The payphone. Despite how connected our world has gotten in the last decade or so, the majority of the 11,000 payphones in NYC stem from a 1999 contract. Due to expire and renew in October 2014, the city’s Department of Information Technology and Telecommunications (DoITT) has been actively figuring out how and what type of modern solution it wants to replace roughly all 11,000 of them with. You’ve heard about a small number being retrofitted with WiFi hotspots and SmartScreen information portals, but those have essentially been tests.
Last night at Quirky’s offices, the city picked out finalists for five categories that could possibly help “Reinvent Payphones” here in the Big Apple: “connectivity, creativity, visual design, functionality and community impact.” Well over 120 entries were submitted since this design challenge kicked off last December at the NY Tech Meetup, with a total of 11 semifinalists having gotten the chance to present their ideas last night for judging. As it turns out, there was a tie for community impact, leaving six finalists overall. Better yet, out of those six, the public can take to Facebook from now until March 14th to select a “popular vote” winner. Curious for more insight? We got to chat with the city’s Director of External Affairs at the Department of Information, Nicholas Sbordone, about the project and he talked about how it went down and what it means for the future of payphones in NYC.
Filed under: Misc
When we think about the distribution industry being disrupted, we tend to think about music and movies, whose physical media and vast shipment infrastructure have been rendered mostly obsolete over the last decade. To a lesser extent, we hear about print, and the effect of e-readers and web consumption on books and magazines. No one is making the change particularly gracefully, and the same can be said of the textbook business, which does millions of dollars of business every year selling incredibly expensive items to students — who likely consider them anachronisms.
Rice University, which has been pushing alternative distribution mechanisms for scholarly publications for years, has announced a new initiative, by which they hope to publish free, high-quality textbooks in core subjects like physics and biology via a non-profit publisher called OpenStax College. It’s the polar opposite of Apple’s iBooks textbooks, which, while they too help drag this dusty industry into the present, amount more to a new sales vector for the publishers than competition.
Rice and OpenStax aren’t the first people to propose open-source or free textbooks. There are collections here and there, like Flat World Knowledge and Apple’s iTunes U — but they’re decidedly short on the type of books a freshman might have to buy for their year of survey courses: Biology 1, Physics 1, Sociology 1, Psychology 1. And 11 Learning has a similar idea of collaboration producing a book, but their creation model may not be economically feasible.
And of course there are the many companies that want to remove textbooks from the equation entirely. Setting up textbook platforms on new devices like Kno and Inkling, making an environment for meta-curricular activities and non-traditional learning like Khan Academy, or virtualizing the whole education experience, something with which many universities are tinkering.
But textbooks are still big business, and their utility in the education system is difficult to argue with right now. So OpenStax splits the difference: fueled by grant money from a number of private foundations (i.e. not government grants), they’re putting together full-on textbooks, peer-reviewed, professionally laid out, and all that. These textbooks will be provided for free in file form. But supplementary materials — quizzes, videos, presentations, and the like, presumably — cost money.
It would be petty to call this a bait and switch, since the bulk of the material is being provided for free. And a savvy professor or TA can scrape quite a few supplementary materials from the web already, thanks to those post-textbook services already mentioned. Providing the meat for free and the potatoes for a price is perfectly reasonable.
What remains to be seen is the quality of the textbooks. So far OpenStax has signed up “in the low tens” of colleged and universities to use the books. Institutions probably are waiting to see how the next year or so plays out: everything is in flux and to commit to one platform over another when the true costs and benefits are still unclear would be a bad move.
OpenStax’s first textbooks, for physics and sociology, will be coming in March, with others following later in the year. A strange time to make a debut, in a way, as the school year is well underway and many intro courses won’t be offered. But it will give time for the creaking machinery of academia to notice, acknowledge, examine, and judge the OpenStax offering. It may be that they can demonstrate their agility in fixing, improving, and expanding the content on the fly, which could either impress or terrify nodding faculty members who use the same text for a decade at a time.
Of course, there are different types of record labels. A major label, such as EMI, has a lot more money to throw around and can make more promises, but contracts with majors can end up with artists further in the hole due to these deep pockets. As Bonacci told me, “There’s more risk. There’s more fuel to propel you forward up front, but that’s no guarantee.” That same fuel could blow up in your face. We’ve seen how bands who don’t hit it big can end up “owing” their major label hundreds of thousands of dollars, after all.
Indie labels (true indie labels, not boutiques under the umbrella of a major) have less resources and therefore will give bands less to recoup. Indies also will often offer the artist a chance to interact with top brass, something that is almost never done at a major. Indies are presumably owned by passionate music fans rather than gigantic multinational holding companies, which is important when a band needs to know that a label is 100% behind them, according to RRR’s Bonacci.
And signing to an indie instantly connects you to that labels fans, Bonacci says. “Nobody really cares about Sony records or Universal. You don’t seek out stuff that’s being released on Universal as a fan. Independent labels, be it Domino or SubPop or whatever, those labels have fans.”
