COVER STORY
attract clicks, that would be dumb in this new world. have a brand, that’s very powerful’
Media in trouble “Media is one of those fascinating two-sided markets with advertis- ers who pay some of the bills and subscribers who pay some of the bills,” says Rayport. “For all of the arguments certainly in the US and around the world, telecoms companies and media houses are grap- pling mightily with the issue of network neutrality. Some sites that have the big bucks like Google or YouTube could pay for privileged access to bandwidth. YouTube would then deliver a better service thanHulu andwin themarket by brute force. A lot of people think net- work neutrality is an important principle for the world wide web. “But that said, what is missing from the discussion is the simple
fact that there is nothing neutral about the network when it moves to mobile devices.” Someone, he points out, will still have to pay and therefore somebody is laughing all the way to the bank every time content is downloaded. The solution, Rayport optimistically believes, lies in devices like the iPad and smartphones. “Somebody is being paid for the distribution and when that con-
tent is distributed it is going to be rich media content. Now when we’re talking about streaming video, high-resolution pages of high- end glossy magazines, plus photography, plus video, plus motion, now you’re talking about stuff where there has to be value shared, it is inevitable. “In point of fact when you look at the way premium SMS servic-
es work on mobiles today, premium SMS is generating a huge amount of money for content creators. Even as that market matures, the irony also is that when you think about a ringtone made out of a 20 or 30-second cut from a music single, it is actu- ally much less expensive to buy the single than the ringtone. To buy the ringtone it is €3.99 or €4.99; it is a hell of a margin, but you pay more for less.” In essence, Rayport thinks mobility is actually going to bring
back a world in which paid content has life. “The other part is to go back to the advertising side, which is going to be more sophis- ticated in terms of everything from marketing mix optimisation to analytics. “Frankly, I think we are taking marketing from a world that was dominated by art to a world which is much more about science, meaning we are not going to have people making judgements about running a national 30-second spot for the Super Bowl, but actually trying to figure out household by household that are digi-
tally addressable by dish, DSL or cable. You are now talking about an advertising efficacy that advertising didn’t have before. “The big critique of advertising wasn’t that it didn’t work, but the
old joke traceable back to the department store magnate John Wannamaker who said ‘50pc of my advertising money in dollars are wasted, I just don’t know which half’. “We’re now going to figure out what works. The digital world is famously accountable and when you move into a world where you calculate a return on investment for ad spend, it actually is an investment because there is a return.”
Let the market decide From Rayport’s perspective the world is moving at an accelerated pace. Even for Intel engineers who cling faithfully to Moore’s Law that computing power doubles every 18 months, the reality is that culturally technology is bringing about changes three times faster than that. “Trying to imagine the world five years from now is impossible. If
you are a marketer or an editor or a media person you are asking what’s here to stay, what are the new realities? There are four basic impacts which you know will change the world irrevocably. “One is human beings for time immemorial have always needed
to find information in order to survive – there’s got to be communi- cations. You could argue that the page rank algorithm which explains Sergey [Brin] and Larry’s [Page] wealth has forever changed the way most of us find things out. The fact that Google has 70pc market share in search queries makes it a uniquely dom- inant company in a fundamental area of human activity. “I would argue that the second area of this is how we store and
remember. I can’t store all the phone numbers but my iPhone does, and carries my vacation images. I do think that we as human beings are distributing our memory across the silicon substrate in our devices – that’s impact number two. “The third impact is that human beings have always been a
social species, that connection is what human life is all about. Social networking has forever changed how human beings con- nect. Facebook has half a billion users, you look at even a dimin- ished MySpace with 150m active users, go around the world to Mixi in Japan, Bebo in Europe, Orkit in Brazil. We are probably somewhere around 1.5 billion human beings active on social net-
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