targeting technologies and whiz bang ad formats. Very few talked about how they intend to achieve the scale necessary to have advertisers and agencies even spend time learning about their approaches. There are well over 300 ad networks in the market today, but I expect that there will be far fewer that achieve the scale needed to survive over the long term.

New York Giants, Super Bowl Champions, and teams: As a life-long Giants fan, I was fortunate to attend not only one of the great games in Super Bowl history, but also a game that ended in an unbelievable victory by my favorite team. There are lessons for business to be drawn from many parts of life, but as I left the stadium that night I was struck by a particular message. It sounds flowery and obvious, but it’s worth reminding ourselves that a team of individuals committed to each other and to a common goal always have a fighting chance, even in the face of naysayers and accepted theory. As venture capitalists, we tend to place a great deal of emphasis on the teams with which we partner. The Giants’ Super Bowl victory reminded me that there is a reason that we seek traits like focus, persistence and commitment in our entrepreneurs and that we strive to give them the same in return. In our business, often times market opportunities are not obvious to outsiders or simple to address. But a determined team that believes in its abilities can sometimes achieve outstanding results, even while those on the outside criticize its ideas and approaches. Just ask the Giants.

 

Super Bowl XLII

Making a (belated) resolution to monetize social media

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Looking back on 2007, I think that there is no debating that social media and user generated content were important components of the overall online media market and that they will only be increasing in significance over the coming years. After all, it has been fairly widely published that social media properties account for somewhere between 20% and 30% of all page views online and nearly 45% of all time spent online. However, advertising spend on social media is less than 2% of total online advertising expenditures. The poor performance of the monetization models that have been attempted to date is well documented. But I believe that there are a few models that are emerging that have the potential for success because they may do a better job of engaging and targeting the right audience. Of course, more compelling advertising creatives, specifically designed for the social media environment, are as important for engaging consumers as is the monetization approach.  

Here are a few models that I hope to see being tested by startups over the next few months. The models have potential for all types of social media sites, including social networks, media-sharing sites, virtual worlds, etc. 

–         Leveraging the various types of data available from a social media site to target audiences, rather than context or page views, on the site. Clearly, the content alone from social media sites hasn’t been valuable enough information on which to base ad targeting.  But combining context with other data, including user activity, demographics and geography, and potentially even sharing that across social media sites, could yield strong results for delivery of advertising, commerce and content.

–         Consumer endorsement of brands, products or content that begins by providing them with value from and control over the messaging initiated by them and their activities. Widgets and RSS are powerful tools to be used within this word-of-mouth-marketing model, which helps advocates and influencers spread the word about the things with which they associate themselves.

–         Mining social media to better target audiences on non-social media properties. The participatory nature of social media makes it an incredibly rich platform from which to extract targeting data that is unavailable elsewhere on the web. This provides a unique opportunity for social media sites to share that data (in a privacy-friendly way) with other web publishers so that value can be generated for both groups. 

I expect 2008 to be the year in which clear monetization models emerge for the social media properties that experienced fantastic growth in 2007 (eMarketer has one or two forecasts of its own). My somewhat belated resolution is to support those companies that are taking innovative approaches to generating sustainability for a thriving, important and exciting medium.

The calm before the widget storm

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After a summer where seemingly every article about the web and social media included discussions about widgets as the next big thing, there has been a relative lull in the widget hype during the fall. Given that widgets themselves are nothing new to the Internet, the period of calm should have been expected. Code and applications that can be embedded and executed in web pages have been around since the first page view counters and banner ad tags. More recent examples of “widgets” include Google AdSense, the YouTube video player and Facebook applications. But that is not to say that the whirlwind of widget press should be ignored altogether. The proliferation of social networks, blogs, media sharing sites, start pages, etc., are all indicative of an overall fragmentation of the web. Anyone interested in reaching consumers needs to be where they are, not where they want them to be.  The portability and interactivity of widgets enables the desired connection to consumers to be made simply and effectively. For that reason, and many others, what we are currently experiencing is likely only the calm before the widget storm.