Indie labels seem to have a better chance of adapting and surviving in tumultuous times. Since for the most part they’re private companies with few employees, they’re able to make drastic changes in their business models much more quickly than major labels. But that doesn’t mean they’ll all survive; famed indie label Touch and Go closed down last year, and in addition to repping bands such as TV on the Radio, Ted Leo and the Pharmacists, !!! and Blonde Redhead, they also handled distribution for other venerable indies such as Drag City, Kill Rock Stars, Jade Tree and Merge. It was a huge blow to the indie label scene.
Getting a Cut of Everything
The way labels are moving to stay alive is by becoming involved in the places that bands still make money, such as touring and merchandising. Traditionally, labels only made money off records sold, while any profits made from t-shirts or posters sold on the road went to the band. After all, if the label just owns the master recordings, it can only make money off the sale of said recordings, not any ancillary profits that come from things like touring.
But now some labels are pushing what are called 360 deals, which involve them in virtually everything an artist does. One of the most famous 360 deals was EMI’s 2002 deal with Robbie Williams, which was worth a whopping £80 million, giving EMI a piece of basically everything that Williams touched. That didn’t go so well, with Williams threatening to withhold albums from the label and trying to get out of his contract. But last week, according to UK trade paper Music Week, Williams’ manager Tim Clark publicly came out in support of the embattled label, saying, “My own view is Citigroup would be mad at this stage not to keep EMI on as a going concern. It just would be bonkers.”
In any case, 360 deals and general diversification are what big labels such as EMI are looking to move into, according to Billboard’s Glenn Peoples. “They’re definitely diversifying and they’re actually getting into agencies, artist management, concert promotion. There’s really no area that the four majors are not pursuing right now.”
These deals make the most sense for huge acts with lots of opportunities for branding and licensing. You’ve seen it in action here on Giz, in fact, with Dr. Dre’s Beats headphones and Lady Gaga’s new Creative Director “job” at Polaroid. Both those acts are signed to Interscope, a sub-label of Universal that’s clearly pushing artists towards these new revenue streams. But many smaller acts are still reluctant to give a label a slice of the entire pie with such a wide-reaching deal.
The fact of the matter is that bands do still need someone working for them, 360 deal or not. For some bands, just having a small team of a dedicated manager, publicist and lawyer who can handle the nitty-gritty of online sales, tour organization, merchandising and marketing will be enough for them. But many can still benefit from the huge networks that labels have with their contacts in every facet of the industry. Sure, you can print your own t-shirts, but a label with contacts with clothing manufacturers, stores and distributors can make that process a lot easier. And just how much of this work do you want to do yourself?
360 deals don’t make sense for all bands; Ra Ra Riot manager Roth isn’t sold on them. “A lot of labels are also now branching into management because the manager is involved with everything going on with a band. Labels will try to be like a full-service company to a band, but I don’t think it’ll be very popular.” He worries that bands will be setting themselves up to be taken advantage of even more by labels if they give up merchandising and touring profits to them. Having an independent team working for a band and playing middleman between them in the label makes sure there’s someone deeply involved in “business stuff” that still has their best interests at heart.
And it makes sense that a manager would be wary of labels moving into their territory, but there’s still a distinction between label and manager with these deals. “For example, a new artist signed to a multi-rights deal may use the major label’s merchandise company and e-commerce division in addition to its publishing and recorded music companies,” Peoples says. “In the past, a manager could pick and choose which merch, e-commerce, publishing and record companies it wanted to work with. Now they’re more likely to be under the same umbrella.”
Sometimes, a band’s management team can replace what a label does entirely. Just yesterday, OK Go announced it was splitting with EMI, whom they didn’t have the greatest relationship with, to strike out on their own with a new company called Paracadute. Paracadute is basically OK Go’s own team to handle management, promotion and distribution of their records. “The things that a major has to offer above and beyond anybody else are the things that OK Go really didn’t need so much,” Peoples says. “And that’s radio promotion and access to brick and mortar retail. If you’re going to create nearly all of your consumer awareness through cheaply made YouTube videos, you don’t need this big promotional and distribution system behind you.”
But not all bands can do what OK Go has done. The digital world looks a lot more accessible when only viewed through the lens of rock acts. “If you’re an R&B act, if you’re a straight up pop act, a country act, you’re going to need radio and you’re going to need brick and mortar retail, and that’s not going to change anytime soon. Things are changing definitely for alternative rock, rock and indie, but some genres sell a lot better in digital than other genres.”
But clearly, the money that’s to be made in music is no longer just in album sales. And bands seem to be presented with a choice: they can either allow labels to become more involved in everything that they do, and give up money that used to go exclusively to them in the process, or strike out on their own. Either way, they’ll entering a landscape where getting their song on Gossip Girl for 40 seconds is more important than any amount of FM radio play, where getting a music video posted to Stereogum is more important than getting it on MTV and where you make more money touring behind an album than selling that same album.
