This article has been reposted with permission from the Spark Minute blog.

It seemed that after the advent of Web 2.0 programming technologies, such as AJAX, that there was no more need for downloadable applications since any web page could now be a live application. With webware applications, each action would behave like a desktop application could. No need to reload a page every time you click a button, and more importantly, no need to download and install an application onto your computer.

On first look it appears that webware programs have usurped the need for downloadable applications.

But web-based programs have one very critical limitation. They require you to be on the web to use them. Webware programs can’t run all the time on your computer. They won’t shrink down into your Windows System tray.

As a result of webware’s limitations, there is still a strong market for downloadable applications. Looking at the history of popular downloadable programs, here are the three most successful categories:

• Communications applications – VoIP and video chat programs like Skype and all the instant messenger applications have always been popular. Many Adobe Air applications, e.g., TweetDeck, fall into this category.
• Anti-virus and spyware – Everyone MUST have these programs on their computer. Many people aren’t willing to shell out the bucks for McAfee or Norton, so they opt for one of the free solutions.
• Multimedia applications – Even though you can watch videos and listen to music online, downloadable desktop programs like iTunes and Windows Media Player remain popular.

All three of these categories have stayed consistently successful even with the amazing proliferation of webware applications.

And this is where itiBiti has found its comfortable and successful niche. DISCLAIMER: itiBiti is one of Spark Media Solutions’ clients.

Instead of trying to compete with any one of these categories, itiBiti is actually a mashup of a communication and a multimedia application, two proven and consistently successful categories of downloadable apps.

These downloadable applications succeed in one of the following three ways:

• They maintain a consistent connection with a brand that generates revenue through advertising (e.g., AOL with AOL Instant Messenger or Yahoo! with Yahoo! Messenger).
• They operate under a freemium model. Basic service is free but additional services cost money (e.g., Skype with Skype Out and Anti-Virus software with further scanning abilities).
• They operate a marketplace that sells content (e.g., iTunes with sales of songs, movies, and applications).

Given all these above described options, here’s the combination itiBiti offers:

• Always-on communications (text, voice, and soon video)
• Multimedia content (video, real-time news, web content)
• Branded application (white labeled so anyone can brand the application)

Since so many downloadable applications have failed since the advent of webware, it’s often a common belief that all downloadable applications are doomed. But if you look and realize that there are still many vibrant and highly demanded categories of downloadable apps, it’s easy to realize that there’s still a very strong marketplace. itiBiti aims to build success on a hybrid of already proven downloadable applications.

Want to know more? Interested in getting your brand on the itiBiti platform? Contact Brad Parry (bparry@intertainmentmedia.com).

Ron Fuggetta, CEO of Zuberance, a service that tracks brand advocacy and calculates ROI on that advocacy, just forwarded this really interesting study completed by Comscore and Yahoo! Thought the results were really interesting. Take a look.

Brightcove’s blog today has some interesting findings from an online video research study they did with Tubemogul.

They analyzed Q1 performance in online video from 2009 and 2010 and summarized their findings as such:

• Online video views has grown dramatically: 40 percent for broadcast media networks. 300 percent for web-based media networks. Spike is attributable to newspapers (37% jump) and magazines (70%)
• Online video production has grown dramatically: Newspapers (up 190%), magazines (up 60%), music labels (up 64%), radio (up 62%).
• Engagement levels vary by media type: Average length of viewing stream (in minutes:seconds) by media type broadcast networks (2:53), music labels (1:50), and newspapers (1:41).
• Completion rates vary by media type: Percentage of people by media type who finish watching videos – newspapers (41%), magazines (39%), broadcasters (38%), and music labels (29%).
• Twitter referrals create the highest level of engagement (longest viewing times): Broadcast networks (1:52), magazine publishers (1:23), and music labels (2:33). The exception is newspaper publishers, which see the highest level of engagement from viewers who find their content via Yahoo! (1:20).

Lastly, Brightcove claims that the majority of publishers in their study plan to launch ad-supported mobile video within the next 6-12 months.

I am an extremely avid podcast consumer (see my podcast listening lineup for 2010), and sometime podcast producer. I have completely stopped listening to over-the-air radio, and I now listen to podcasts whenever I can. All except one of my podcasts are free. The podcast I pay for is “Never Not Funny.” It’s a 90-minute podcast. You can get the first 20 minutes for free, or you can pay to get the entire podcast. I like the podcast so much that I pay for the full 90-minute version. To learn more about “Never Not Funny’s” business model, read or listen to my interview with the show producer, Matt Belknap.

Because I pay for the “Never Not Funny” podcast, I make sure that I always watch it (I pay an extra $5 to get the video feed). I’m paying about a dollar per show, but that’s enough to get me invested into the show that I feel compelled to watch it. That’s not the case for any of my other free podcasts.

I feel the same way about watching films I purchase and download from iTunes. Or music I purchase from iTunes. Or listening to music on the paid service MOG for which I also became a paid subscriber ($5/month).

When I pay for content, I’m compelled to consume it before content I can get for free.

But as we all know, even charging a nickel for content can be a barrier for consumption. Some may see this as dealing with two mutually exclusive issues:

• If people pay for content they’ll be compelled to consume it.
• If you charge for content it will be a barrier to consumption.

I see the ability to overtake these conflicting issues is by not scaring people when you charge for content. Instead, get people excited that you’re going to charge for content. And I believe you can do this by creating your own form of scarcity. Give away a portion of content for free that leads people to want to purchase the rest of it.

How do you charge for podcasts?

While iTunes has an app store, a music store, and a movie store, they don’t make it possible for podcasters to sell their podcasts. Podcasts within iTunes must be completely free. That doesn’t mean you can’t sell your podcasts, you just can’t do it completely within the four walls of iTunes. You have to go outside and create a personalized RSS feed that requires a username and password for access. You can manage that through services like Premiumcast (read and listen to my interview with Premiumcast’s founder, Paul Colligan).