 

When widgets first got the attention of the media, it was largely because of the novelty of allowing consumers to embed widgets in the same way that they were previously embedded by website owners. Companies such as Slide and RockYou established themselves as early leaders in the creation of widgets for consumers. Other companies, like MuseStorm, Clearspring and Goowy Media emerged to provide applications and services to enterprises for widget authoring, distribution and tracking. Over the past few months, each of these enterprise-facing companies seems to have reached the same conclusion….that an end-to-end solution, including monetization, is the best way to attack the market.

 

The market for banner ads provides an interesting model for the potential development of the widget market. Ad serving technologies became a commodity over time because they only enabled publishers to distribute and track banner ads. The authoring was left to agencies and the monetization was left to publishers and third party ad networks. The most value accrued to companies like Google, which provided all of the needed capabilities. Given that ad serving platforms are now embedded at most agencies and publishers, the preferred infrastructure for distribution and tracking is largely in place. The successful widget companies will integrate with and complement these existing systems by providing tracking, analytics and monetization capabilities that are unique to widgets. Consumer-facing widget companies will need these same capabilities internally to establish sustainable business models.

 

The recent monetization partnership announcements by Clearspring and KickApps may be early indicators of the maturation of the widget market and a flurry of economic activity around widgets. Like banners and search before them, and like video and mobile now, widgets are a new form of media that require their own infrastructure and monetization models. The companies that deliver those solutions will be the ones that survive the coming storm of widget activity and avoid being washed away with the widget companies that have not established a firm foundation for their businesses.

Building vertical ad networks to survive

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Vertical ad networks have become all the rage over the past few months. The acquisition of Jumpstart Automotive, the pending financing round for Glam Media and the launch of network after network on the Adify platform have all contributed to rampant investment activity in the vertical ad network market. Within the past two weeks, there have been announcements for new vertical ad networks from Martha Stewart Living Omnimedia (home and lifestyle), Reader’s Digest (food) and BiggerBoat.com (entertainment). But the announcement that signaled the peak of the vertical ad network bubble for me came yesterday from NBC and P&G. If Pets.com was the peak of the e-commerce bubble, does a pets-focused vertical ad network signal the peak of the vertical ad network bubble?      

 

Historically, vertical ad networks have succeeded against traditional, broad ad networks because they aggregated a defined, highly desirable audience that could be purchased by advertisers through a single source. The focus of the networks allowed them to truly understand the audiences of their publishers and generate higher CPMs. Advertisers were provided with ease of administration and creative guidance for developing highly engaging ads. All of this worked well for the ad networks when there was a single one in each of a few high value verticals and when the only alternatives for publishers were either incurring direct selling costs or turning to a broad ad network. But the recent proliferation of vertical ad networks, and various ad networks in general, may have changed the dynamics of the business for the worse.

 

When it comes to changing ad networks, the switching costs for publishers have always been close to zero. In a market in which publishers have many ad networks to choose from, the ad inventory simply goes to the network that delivers the highest effective CPM (or provides the highest revenue guarantee). Furthermore, because ad networks don’t control the inventory that they sell, what is there today could be gone tomorrow. When a publisher reaches a certain volume of page views and unique visitors, it’s typically more economical for the publisher to begin selling ads directly. Over time, the ad network is allocated a smaller, less attractive portion of the publisher’s inventory. Further, advertisers look to buy media at scale. Publisher and inventory churn makes it increasingly difficult for a network to build and maintain the critical mass needed to attract campaign dollars from advertisers. In my view, it’s difficult for ad networks to build defensible, sustainable businesses if they don’t address these issues and do more than just aggregate audiences.   

 

I think that there are several potential strategies for creating a lasting, high-value vertical ad network: proprietary distribution, proprietary targeting, a portfolio of products and exceptional service. Proprietary distribution means either owning a significant portion of the network’s inventory or having exclusive access to it for a lengthy period of time. Google is so successful financially because much of its ad inventory, and hence revenue, is generated by Google.com and because advertisers can’t go anywhere else to buy that prized inventory. Proprietary targeting provides advertisers with a unique ability to select specific members or groups within the target audience for receipt of their ad content. When this targeting proves effective, advertisers are willing to pay significantly higher CPMs, which in turn generates more value for publishers. Advertising.com was acquired by AOL because it had developed a novel methodology for identifying which site visitors would be most receptive to the message of a particular advertiser. A portfolio of products allows a network to deepen the relationships with publishers. Publishers are then faced with having to forego value beyond monetization when considering whether to switch to another network. Web analytics, ad serving, content syndication and site search are all examples of services that publishers need, that they value and that could be provided by networks. Lastly, and potentially most importantly, exceptional service matters greatly in what is inherently a people-driven business. Decisions in the advertising business are often made based on established relationships, personalities and perceived commitment. No ad network can survive over the long term without dedicating itself to putting the customer, whether advertiser or publisher, first.