And in order to prove to artists that signing with a label is a better idea than going out on your own, they’ll need to make big changes; bigger than they’ve made so far. “It might be how an addict ends up turning his life around,” Peoples says. “He’s gotta hit rock bottom. And I dunno if the record industry has hit rock bottom yet, but maybe that’s what’ll need to happen for there to be really big change.”
But at the end of the day, the saving grace of record labels might be a lot more basic than who gets what percentage of merchandise or who deals with distribution. The big question is this: do bands really want to try to make it completely on their own? As Bonacci says, “I don’t necessarily want to have all that nitty-gritty stuff to worry about. I’d rather just worry about making music. I don’t want to worry about numbers or distribution or marketing or publicity or anything like that. That sounds like a desk job. I used to have a desk job, that’s why I’m playing music. Now look at me. I sleep on couches.”
Note that the first graph shows research and development as a percentage of revenue (to scale the spending by company, since revenues differ so greatly). This next graphic can help you conceptualize the revenue and R&D gap:
A Few Interesting Notes:
• Now, Microsoft spends about 17% of their revenue on R&D. Sony spends about 8%. Apple spends less than 4%.
• If you were to break down the amount of R&D that goes purely to physical (non-software) products sold by Apple and Sony, Sony would spend about $11.5 million per product while Apple would spend about $78.5 million per product. (Of course, that’s rolling the cost OS X and iPhone OS development into Macs and the iPhone, which could be seen as inflating their per product spending.)
• Microsoft just spends a lot of money in R&D, period—about $9 billion last year in generalized research (that often doesn’t lead to specific products). In terms of percentage growth over the last decade, Apple’s R&D has grown the most (nearly quadrupled) while Sony’s has grown the least (not quite doubled).
In light of these bare numbers, is it any surprise that Sony is struggling the most to capture the hearts and minds of a public hungry for gadgets?
Apple Public Relations
Apple Investor Relations
Apple Insider 2004
Apple Insider 2005
Apple Insider 2006
Apple Insider 2008
Microsoft Investor Relations
Sony Investor Relations
Research by David Chaid
Dr. Augustine Fou is Digital Consigliere to marketing executives, advising them on digital strategy and Unified Marketing(tm). Dr Fou has over 17 years of in-the-trenches, hands-on experience, which enables him to provide objective, in-depth assessments of their current marketing programs and recommendations for improving business impact and ROI using digital insights.
- Netflix vs Blockbuster - Perfect example of an industry replaced by a more efficient version of itself
- Coke vs Pepsi vs Dr Pepper
- Marketing Costs Normalized to CPM Basis for Comparison
- The Top Endorsement Earners In Each Sport
- 3G calling, no registration, and totally free
- AOL's Plan To Steal TV Ad Dollars Is Totally Working
- Groupon launches Breadcrumb iPad app, vows to not be a typical POS
- Flash Sale Sites Have A Social Media Problem
- HP Mini 311 Nvidia ION Netbook Hackintosh'ed
- #SESNY: Toward a Performance Mindset for All Advertising
- Tips for Marketers Selecting a Digital Agency
- Context Is Not King or Queen; It's Just Necessary
- 2013 New Year's Digital Marketing Resolutions
- The Good, Bad, and Ugly of Online Campaign Ratings and eGRPs
- Why You Should Banish the Net Promoter Score Immediately
- Digital Strategy To-MAY-to vs. To-MAH-to
- The Agency-Client Relationship is Forever Changed
- Targeting vs. Privacy - Who Will Win?
- Digital + Traditional = Unified Marketing
- May 2013 (56)
- April 2013 (70)
- March 2013 (114)
- February 2013 (89)
- January 2013 (136)
- December 2012 (96)
- November 2012 (130)
- October 2012 (147)
- September 2012 (94)
- August 2012 (92)
- July 2012 (112)
- June 2012 (71)
- May 2012 (82)
- April 2012 (80)
- March 2012 (122)
- February 2012 (114)
- January 2012 (129)
- December 2011 (60)
- November 2011 (54)
- October 2011 (29)
- September 2011 (17)
- August 2011 (30)
- July 2011 (18)
- June 2011 (19)
- May 2011 (23)
- April 2011 (23)
- March 2011 (52)
- February 2011 (69)
- January 2011 (108)
- December 2010 (82)
- November 2010 (67)
- October 2010 (68)
- September 2010 (44)
- August 2010 (101)
- July 2010 (61)
- June 2010 (28)
- May 2010 (28)
- April 2010 (26)
- March 2010 (33)
- February 2010 (21)
- January 2010 (12)
- December 2009 (4)
- November 2009 (2)
- October 2009 (14)
- September 2009 (6)
- August 2009 (19)
- July 2009 (34)
- June 2009 (11)
- May 2009 (4)
- April 2009 (6)
- March 2009 (13)
- February 2009 (32)
- January 2009 (25)
- December 2008 (1)
- October 2008 (1)
- June 2008 (1)
- November 2007 (1)