Much like print and tv are becoming marketing vehicles to drive people online, the domain name for an online media service is becoming sort of an abstract utility or maybe just a brand address for media services rather than the real estate upon which the core activity occurs. The service a media vehicle provides matters more than the vehicle itself.

And this isn’t only happening in the content space. Every aspect of the media business is pointing to a services model. Here’s what the key pieces look like, in my mind:

1. Data is infinitely distributable. All data…not just editorialized words. The RSS standard opened the doors for vast distribution networks, and services like Yahoo! Pipes and Feedburner figured out how to make the distribution methods meaningful. There’s an endless supply of microchunks flying around the Internet, most of them unattached to any domain or URL except as a handy reference point.
2. Data can be visualized in meaningful ways. AJAX and the many freely available widget kits and javascript libraries such as YUI are rendering these microchunks in the right place at the right time in the right way for people which, again, is not always on a web site. The Internet user experience is no longer held back by the limitations of HTML and the packaging a site owner predefines for their media.
3. Media is created by everyone. Whether written in long form by a reporter or researcher, captured as video by a mobile phone owner, or simply clicked by a casual web site visitor, expressions of interest are shared, measured and interpreted in many different ways. This results in a seemingly neverending stream of media flowing in and out of every corner of the digital universe.
4. Distribution technologies are increasingly efficient and inexpensive. Personal media services like instant messaging, blog tools, podcasting and collaborative media services like Wikipedia, del.icio.us, Flickr, etc. are easy to use and often free. Web services and open source software enable people and companies to scale distribution and production functionality for large audiences or groups of users with negligeable costs. Most importantly, these tools enable people to be influential without ever owning a domain.
5. The distance between buyer and seller is shrinking. There are more and more ways for buyers to find sellers and sellers to find buyers from search engines to recommendation tools to coupon rss feeds, etc. Distributed ad markets like Right Media are enabling marketers and service providers to negotiate both the methods and the value of a marketing message. Advertising can operate as a service, too.

After re-reading this description myself, it looks like I’ve just echoed much of the whole Web 2.0 thing yet again. That makes me think I didn’t articulate the concept properly, as I believe there’s a very different way to visualize how data get created, packaged, distributed and remixed and how the various parts of a media business can be coupled both within the organization and across the wider network. Maybe that’s Web 2.0. Maybe it’s edge economics. SOA. Whatever.

The important thing is to think of how your media business can create for yourself or leverage how others offer Marketing As A Service, Sales As A Service, Operations As A Service, in addition to your editorial and community building efforts. Here’s a quick chart of how a media business might look that hopefully gets the point across:

We’ve seen Journalism As A Service evolve with a little more clarity, particularly recently. Mark Glaser provides a step-by-step guide on how to structure a community-driven news organization:

“Reach out to the community for bloggers, muckrakers and go-to experts. Each topic area would require more than just reacting to news. The Topic Chief would be sure to enlist as many experts as possible not only to be sources but to also be contributors, commenters, and word-of-mouth marketers. Anyone who possesses the skills that go beyond basic participation can be hired on as freelancers or even full-time staff.”

Similarly, Doc Searls’ “How To Save Newspapers” post also lays out what needs to happen on the editorial side. Here’s step #5 in his list:

“Start looking toward the best of those bloggers as potential stringers. Or at least as partners in shared job of informing the community about What’s Going On and What Matters Around Here. The blogosphere is thick with obsessives who write (often with more authority than anybody inside the paper) on topics like water quality, politics, road improvement, historical preservation, performing artisty and a zillion other topics. These people, these writers, are potentially huge resources for you. They are not competitors. The whole “bloggers vs. journalism” thing is a red herring, and a rotten one at that. There’s a symbiosis that needs to happen, and it’s barely beginning. Get in front of it, and everybody will benefit.”

There is lots of guidance for the newsroom, but all parts of a media business can become services.

For example, the ultimate in Marketing As A Service is the customer evangelist. It’s not about branded banners, as Valleywag points out,

“When paid-for banner ads lead to another site that’s supported by banner ads, you know that something’s wrong. Anyone who relies on that circular spending is asking for trouble.”