 

In today’s market, it isn’t enough to attempt to aggregate an attractive audience when your competitors are competing heavily for scale and dollars. My guess is that the majority of vertical ad networks that have launched in the past 12 months will fall by the wayside within the next 18 months because they haven’t established any true, sustainable differentiation. What are your best guesses for which companies will be the Pets.com, eToys and Webvan of the ad network category?

Close encounters of the Facebook Beacon kind

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I had my first experience with Facebook Beacon this past weekend when I purchased movie tickets for “American Gangster” from Fandango.com. Moments after my purchase a notification popped up in the lower right hand corner of my screen (similar to the email notification in Outlook) asking me if I wanted to publish my purchase to my Facebook. I chose the “No thanks” option given that I didn’t want to effectively recommend the movie without having seen it at that time. Later, when I visited Facebook, I had an alert asking me whether I wanted to publish my Fandango “story” for other users to see. I was given the option of publishing my purchase, opting out of publishing that specific purchase or opting out of publishing actions on Fandango altogether.

 

I had three reactions to this rather alien experience, which if shared by other consumers, do not bode well for Facebook’s Social Ads. First, I was irritated that despite having opted out while on Fandango, I was still prompted to publish my purchase upon my next visit to Facebook. Second, although I was given the ability to opt out of having Fandango send purchases to my profile, it was frustrating to see that I will still get notifications whenever I take actions on Fandango itself. Lastly, it was worrisome that my actions on Fandango seemingly will continue to be recorded by Facebook, even though I opted out of publishing them to my profile.

 

Aside from the obvious privacy issues associated with collecting information on my actions without my consent, there are fundamental consumer issues with Beacon which should concern Facebook. The experience of having a Facebook notification appear while on another site will likely be unsettling for most consumers. I will be surprised if the opt in rate for publishing actions at that point in the process is significant enough to generate much volume for Social Ads. If Beacon becomes widely implemented, the sheer number of notifications on Facebook and other sites could become a serious annoyance for consumers, leading to further opt out or even abandonment of Facebook altogether. With only a small number of actions likely to be published to profiles, the potential inventory for Social Ads becomes limited. Any advertiser that elects to target more granularly than a specific action will be addressing audiences that incredibly are small. Advertisers are not interested in actively managing a marketing channel that only reaches a small audience and generates an even smaller number of qualified clicks. Unless Facebook addressed the consumer experience with Beacon, there may be no viable option for advertisers interested in the Facebook audience.

 

Clearly, Facebook intends to iterate on the Beacon model, but I think that when it comes to the consumer experience, the first impression matters a great deal. Unfortunately for Facebook, this close encounter of the third kind with Beacon may leave consumers feeling like their actions have been abducted by aliens rather than used to communicate effectively and privately with their fellow human beings.

I can’t be the only one without a Facebook post!

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There is no shortage of commentary on the $15 billion valuation of Microsoft’s deal with Facebook. As Facebook’s investors have said themselves, Facebook needs to perform incredibly well over the coming years to grow into the valuation. So how exactly is that going to be done?

 

To date, Facebook’s monetization strategy has centered mainly on attempts to sell sponsorships for groups or user profile-based text ads called Flyers. A recent conversation with one of the big agencies revealed the cost associated with sponsoring groups, as measured by people and activity in the group, far surpasses traditional CPMs. Yet, the same agency pointed out that no agency employee is getting promoted without having purchased a sponsored group on Facebook. The promise of building relationships with users that are passionate about brands is a major lure for advertisers. How long can Facebook count on agencies to ignore the poor fundamental economics and effectiveness of sponsored groups? It would seem that the revenue realized from groups this year is a temporary anomaly, unless something fundamentally changes in user behavior.

