Google vs Facebook: who's the bigger monster?

Google is finally getting into the Social Networking Biz with its new Google+ features. The first question that comes to mind is "what about Facebook?" meaning: will Facebook and Google+ coexist? will they compete? will one "kill" the other? if so, which will be the survivor? Well, only time will tell.

From what we can see, Google+ is positioning itself as a bit more convenient, easier to use and safer than Facebook with a few new features that make the user control his social networking even more. The look and feel is almost exactly like Facebook's, at least for now during the test phase. The new features include a more straightforward way to organize your friends called "Circles", a video conference calling feature called "Hangouts", and the possibility to synchronize your phone's pictures with Google without having to plug your phone into your computer called "Instant Uploader". There's also two things that don't really seem like "new value" to me: "Sparks" which is a way for Google to get you to tell them what you like and in exchange they'll send you "valuable content"; and "Huddle"which is like a BBM "Groups" deal, that gives the user the possibility to chat with multiple people at the same time.

Frankly, it seems to me like Google is trying to take Facebook's social media crown by doing what they do best: organizing information better than everyone else. And yes, they do a pretty good job at it. Kinda reminds me of when I had Hi5 and switched to Facebook because I felt it was "cleaner and more private". However, this is a real battle (unlike Hi5 vrs Facebook), and it is mainly the fight to win the users over: most people that have Google accounts also have a Facebook account. Google+ on one hand takes away their need to move to another site to do the networking, but at the same time poses them with the conundrum of switching from Facebook, or keeping two similar (ahem, almost exact) services. The real pain is that these 750+ million users that Facebook has already have a pretty robust network of friends. Moving to Google+ would mean starting over. But is this really a bad thing? I bet there are a couple of Facebook users out there willing to shut their accounts down and start over in Google+ just to save themselves the time of "cleaning" their network. Facebook has felt the threat and is fighting back: just recently they introduced video calling through an alliance with Skype - but the group video calling is not free like Google+'s. They clearly know they should start getting prepared for when Google+ launches openly, because they'll need to react fast if they start losing users.

What would you do? I honestly don't know what I'm going to do about this situation, I think its still too early to tell. And yes, Google is putting us Social Networkers in a "situation" by giving us an option to Facebook. An option that seems to be cooler and more beneficial. I guess I'd have to try Google+ to decide, and one of the deciding factors would definitely be how many of my friends decide to switch. Also, the proper functioning of Google+'s value propositions. Seems like the Facebook-Google battle is ON!

Lessons of poor airline customer service

A few days ago we had a class with Enrique Dans where he told us about an “episode” he had with Air Europa. To make a long story short, Prof. Dans wrote a post on his blog in January 2006, an "open letter" to Air Europa's president, after a truly terrible customer service experience with the airline. To this day, more than 5 years later, he has not received an answer - needless to say a compensation - from Air Europa. What he accomplished was to get his post linked and commented by hundreds of people. He was featured in multiple press articles, all which contributed to him generating awareness of this of this issue. I would say he helped to "pave the way" for what would come later: social media as powerful tool to "fight" against poor customer service.

Hearing Prof. Dans' story in class and then further reading about it online made me remember another issue of this sort: Dave Carrol, a Canadian musician who was also mistreated by an airline, this case United Airlines. Carrol did not write a blog post; he created a song & video and posted it on YouTube in 2009. The video pretty much speaks for itself:

Mr. Carrol made 3 songs in total to protest against United. He didn't stop there, as he basically created a social media campaign against United's bad treatment that achieved millions of comments and views. Today, Carrol is founder and leader of Big Break Solutions, a company that offers solutions to improve customer service and therefore people's experiences.

These two stories of poor customer relationship are not the only ones. But the point here is: how in the world did these companies not realize the importance of customer service? I would say it is because, even though they get all the negative coverage they do, they still seem to operate perfectly well and gain as much profits as they did before the protests. What I think they do not realize is how, in time, they will start to be affected by the increasing reach of their customer's voices that is empowered through the growth of social media.

Companies need to increasingly pay attention to their customers critiques, suggestions and complaints because their biggest asset is the brand experience that they offer, which basically translates into customer loyalty. Also, in order to keep their customers anxiety-free and therefore loyal to the brand, companies need to provide an answer, even if that answer is "I don't have an answer to your question" or "We are working to solve your problem". Nothing frustrates a customer more than feeling ignored, which in turn generates actions like the ones of Prof. Dans and Mr. Carrol.