Marketing should be about enabling customer evangelists whether your customer is simply promoting your stuff for you or actually distributing and reselling it. Fred Wilson thinks of this in terms of “Superdistribution“:

“Superdistribution means turning every consumer into a distribution partner. Every person who buys a record, a movie, reads a newspaper, a book, every person who buys a Sonos or a Vespa becomes a retailer of that item. It’s word of mouth marketing, referral marketing, but with one important difference. The consumer is the retailer.”

None of this needs to happen on a single domain. The domain chain in any of these actions probably should be invisible to people, anyhow, except maybe to ground the events in trusted relationships.

Now, there are many domains that can create wonderfully useful and valuable destinations once they reach a certain critical mass. Invoking another over-used dotcom jargon word, this is what happens at the head of the long tail. And there are obviously lots of nice advantages of being in that position.

Most media companies want to be in that position and fight tooth and nail for it even if it just means being at the head of a niche curve. But instead of or maybe in addition to competing for position on the curve, most media companies need to think about how they provide relevant services outside of their domains that do something useful or valuable in meaningful ways across the entire spectrum.

Posting articles on your domain isn’t good enough any more. The constant fight for page views should be positive proof of that. There’s a bigger, deeper, longer term position out there as a critical part of a network. Sun Microsystems’ mantra “The Network is the Computer” is still meaningful in this context. What is your role if “The Network is the Media”?

Similarly, is Marshall Mcluhan’s widely adopted view that “The Medium Is The Message” still true? Or, like many have asked about the IT market, does the medium matter anymore?

If we are moving to an intention economy, then those who best enable and capture intention will win. And that doesn’t have to happen on a domain any more.

A commenter in Mark Glaser’s recent post on MediaShift about the USA Today redesign sheds light on a problem that Internet companies seem to struggle with a lot.

“I think there may be a lesson to be learned in how to roll these things out. Most of the problems people are having are usability issues that it is nearly impossible for designers/developers who are in the weeds to notice.”

Similarly, Scott Karp asked the right question:

“Could it be that it’s really the social media revolutionaries who “don’t get it” when they assume that what the people want is to rise up against the media autocracy and take control, when in fact what most people want is to get high quality information from a reliable source?”

Unfortunately, even if you do the user research the recommendations of the studies often don’t fit into tight product release deadlines. And the studies often just support product direction rather than fully investigate a user need.

But the problem isn’t the research, it’s the product roadmap. In order to deliver a big punch in the market and cut through the noise, you need to be bold. And big changes that get noticed by big audiences require a lot of planning and complicated scheduling. Big changes are expensive on many levels.

But do you really need a big punch?

Most of my favorite online services tend to evolve organically as if responding to the way people are using the tools. Last.fm, for example, subtely rolls out new features that can occassionally have a significant impact on my usage. They had a pretty crappy web-based player for a long time. Of course, they upgraded it, as I knew they would, and I found it when it was relevant for me to look for it. There’s no amount of marketing they could have done to make me upgrade, and if they had done heavy marketing I might have actually been annoyed with them and considered a competitor.

The online media market is way too fickle to annoy your loyal customers.

But what about reaching new customers? Subtelty won’t win market share.

Admittedly, when you have a hammer everything looks like a nail, but the lessons of the web services market can be instructive. When you empower people to build businesses (or audiences) with your core offering, then you create a multiplier effect and reach all kinds of markets that you might never reach otherwise.

Winning market share in online media can happen by giving people the ability to distribute your offering for you, to create loyal customers for you out of their own customers, to build their own buzz for your product because they have an incentive for it to succeed.

Building the kind of passion required for a distributed customer model like this will never come from big bang marketing. It comes from fostering trustworthy relationships, establishing meaningful brands, proving tangible value, and responding quickly to market changes.

It’s not about noise. It’s about relationships.

I tend to agree with most online media insiders who appreciate the conceptual breakthrough for USA Today online and the balls to act on it, but I would be surprised if any of the positive comments in the blogosphere came from USA Today readers. And if USA Today damaged their relationship with their readers with this redesign, then they have made an incredibly costly mistake.