 

As for Flyers, Facebook doesn’t even provide advertisers with click-through rates for the Basic version, suggesting instead that “the value proposition of Flyers is primarily the high volume and localized exposure of your ad, not click through rates”. Flyers Pro is a cost-per-click product that doesn’t address the needs of brand advertisers or those interested in “engagement”. Further, I’m told that click-through rates are only slightly better than for standard banner ads, yielding only a nominal effective CPM for Facebook. This matches the experience that we had at Google working with social networking sites like Orkut, MySpace and Hi5 on various targeting techniques. The fact is that targeting ads based on user profile information performs only marginally better than contextual targeting or no targeting at all. It’s also incredibly difficult for advertisers to purchase campaigns at scale when segmentation and targeting get too granular. So don’t count on Flyers to be the magic monetization bullet either.

 

Recent reports suggest that we will have a much better idea about the future of advertising on and potentially off of Facebook after its big advertising announcement in New York on November 6th. Let’s hope that the new targeting models and ad formats introduced are dramatically different than what we have seen to date.  Importantly, they need to engage users within the context of the primarily communication-oriented activities that take place on Facebook. The success of advertising on Facebook is important not just for the company, but for all of social media, which now accounts for over 25% of all web page views. Someone is going to crack the social media monetization problem. To live up to its expectations and valuation, Facebook better hope that it has devised the scalable, effective social media monetization solution that has so far eluded its competitors and its recent investor.

Setting free the Wall Street Journal Online

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The entire online community is anxiously waiting for Rupert Murdoch to open the gates at the Wall Street Journal Online and provide free access to its content. At yesterday’s Web 2.0 Summit in San Francisco, he outlined his plans for the property, which included expanding national, international and cultural content to compete more effectively against newspapers such as The New York Times. As a long time subscriber who appreciates the both the quality and the breadth of the journalism, I am eager to see the Journal make the operational and economic leap to free content and execute against this vision.

 

I got a recent view into some of their plans via an online survey from the WSJ Online. What surprised me most about the survey was that the focus was on identifying packages of content and services for which I would be willing to pay (unfortunately, I didn’t think quickly enough to capture screenshots so this is mostly from memory). For the most part, the services mentioned were identical to many services that I can already get online for free, such as Digg, Techmeme and Google Alerts. The Journal’s differentiating assets are its journalists and its reputation/brand. Why try to use those assets to charge for content and services similar to what is available for free at established online properties? Given the decision to open up content, shouldn’t the goal be to provide increasing amounts of free content and drive as much traffic as possible to increase advertising inventory? Wouldn’t the WSJ be better off encouraging its loyal reader community to participate in conversations centered on WSJ authored or identified content, rather than charge it for accessing additional content? The New York Times already demonstrated through TimesSelect that only a small percentage of readers are willing to pay for additional content. Further, recent data suggests that opening up NYT content has led to enough page view growth to make up for lost TimesSelect subscription revenue.

 

I’m a firm believer in the advertising model for online newspaper content, so I’m eager to see the impact on WSJ.com traffic and advertising growth once content is indexed by search engines and increasingly linked to by blogs. The WSJ should free its content rather than spend time identifying ways to protect or generate subscription revenue through paid services that don’t leverage the Journal’s core journalistic strengths and loyal readership. If the new content and services are valuable, readers will visit the site and advertising revenue will follow. If the new products don’t strike a chord, no one would have paid for them anyway. Will WSJ.com make the leap headfirst or instead tumble towards the advertising-based model that is clearly the present and future of online content?

Miners vs. picks and shovels: a contrarian venture capital investing approach?

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Earlier this week, The New York Times published an article about the “fuzzy math” driving the funding of companies in Silicon Valley. In talking to my peers in the investment community, there seems to be consensus that valuations are regularly disconnected from the reality of many companies. That said, the exuberance seems to be continuing and is at its peak amongst consumer-facing media companies.

 

At Battery, our digital media investing is focused on two categories of companies, of which the first is consumer-facing media properties that build, aggregate and monetize audiences in differentiated ways. The second category is companies that provide the tools and technologies to support the first category, including everything from ad networks to targeting and optimization software to video delivery infrastructure. Increasingly, we find ourselves spending more time on the second category while largely avoiding the first. Broadly speaking, this seems to be a fairly contrarian investing approach.

