Tuesday, January 14, 2014

While You Were Out, The Signal Economy Trumped The Content Industry. Again.

I am sure that there are some folks who won't like to hear that they're missing the boat yet again as they start a new year. I am sure that there are some folks who are especially tired of hearing that Google is the one who jumped in to the boat before they even had a clue that there was a boat worth jumping into. I am sure that there are some people who are very tired of hearing that the content industry is being redefined by +The Second Web, the confluence of the Internet and trillions of sensors and Web-based analytics that are transforming everyday, humdrum objects and processes into vital contributors to a vastly expanded world of personalized and global services.

Well, I am sorry for those people who are tired of hearing this, because they're going to hear a lot more about it in the months and years ahead. It's called The Signal Economy, the huge boost in economic opportunity emerging from the reinvention of many basic human and machine processes based on this confluence of signals from a vastly expanded definition of what the Web touches and our vastly expanded ability to respond to those signals with valuable products and services. Research by Cisco indicates that there is a $14 trillion potential for The Signal Economy, so it's time for the content industry to understand more clearly that "the Internet of things" is not about selling gadgets, it's about redefining what people pay for to have a good life.

And yes, Google gets it, and, chances are, your company doesn't. Chances are, your company is scratching its head as to how to apply technologies like semantic processing to the same old intellectual property that you've been selling for decades or centuries. It probably didn't even make its way onto any of the slides that executives actually hang around for in a management presentation that The Signal Economy just blew away your definition of the market pie of the content industry yet again. Two decades ago, the Web redefined the market pie for the content industry by saying that anyone could publish media to a global audience for next to nothing. Now, The Second Web challenges us with a market pie that encompasses not just computers but billions of mobile devices and practically every nook and cranny of the world that can have a Web-connected sensor applied to it and create more contextually aware content than anyone can imagine easily - but that semantically-aware Web services can imagine.

But here's the thing: this is not just a Silicon Valley story. Major industrial players like +General Motors and +Ford Motor Company get it. Major medical services get it. Consumer goods companies get it. And, as always, financial institutions get it - the same financial institutions that revolutionized securities markets by turning humdrum stock tickers, databases, Web sites and news feeds into input for enormously powerful financial analysis engines which created and exploited huge economic opportunities before a human could blink, much less think about them. Anything that the Web touches becomes a platform for signal-driven services, and in The Signal Economy, anything is now becoming everything.

Marketing in The Signal Economy is no longer waiting for your intellectual property to flow through a pipe to someone's desk or mobile device. The Signal Economy wants three-dimensional insights based on what's happening in the real world now, and it wants to find the most valuable answers to marketing and social problems before others even get around to testing a hypothesis about what might be worth doing. And it's starting to happen now.

So it's in this light that I ask content executives to look at why Google would spend more that $3 billion on +Nest, a funky little company that sells $100 Web-aware thermostats and smoke detectors that can be controlled by their mobile apps and that feed analytics on how to use them better. This is not about gadgets, but about understanding what's happening in people's lives in more intimate detail than ever before. Nest devices are sensor-equipped computers on a chip, and they work in part by understanding people's movements in and out of rooms. In an era in which the media industry can barely figure out how to get a TV to respond to who's sitting in front of a screen, Nest is helping services to bloom based on sensors in all parts of the home. Nest equipment also now talks to you, as well: if you have a problem with smoke or carbon monoxide in one part of the house, a Nest gadget in another room where you're located will tell you what's happening in which room.

So what you have in Nest is a technology based on emerging home appliance networking standards that can talk to people, the Web and other appliances. Today, we have Google Now, a digital concierge service that pushes information, reminders and suggestions proactively to Google users on mobile devices based on predictive analytics. You looked up a place on Google Maps, for example, or you traveled there recently to meet people who communicated with you through other channels; Google Now pushes up the travel time to that destination for you at the times when it thinks that you may be ready to go there again. And so on. Now, multiply that kind of concept by the size of the market pie defined by talking, sensing, Web-aware gizmos in every room in your home.

If you thought that marketing was about print or Web page inventory, you just lost, the same way that financial institutions and information services lost when they couldn't manage the transition to a redefined pie of relevant signal for finance. If you thought that market research was about pulling together a statistically significant sample to represent a targeted population, you just lost; The Signal Economy just beat you to the punch and ate your bacon by filling your customers' needs intuitively with better and more immediate targeting of what they needed, often inventing it on the fly instead of mass-marketing it. If you thought that business information was about selling database subscriptions, you just lost, because business information in The Signal Economy is about identifying and responding to emerging patterns in complex markets and research environments before your customers even had a chance to look at information in your database.

What do we make of the content industry in The Signal Economy? Well, before I get into the usual dinosaur lecture, I know that some of the more advanced companies in the content industry are aware of the emergence of The Signal Economy and wrestling to come up with better strategies to respond to it. But they're a minority, to be sure. You can extend your intellectual property rights for life plus 180 years, if you want, but ultimately the world has its own right to its own data. What people pay for are actionable insights that apply to specific valuable contexts. How are your services evolving from "workflow" or other sorts of basic productivity tools into tools that look at massive amounts of information and come up with automated, actionable insights faster and more precisely than any one else, regardless of whether the result is in a nice, glossy product package? How are you using your subject matter experts not to push out "Too long, didn't read" blocks of prose when they could be collaborating in the analysis of their fields of expertise with as much immediate awareness and insight into what's happening in the world today, both inside and outside "the box?"

And, of course, how much are you willing to redefine what your market is in the context of The Signal Economy? Maybe you aren't - maybe you don't have the capital, staff or desire to reinvent your company for this new era in information services value. But at minimum you have to be able to redefine your marketing channels in the context of The Signal Economy. The same-old licensing deals will buy you fractions of potential growth when smart alliances with signal giants might help your content to get in far more valuable contexts than a banner or sidebar ad could ever manage. You resist such redefinitions of your market pie at your own peril. Every moment that you wait to try something new is a moment that someone else meets needs in The Signal Economy that will draw signal away from you and your content.

So yes, it's just a bunch of thermostats and fire detectors that Google bought, right? Not. Time to jump in the boat - or at least to start looking for the dock. Let us know if we can help.
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