Online services need to roll out important new features constantly. But the days of hitting the market hard with a new product launch are fading. It works occassionally for major releases of things that are really new and require a reeducation of the market, like the iPhone. But fewer and fewer things fit into that category.

At the risk of invalidating everything I’ve said here by quoting a man who’s social and political beliefs go against just about everything I believe, Eric S. Raymond’s “The Cathedral and the Bazaar” included many astute observations about the way Linux development was able to scale so efficiently. Among the lessons is the classic “Release early and often” mantra:

“In the cathedral-builder view of programming, bugs and development problems are tricky, insidious, deep phenomena. It takes months of scrutiny by a dedicated few to develop confidence that you’ve winkled them all out. Thus the long release intervals, and the inevitable disappointment when long-awaited releases are not perfect.

In the bazaar view, on the other hand, you assume that bugs are generally shallow phenomena…or, at least, that they turn shallow pretty quickly when exposed to a thousand eager co-developers pounding on every single new release. Accordingly you release often in order to get more corrections, and as a beneficial side effect you have less to lose if an occasional botch gets out the door.”

Product Managers and Marketers need to bake these concepts into their thinking as well or risk missing the wider opportunity, the ultimate in marketing and distribution efficiency — customers as partners.

Photos: marble2, ccarlstead

BusinessWeek ran an interesting story on business model innovation this week called “Mistakes Made On The Road To Innovation“. The article focuses on Kodak which reinvented itself yet can’t get ahead in the new markets.

Among other things, the article talks about how the speed at which new models take over markets is getting harder to manage:

“At its peak, Kodak was an icon of American technology innovation. Now it’s fighting to recover from a tech revolution that is strangling its core business. Kodak was late to recognize the problem, slow to react, and then went down the wrong innovation path.

Over time, all innovation gets commoditized. In this regard, business models are not different than products and services. So business model innovation must be a perpetual quest for renewal.

Look at how Dell, (DELL ) long the PC industry’s heavyweight champ, has suddenly become wobbly in the knees. It revolutionized the PC business by assembling computers to order for customers while eliminating the middleman. Now competitors have caught up with Dell’s efficiencies and are even undercutting its prices.”

What struck me in particular is the notion that business models must iterate the way new technologies iterate. Creativity should not be isolated as a product development or an engineering problem. Creativity must be part of a company’s approach to winning in the market.

If you think about this in terms of online media, it seems rather obvious. The banner innovation enabled the page view model to take off. Content targeting enabled the search market to explode. The success of those business models put parameters around the types of engineering problems to solve and opened lots of product creativity.

But business models beget business models and new revenue streams will continue to replace old ones. It can be frightening when the model you invested in becomes a commodity down the line and the company then has to decide how to redistribute its resources if it wants to grow again.

In the Kodak example, they didn’t catch on to the commoditization of digital cameras fast enough and now sit in a market of margin wars, fighting for positioning on increasingly crowded shelves that provide weaker and weaker yields. Without a deeper relationship with the photographer, Kodak is almost meaningless and the technologies they sell are totally replaceable.

The article adds that Apple’s music business is instructive. In iPod-land the connection between the hardware, software, media and revenue are all intertwined. And the more time and money a consumer invests in any one of those pieces, the harder it is for that person to end their relationship with Apple and all the related services in that market.

Kodak’s focused approach on doing one thing well is actually failing them as more innovative business models squeeze them out of markets.

Similarly, page view inventory is losing its value in the online media market. Ad inventory on the home page at mymediaproperty.com used to command a nice premium because it was unique and captured a targetable demographic. Most advertisers are smart enough to recognize the value of independent media brands to lend credibility to their marketing messages and willingly spend lots of money to support those brands. But, at the same time, most online media brands are struggling to communicate their customers’ marketing messages in meaningful ways.

Many advertisers are instead creating their own online brands rather than waiting for media companies to figure out that page views are an aging marketing platform.

I don’t have the answer to the diminishing returns on page views, but I think I know what the market could look like eventually…

Take the AllCrazyStyle mashup example. This site can tell me where to see music performances in my area that I might like by combining my listening behavior at last.fm and my saved locations at upcoming.org.

Where is the link to purchase tickets to each performance? Where is the link to buy the most recent album for each artist? AllCrazyStyle should be able to pull ad content from an ad network that knows what I’m most likely to click on, just like they can pull my listening behavior and location data.

