THOUGHT (aka Centric's Blog)

A couple of years ago, Silicon Valley techies created a whole new world.

Like the old New World, explorers quickly appeared. Some took plots of land and settled them; some built homes like they had in the Old World; some, more ambitious, built entire cities. Commerce came, and with it more settlers. Writers and entertainers moved in. And as the population grew, banks and other big business interests began paying attention.

This world’s currency has had its ups and downs, but if you invested in it a few weeks ago, you’d be a happy person; its value is climbing steeply against the dollar as I write this.

The catch? This world exists entirely in virtuality. It’s called Second Life.

Second Life isn’t a game, but a resident-built virtual community. Every piece of land was bought and maintained by real people. Every structure you see was built by real participants. And every wild costume you see has a designer, who was probably paid handsomely for their services.

And Second Life is growing like mad. When I joined in April, there were about 130,000 residents. July was 400,000. Today is pushing 600,000.

My prediction: this is the MySpace of the next five years. And much, much more. Consider this:

• Major brands are moving in: Amazon, Adidas, Scion, and more
• A PR firm has moved in
• There are people making their living entirely within this world—already
• Some of the most successful building design firms are architects in real life
• There’s a startup exploring ways to make cubicle-work more interesting by doing it in virtuality

And can you imagine a better place to host virtual business meetings, to build virtual factories, to experiment with architecture before committing in real life, to get your start in programming and 3D modeling, to show monumental art projects, to re-create real-world terrain for big project proposals, or to serve as a training ground for commerce and interaction in the real world? The possibilities are mind-blowing already.

And consider the future. Someone just has to work out the body language and voice communications problem, and we’re looking at something that will change the world.

So what are we doing about it? Our office in Second Life will be open before the end of the year. We have some client work already in process. And some really, really exciting things we can’t talk about yet. But we’ll keep you posted.

So go ahead. Jump in. Explore. Build things. Meet people. And think, “Wow, this is a whole new world.”

Those of you who follow my other blog may have already read about the MediaPool, the all-media portal with a popularity-based revenue-sharing model that I’m betting on becoming the dominant way content producers will make money in the Brave New Age ‘Tis A-Brewin.

The MediaPool idea was the result of conversations with some high-powered authors and entertainment industry pundits who believe the de facto death of copyright is the end of us all. In a world where organizations cannot control distribution, there will be no way to get the funding to produce the next blockbusters, they say. The entertainment industry will be killed by billions of end-users, furiously file-sharing the last of the greats. The only hope is that the big corporations might step in to fund entertainment that serves their needs, like a medieval patronage model.

But they’re wrong. We’re heading towards a model where nobody will be able to control distribution, true. This will mean fundamental changes in the way we view copyright, true. But it doesn’t mean the end of the world. All you have to do is run the numbers.

In the United States, the movie, music, publishing and gaming industries are, combined, about $100B entity. Given the amount people are willing to spend every month on cable television, it’s entirely possible that all of this revenue can be replaced by a subscription-based, all-media service. Share the revenue based on popularity, retain a percentage for operation of this all-media network, and it’s possible the individual content creators would do even better than they do today.

But–here’s where it gets really interesting–the advertising biz in the US is about a $200B industry. Thats TWO TIMES the size of the combined movie, music, publishing, and gaming industries. So the question becomes: does this MediaPool need subscription money at all? Or can the advertising industry carry the entire new content-and-distribution model on its back?

It’s entirely possible.

Consider Revver, where content producers are paid for every view of their content. Micro-produced shows could turn a healthy profit, especially when tied to affiliate sales and Google AdSense network ads. In this model, there’s no need for monolithic control of content; the creators are rewarded in direct proportion to popularity.

There’s no reason that user-generated content can’t evolve into microproduction, and microproduction evolve into a larger-scale open-source production environment, where people come together to create content to “fish” this huge potential pool of revenue.

This is the MediaPool. This is the new model. Or at least one of them.

If the agency.com experiment tells us one thing, it’s that the day of the agency might be over.

Consider this: based on number of views, the product of these brilliant creative minds is only about 1/500th as compelling as a nerdy white guy dancing (Evolution of Dance), 1/130th as interesting as a Japanese toilet prank (in unsubbed Japanese, no less), and 1/36th as effective as the Volkswagen Unpimp Your Ride ads (true brilliance in what many consider to be a “dead” medium.)

They’re losing to people running through malls, highlights of the latest Sony tech gadgets, reporters having a bad day at the office, the Japanese national anthem, college pranks. Hell, a girl talking about her lazy eye got 600,000 views in the last 2 weeks.