In these two cases, both airlines should have provided an answer, even to just accept their mistake and then say "We are sorry for your inconveniences". They should have realized that, regardless of the power that Dans and Carrol have, they are customers that will never use their services again. Secondly, they should have thanked the customers for showing the mistake and giving them the chance to become better airlines. Third, they should have offered concrete compensation as a promise of "improvement": Dans should have been offered free business class tickets for future flights and Carrol should have been paid fully for this broken guitar. Going further, both companies should have implemented some sort of crisis management program when the issues grew, and immediately incorporated customer service improvement programs into their management. A smart move would have been to turn the crises into opportunities to become better, more customer-satisfying companies by doing just that: incorporating improvement programs and then massively communicating them to turn their negative publicity around. 

To conclude on a positive note, there are companies that know how to pay attention to their customers and are currently applying best practices to enhance brand loyalty. KLM is an airline that that has shown this other side of the coin: they used customer Twitter feedback to turn the inauguration of a new route into a gigantic campaign. Check it out:

Lessons of the NYT Paywall

One of the newspaper’s biggest fears is the future. This mainly relates to the fact that most of them don’t see themselves there. The internet has become a slow and painful death for most printed newspapers. With their traditional business model being threatened, newspapers have debated what to do next. Some opted to become completely free, hoping that the advertising revenue would make up for any losses. 

 

Others like the New York Times have come up with a Paywall. This means that any user can read 20 NYT articles a month, but after that he or she needs to subscribe. This radical change was a big risk, mostly because the NYT was basically going to give away part of the ad revenue it was generating from its 15 million monthly users. Still, they decided to go ahead with it and after one year, (contrary to what many people thought) the pay wall is working.

At the time when its online content was free, a year’s subscription to the print edition of the NYT cost around $12 dollars a week or $600 dollars a year. It doesn’t take a genius to figure out why circulation was declining: “Why pay for something you can get for free?” Or better yet, “Why do I have to pay for something that others can get for free?” What this meant was that loyal print subscribers were getting less benefits than the people who didn’t pay anything at all. It was a question of creating value for the customer. With the Paywall the value of the NYT increased. People who valued it also increased, because putting a price on the online content made subscribers feel better. Not only that, according to Businessinsider.com, there has been an increase in print subscriptions!

I think that newspapers in general feared that, because of the size of the Internet, they needed to cater to a large market. They figured that by giving away news for free they could generate more revenue from the millions of new users they could reach. In NYT’s case, it was losing its customer base not because of other free news sites, but because it was giving its content for free. 

Currently, the newspaper is rolling out its digital subscription for tablets and smartphones trying to make the best out of these technologies and their reach. The Wall Street Journal and the Financial Times also have paywalls and, like the NYT, they are expanding into digital subscriptions.

A lot of people get their news from different sources, many of them for free. But there are also a lot of people who are willing to pay. In my opinion newspapers that want to differentiate themselves must do so by the quality of their news, editorials and opinion articles; not by their price or the way they are distributed. Now more than ever it is important to create a brand that subscribers can identify with, because to be able to charge for value, it first needs to be created.

Apple's MATCH means a win-win situation

This week was full of Apple announcements. I’m sorry if I’ve been talking too much about Apple lately but I think - as do other people - that a lot of what they announced is incredibly important.

The iCloud product featured a very interesting take in music. If you purchase a song through iTunes it will automatically be stored in your iCloud. You can then download the song in any other Mac or iOS device you own whenever you like, for free. This seems great so far, but what about our other music, the one we ripped from CDs we legally bought? Here is how it works. Apple has an 18 million song catalog, and chances are that the songs that you ripped into iTunes are among those songs. So, iTunes will scan your music library and will MATCH every song you have with the ones Apple has in its catalog. This will enable you to wirelessly download these songs to any iOS device you own, for $24,99 a year. In other words, you’ll have to pay to store music you already own. Bear in mind that all of the major music labels agreed to Apple’s term before this was launched. And why wouldn’t they? Apple offered around 60% of future profits. 