They should be able to display ad content in whatever way makes the most sense in the user experience. I want those links to be there so that I don’t have to go hunting for them, and I want them intergated into the experience.

And like Apple, the more time and attention I invest into either last.fm or upcoming.org, the harder it is for me to end my relationship with any of them and all of the ancillary businesses associated with them.

Regardless of whether or not this concept works or makes any sense, the idea that innovation is a technical problem is short-sighted. Bad business models (or no model at all) perpetuate incomplete approaches to innovation and weak ideas.

When you’re battling in a commoditized market, you need to step back and steer the ship in another direction. Otherwise, you’re going to get sucked deeper and deeper into protecting assets with weaker values against heavier and heavier competition.

Like Kodak, you’ll fall behind all the innovators taking advantage of all the time you spend in meetings trying to figure out how to be more innovative.

John Hagel’s post the other day included a great little nugget:

“If executives need lots of data before they feel comfortable making a decision, chances are they will not act until it is way too late. Don’t get me wrong, data are extremely valuable. It’s just that, if we insist on too much data, we will often miss significant changes on the horizon. This isn’t just about analysis paralysis; it’s much more insidious…

Data not only draw us into the past, they also draw us into the core because the core is so well documented and analyzed relative to various edges where data are at best fragmentary and often contradictory. To avoid being blind-sided, we need to pay equal attention to stories and train ourselves to detect patterns in the stories, even if the data supporting the stories remains fragmentary. Stories are generally our first indicators that something really interesting is about to happen; something that data will only reveal to us in full force much, much later.”

As any researcher knows, the data will tell you just about whatever story you want to hear. More important than messages in the data is what’s happening right now that is not yet measurable. That in combination with stories we learn over time gives us insight into the possible answers to the questions that we might not even understand how to ask.

Here are a few questions Internet business historians might ask today:

• The banner ad made web pages profit centers and disrupted offline advertising markets. Are web services disrupting the web page model, and, if so, who made the transition to web page advertising successfully? Who failed? Why?
• The media business rewards companies that out-niche the niche. How should a company react when it knows it’s being challenged by a smaller, more nimble, more focused media property?
• The operational efficiencies enabled by the Internet created several manufacturing and distribution giants. Are there quiet giants or even not so quiet giants on the horizon that have both found and are leveraging new kinds of efficiencies?
• There are insightful leaders in any market who consistently make smart decisions. Given a particular market condition, who has proven to be successsful and what can we learn from their recent decisions?

Also implicit in Hagel’s statements is the idea of intuition. Trust in your own intuition is a key leadership skill that a lot of people are missing. Never mistake fearlessness for intuitive confidence. Fearlessness can go a long way fast…including off the cliff.

Last week’s Yahoo! Hack Day was, as usual, an eyeopener. In addition to the creative hacks, I was hugely impressed that the co-founder of the company and CFO among several other key executives spent an uninterrupted afternoon watching and then judging all the hacks.

Photo: Yodel Anecdotal

The only other model for bridging the gap between top brass and ground troops that I’ve seen work successfully was at IDG when founder Pat McGovern conducted his annual handshake around the world during the holidays. He meets with every single employee of the company (2k plus), shakes hands, chats for a few minutes and, if available, hands the employee his or her bonus. He remembers impressive details from previous conversations and clearly challenges himself to make a tangible connection with each person’s contribution.

Everyone admits that it creates awkward moments, but the effort is appreciated by all and wins him both loyalty and credibility across the whole company.

At Hack Day, I expected Jerry Yang and Sue Decker to spend much of their time on their phones while engineers were working their hardest to impress the crowds. Admittedly, I didn’t make it through the whole afternoon undistracted, but the judges were engaged in every presentation that I did see. No doubt they were paying attention and learning things that will impact their future decision-making.

There’s always the question of whether the hackers are motivated more by peers or by bosses. In either case, the 90-second demo format is the closest thing software development has to the clean and jerk. I’m not sure I’d call it chest-thumping exactly, but don’t believe for a second that every hacker doesn’t hope to beat his colleagues with the better hack.