So why didn’t they hire her? Why didn’t they think of working their connections for a b- or z-list celeb who isn’t afraid to make fun of themselves (hello, Hoff)? Why didn’t they think of wrapping it all up in a nice big shiny story-wrapper?

To someone on the outside, it may seem like we’re moving into a new era, where agencies aren’t The Sole Repository of All That Is Creative and The Keepers of the Edgy.

And you know, they might be right.

There are times when I’ve seen more creativity in SomethingAwful’s Photoshop Phridays than I’ve seen in agency work. More thought in Fark.com than in agency concept and strategy. And accessing these creative thinkers is a breeze. In fact, there are whole sites that facilitate this phenomenon.

So is the era of the agency over? Should companies fire us all and hire a bunch of geeky college kids instead? Should they drop their Britney Spears contract and hire the Evolution of Dance guy? Should they be thinking about revenue models that encourage the best and brightest of the new content creators to jump into their own MediaPool? Should they hand cameras to several thousand of their best customers and announce the age of “reality advertising?”

Probably.

Or at least they should think about it. With most content online being user-generated, the traditional models of branding and “share of voice” are dead. The closer they are to their customers, the better they’re going to do.

“So, wait a minute!” you say. “You’re cutting your own throat!”

Not at all. The model has changed, and we’re doing everything we can to stay in front of it. We’re helping our clients become their own advertainment companies. We’re modeling the ways viral campaigns propagate online and building campaigns around it. We’re putting together openly available networks and applications to create new ways of marketing. We’re theorizing (and helping to build) entirely new revenue models, such as microproduction and the MediaPool. We’re looking for ways to fit our clients into a new world where we have a de facto reputation economy and near-complete transparency between corporation and consumer. And we’re coming up with some really neat ideas. Not All the Ideas in the Universe, or All That Be Great and Cool, but some. A few. Enough.

And, over the next weeks and months, we’ll be sharing them with you.

There’s a great moment in Citizen Kane where Charles Foster Kane’s money manager tells him that he’s blowing too much of his cash on his newspaper empire. Kane replies, “You’re right, I did lose a million dollars last year. I expect to lose a million dollars this year. I expect to lose a million dollars next year. You know, Mr. Thatcher, at the rate of a million dollars a year, I’ll have to close this place in… 60 years.”

I kept thinking about that after reading this article about the return of private newspaper owners. As big media companies are selling off their less profitable limbs, wealty people are buying back their daily rags. This, I think, is a great idea, since nobody knows the local market like the locals. But then I read this and realized how doomed this enterprise is:

[John Brian] Tierney is betting the ranch that he can make the turnaround [of the Philadelphia Inquirer] work, and plans to invest an additional $60 million over the next three years in various improvements including more color printing, online features, marketing programs and implementing more creative ways of selling and printing ads.

Unless Tierney has something really brilliant in mind, he’d better have more money to burn than Charles Foster Kane. Or have the kinds of advertisers that only show up in the backs of alt-weeklies, ’cause newspapers, as much as I love ‘em, are dead in their current form

What’s the problem? Competition for attention, same as always. Or, rather, ways in which to spend that attention. (more…)

Stop me if you’ve heard this already:

On July 31st, Agency.com launched a video on YouTube (you should be able to find it pretty easily). It was supposed to be a five-minute Meet The Creative Team short that was part of its pitch to become Subway’s agency of record. What we got instead was nine minutes of…well, see the video then come on back.

Well? What did you think? Was it funny? Was it memorable? Did you want to press Share and send this around to your friends? Or did you hit the industry blogs and let loose with the fury that comes from wasting nine minutes of your life? Or did you join in the chorus that says it was brilliant and that Agency.com has won the day, pointing out the way to success on Teh Intarweb?

Oscar Wilde pointed out that the only thing worse than being talked about is not being talked about. And conventional marketing wisdom always says there’s no such thing as bad PR. I think both Oscar and the ol’ CW are both dead wrong in the case of Agency.com because they broke these three basic tenants of good online video:

1) Be brief.
2) Be memorable.
3) Be ready.

(more…)

You can study a trend, or you can dive in.

We chose to dive.

In order to better understand the phenomena of user-generated media, video podcasting, microproduction, user-rated news, and social network propagation, Centric has become a willing participant in Wineass, or Wine Reviews . . . Without the Bull. Fair warning: this site is slanted towards a college-age and young professional audience, and it contains profanity and vulgar language.

Over the next weeks, months, and years, we’ll generate real intelligence about what it takes to produce short, iPod-friendly shows, how they propagate through various networks, what people respond to, and where the revenue can come from.

We’ll keep you posted on the results!

Oh, and watch for other interesting experiments along these lines.