Profits aside, this business model to monetize a song after its been purchased sounds great for music labels. Subscription services like Spotify and LaLa (acquired by Apple) have existed for years, but record labels don’t seem to like the unlimited streaming of songs. In fact, a lot of people think that’s why Spotify hasn’t been able to Launch in the US yet. The fact of the matter is it seems that Music labels will be able to find different ways to monetize their content. And as time goes by, the opportunities seem to be growing. With big contenders like Google, Apple and Amazon fighting over the distribution part of the value chain, other players like Facebook have decided to join the battle. 

There have been rumors that Facebook and Spotify will launch a music service together. Wouldn’t that change things a bit? Regardless of who wins, it appears that the music industry is steering towards a subscription model. What the big players must not forget is that the deals need to be attractive to both consumers and record labels equally. So far Apple figured out what Amazon and Google didn’t. But now the cat is out of the bag, and I would dare to say that soon enough Amazon and Google will copy Apple’s formula and the record labels will agree to their terms. 

It looks like things are looking up for everybody. On one hand, consumers win with great services at a relatively cheap price and with their music available where ever they go; on the other, companies win with new products and additional revenue and record labels win because they can finally monetize their catalogs efficiently.

From traditional to online: the “move” of TV

Moving to the Internet is the imminent evolution for traditional television. By this, I mean content will be offered online and cease to be offered through the antenna or cable/satellite. However, more important than getting into the details of this “move” is to analyze whether it’s completely feasible and what it depends on.

For starters, the speed of the evolution of traditional TV depends on the type of content. Roughly, I could say that TV offers scripted shows, live shows & news and sports content. In the case of scripted content, it’s not necessarily important when you watch it, but for sport events or news it is. This could be an explanation to why we see that scripted content is already being offered online everywhere, in both TV sites (ABC.Com and HBO.com for example) and in models like Hulu.com or iTunes. More importantly, this type of content is being viewed online in a way that actually threatens traditional TV. According to Nielsen, time spent viewing video on PC/Mac/laptops from home and work locations increased by 45% from Jan 2010 to Jan 2011.

On another hand, Live content and sports are harder to move online in terms of quality and monetization, because for this type of content users place high importance in the moment when it’s watched. Even though it’s currently available in sites like CNN.com, according to Intereconomía TV, online content does not represent a significant revenue stream yet for TV channels of this sort. In the case of sports, it is the same. Repetitions of soccer games, for example are watched by big fans or by people who couldn’t see the game live. Quality of the live streaming plays a big role here, and there is still competition by the quality offered from the TV screen vs. the quality offered online.

Another important factor that will determine the “move to online” is Internet penetration and usage patterns of the population. According to Comscore, the total Internet audience in Spain was 23.5 million people in March 2011, which represents 63% of the population approximately. According to the same source, Internet users in Spain spent the most time on Portal sites, Instant Messengers and Social Networking sites ranked 2^nd and 3^rd. Multimedia ranked 6^th and no specific mention was made to video watching habits online. We can compare this to the USA, where there are approximately 230 million Internet users (75% of the population). According to Nielsen, Americans spend most of their online time at 36% communicating and networking across social networks, blogs, personal email and instant messaging, and 3.9% of their time watching videos and movies. The source mentions that this activity was the only one to experience a significant growth in share of U.S. activity online growing 12% from 3.5 to 3.9% from 2009 to 2010. We could interpret this as Americans having a higher interest on online videos than Spaniards, which would lead the American market to be more advanced in TV’s move to online than the Spanish market.

So to conclude, I think the traditional-to-online transition depends on the type of content and its costs. How the migration happens seems to still be debatable, as we have many players looking for a piece of the cake: from TV channel websites to other sites like Netflix & Hulu, to companies like Google and Apple with their multiple TV content offers, to social media sites like Facebook that are now looking to become digital hubs. What will be important is which of all of these players will be the smartest in deciding how to make the content available while monetizing it, but most importantly in how to catch the most users.

What Apple’s announcement means for publishers

Every one is talking about the new iOS5 and iCloud that Apple announced last Monday, June 6th. Don’t get me wrong, I think these things are great and look very promising. However, the most important thing for me wasn’t about a specific feature, but about how they all tie in to make owning a computer pointless. 