 

There is no shortage of speculative, high-priced investments being made in hopes of finding the next YouTube or MySpace or Photobucket. My perspective is that the risk/reward tradeoff associated with investing in many of these companies does not compute. I’d much rather invest in the companies that are arming all of the competitors in the consumer media market (the picks and shovels approach) than bet on identifying the one that is going to be the next big hit (trying to find the goldmine). There is no doubt that incredible amounts of equity value can be created by leading consumer media companies, as evidenced by the aforementioned companies. However, neither I nor any investors I have spoken to have found a crystal ball that tells us which consumer web properties are going to be the next ones to resonate with consumers and spread virally. In addition, there is intense competition for consumer attention on the web, making it an expensive battle to fight. Lastly, it seems that the equity value that has been created by consumer web properties in recent memory has been independent of demonstrated economic success.

 

As we learned in earlier this decade, valuing companies primarily on audience-based metrics is not a sustainable approach. At the same time, we have also seen that companies that build fundamentally sound businesses by providing value to and extracting value from paying customers can also create tremendous amounts of equity value. As an investor and an entrepreneur, do you have a better shot at creating the single winner in the online video destination market (i.e., Youtube) or building one of several successful companies in the online ad serving market (i.e., DoubleClick, Aquantive, 24/7 Real Media, Right Media)? Which businesses are easier to predict and monetize?

 

I think that chasing the next Youtube also puts investors at odds with their entrepreneurs. Searching for a single big win forces investors to take an aggressive approach to managing their portfolio of “bets”. Approaches to financing and exits can diverge dramatically when an investor is swinging for the fences at the potential expense of the entrepreneur. While the economic rewards of investing in picks and shovels may not be as great (although this can be argued), the satisfaction of building a sustainable business in partnership with entrepreneurs is well worth the cost associated with watching this current “gold rush” from the sidelines.      

A few more nails in the traditional music industry coffin

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The entire music world is abuzz with the launch of Radiohead’s “pay what you want” download of their new album, “In Rainbows”. Nine Inch Nails, Oasis, Jamiroquai and Madonna have also announced their own intentions to divorce themselves from the stranglehold of the major music labels. Clearly, the time when major artists simply complained about their indentured servitude to the labels has ended and their experiments in freeing themselves have begun.

 

In the pre-digital days, the music labels played a critical role in the industry. At a high level, the labels were responsible for identifying talent, financing production and marketing music, while retail outlets sold it to consumers. Artists were beholden to the labels and retailers, and consequently, earned only a few pennies for every album sold. Consumers were beholden to the retail outlets given that they controlled access to the physical media of LPs, cassettes and CDs. The digital world has changed all of these dynamics. Artists can choose to assume all of the responsibilities of the labels because the cost of production has decreased dramatically and cheap, digital distribution is available over the Internet. Consumers have ready access to inexpensive or free digital music at thousands of places on the web. As has happened in many other industries, the digital age has made it possible to remove the middleman from the relationship between the producer of the good and the consumer of the good.

 

Artists have long known that album sales are only one piece of the revenue puzzle. Merchandise, touring and publishing are critical ways in which to increase revenue and make music a potentially lucrative business. Consequently, the move away from the labels is about more than just capturing a larger share of album revenue. What’s most striking about the shift is that artists have come to the realization that being closer to their listeners gives them more control over their economic fates. Even if someone who downloads Radiohead’s new album chooses to pay nothing, what is it worth to Radiohead to have that listener’s mailing address, email address and mobile phone number? How many different ways can Radiohead touch me as a fan and encourage me to spend, now that they have that information? The most exciting part of what’s happening in the music industry is the ability for artists to have an ongoing dialogue with both their avid and casual fans.

 

And it’s not just possible for the big name artists to cut ties with the labels. Huge entities like MySpace and new upstart companies such as Sellaband, Amie Street and Magnatune are all making it possible for emerging and independent artists to make a business out of their passion for music. 

 

As a consumer and an investor (Battery is an investor in Ruckus), I’m thrilled to see the new experiments in music creation and distribution. However, it remains shocking that music industry’s only responses to the emergence of digital music and the Internet have been litigation and digital rights management. Isn’t it time that the music industry stopped swimming against the tide and embraced new business models before they are cut out of the value chain altogether? How is it possible that the labels haven’t learned anything from the prior transitions of vinyl to cassette to CD to Napster? The recent announcements from major artists have to be the final wake up calls for the labels, or else the final nails in their coffins.