Yes, you no longer need a computer to own an iOS device. And this means that the iPhone, the iPad and the iPod Touch just got a HUGE price discount. Of course they didn’t literally get a discount, but if you subtract the cost of a computer, owning an iOS device is way cheaper than before. Taking the computer off the equation also means that iOS devices suddenly became interesting to people who are too afraid to use a computer because of the learning curve or to people that simply don’t want one. This makes iOS devices, and specifically the iPad, more appealing to a lot more people. Now, there’s no excuse!   

It took some time, but Apple realized that to explore and belong to the digital world most people don’t need computers. Just like they don’t need one to read a newspaper or a magazine. Why pay $700 just to send emails and browse the web, when you can pay a little less, and make the whole experience easier and ultra portable? 

I’ll get to my point: what does this mean for the publishing industry? Well, now there is an electronic device that can actually work the same way as the paper... only better.

Another feature that Apple announced is Newstand, which is basically an app that keeps all of your digital subscriptions in one place. The best part is, that every day or week that a new edition is published, Newstand automatically updates the information in your iPad. It’s like getting the newspaper fresh from the printing press! This makes the whole transition to online a bit smoother, because Apple takes care of the whole distribution part. In the long run, publishers and newspapers can look at a future with lower costs and capital expenditure, at least in the packaging and distribution part of the value chain.

This will enable them to spend more where it actually counts: content creation. Of course some money should be put aside for marketing, because my guess is a lot of publishers are going to be competing for the consumer’s time and money. Subscriptions prices should decrease as well, in order to attract more consumers. And the best part for the publishers is the reach. According to Apple, in less than 2 years, 25 million iPads have been sold. The company has projected that they will sell 57 million by 2015. On another hand, according to the Audit Bureau of Circulation, The Wall Street Journal currently sells approximately 2 million copies of its newspaper everyday. That is less than 10% of the iPad market, and in 2015 it will be less than 5%. Even if it’s a specialized and targeted news source, just imagine how much readership could grow!

The same goes for magazines. Take something with a more general subject like Readers Digest, for example. In 2010, circulation of this mag was around 5.5 million, according to the Audit Bureau of Circulation. The iPad market is 5 times that amount... and it’s going to get a lot bigger!

To conclude, publishers need to move swiftly in order to be present in as many iPads as possible, by offering cheaper subscriptions and better content. I think this is the light at end of the tunnel for the publishing industry. What do you think?

Google at a crossroad

Google's mission statement is and always has been "organize the world’s information". It has also understood how technology evolves, introducing and leading changes in the market. For example, by launching Android, Google proved it’s deep understanding of the market's migration from static towards mobile Internet connection. It has expanded way beyond "searching" to provide organized solutions with products like Google docs, Google Maps and Google Calendar. It has grown from organizing online queries to providing all kinds of online organization solutions for people.

Today, Google is at a crossroads facing several challenges to become a better and more competitive growing business. What should Google do to sustain its leading position and keep its fast-growing pace? 

On one hand, there is a pressing competitor that could take it out of business. Should Google focus on tackling Facebook? Secondly, there is China: a "new" market that is growing at a light-speed yet very difficult to enter due to various factors - i.e political.  Third, Google needs to be weary of anti trust lawsuits in Europe and other parts of the world. And fourth, Google's workforce is currently being poached by important tech start ups due to the lack of strong company culture and organization.  

Google can work on these and many other challenges at the same time, but it may need to prioritize its overall strategy. I think that the company should focus on it's social network strategy and optimizing it's organization. Google's social focus will deal once and for all with Facebook and Twitter by proving to be a worthy competitor. It is easier to tackle this problem first and then, if successful, expand it to other markets. 

From an organization point of view Google is very horizontal and employees sometime have no way to move up the corporate ladder. Rather than being the "it" company to work for, Google should work harder at implementing values and beliefs to make the company's purpose more palpable. It shouldn't be all about money, or trends. It should be about the future, and making technology easier and more accessible to people. So it's not only about the best performing employees, it's also about the ones who are more loyal.  

Dealing with many problems at the same time is a common symptom of big and diverse companies. Prioritizing while managing all of them is what helps them overcome these issues. In Google's case, it not only needs to prioritize, but also compete in different fronts at the same time. The problem is: will the choice it makes be the right one? And if not, will it have time to react?