I love stories of people sidestepping gatekeepers. At WordCamp in San Francisco, Karl Vogel of QuestionCopyright told a great story of how one animator and filmmaker, Nina Paley, chose to distribute her film, Sita Sings the Blues, completely open source. The open source distribution was so complete that she even let other people profit from her film and the character likenesses. You could, if you want, show her film at a theater, charge admission, and keep all the money. Or you could sell products with images of the characters on it and keep all the money.

Unbelievable.

Paley didn’t make a fortune, but she did make money, about $90K in profit.

Except for a music licensing deal that cost her $50K (she had to take out a loan to pay it), Paley didn’t deal with any gatekeepers, or have any additional film distribution expenses beyond site hosting fees. She made her film completely free via an open source platform and made money using these techniques:

Test, don’t take unnecessary risks: Paley first tested the waters to see how interested her audience might be in purchasing a DVD of the film. Getting this feedback let her know how many DVDs to print in the first run.

Make it easy for people to give you support: If you give something away for free, there will be people who will want to tip you or give you a donation. The obvious first step is to post a very visible donation button. Take that one step further and make the donation part of a challenge. Show an actual goal that you want to reach. Paley created a percentage bar to show how close she was getting to paying off her $50K music licensing fee. By providing this information, showing her fans where their money is going, she was giving her audience a reason to give money. People like to donate in such cases. They like to be rewarded by pushing you over a significant milestone.

Sell products: Paley sold everything from her site. Obviously she sold CDs, DVDs, and t-shirts. But because it was an animated feature with iconic characters, she also sold other items such as prints and jewelry. In some cases product makers, such as handbag makers, approached her to put her character designs on their bags. In return but not required, they gave a percentage of their proceeds. Fans like to buy these products because they act as physical containers or tokens that connect the purchaser with the artistry.

Utilize a “Creator Endorsed” badge: Since Paley’s film was completely open source, anyone could sell the movie or related products and not give her any share of the profits. While anyone could sell the product, Paley placed a “Creator Endorsed” badge on sites where proceeds from the sales of items would go directly to her, the artist. Since people want to support the artist, Paley rightly assumed that they’d choose to purchase items from “Creator Endorsed” sites.

This was advice that Vogel offered that I believe can easily be spoofed with a simple copy and paste of the badge. But I guess you can put a qualifier in the open source agreement that you can’t lie that something is endorsed by the artist, when it isn’t.

Encourage commercial activity: Since Paley wants people to see her film, she encouraged people to hold screenings and sell tickets. The people who showed the film were so grateful that they often sent a percentage of the proceeds back to her, or put out a donation bucket at the screening and announced that all donations will be sent back to the artist.

Encourage involvement: Ask viewers to get involved with the film. That can take many different forms. For example, some audience members created subtitles for Paley’s film, and also translated the subtitles in many different languages. You can crowdsource fans for information. Paley asked her fans what products she should sell.

Fans will also surprise you. Some of them remixed the film. One guy created a poster of every single frame of the film. And another person produced a fashion show based on designs from the film.

While making $90K is not an astonishing sum of money. Paley completely avoided the gatekeepers and made some money. So often gatekeepers buy films and all that happens is everyone loses money. Paley only had one risk, a loan of $50K for her licensing fee. After that, most of the revenue that came in turned into profit for Paley.

Every single action we take online can be monitored, analyzed, and then used to serve us even more targeted information. Online advertisers have been doing this for years by dropping cookies and tracking our web behavior. But many of us don’t realize that every iota of our actions are being tracked. It isn’t just the websites we click on, but whether we scroll a screen, how long we spend on a page, what links we click on, where we track or hover a mouse, and so much more. Amazon and Netflix have been using filtering technologies for quite some time.

The same organizations that have been helping retail sites target information are doing the same for content sites. Services such as Baynote and Loomia track and digest more than a dozen user behaviors on retail and content sites to serve up more personalized and relevant information.

Known as “session psychology,” many companies are working very hard to make information more and more relevant in hopes to lead to the goal of Web 3.0, a.k.a. the semantic web.

But our focus has constantly been specifically on user behavior. There are so many other factors, not measured by personal behavior, that affect our decision and interest.

On Friday, the LA Times reported that NBC.com has announced that they’ve enlisting the services of a British company called Filter to serve up more targeted personalized video content. Those recommendations will be based initially on the digital breadcrumbs we leave behind as we search, click, and browse across the web. NBC.com Communicator, built on the itiBiti communications engine, is a separate effort.

What’s intriguing about the Filter announcement is how they’re taking into account other factors that have nothing to do with individual behavior. Time of day, day of the week, and location are some of the other factors that come into play in the decision making process. For example, people are more interested in news information in the morning, but want to watch comedy at the end of the day. Comedy viewing also shoots up dramatically at the end of the work week, said Will Rogers, CEO of Rooftop Comedy.

Filter is keeping much of their secret sauce hidden, but they are also taking into account what videos your friends on Facebook are watching as well. This is not a new concept either. Social reading for recommendations is a feature that Loomia uses as well.

Years ago when Napster went legit in its pay a flat fee for all-you-can-eat music, many believed that they hit upon something huge. People have already proven that they don’t like their consumption metered. Phone service and Internet service went in that direction. Later, DVDs-by-mail providers Netflix and Blockbuster did as well. Flat-fee monthly pricing seemed an obviously successful business model for music. But it still hasn’t worked nearly as successfully as iTunes’ $.99 per song own-it-forever model. Why?

People don’t want to pay an ongoing fee for the music they love

You can give people all the music they want for a comically low price (MOG offers a $5/month subscription and Rhapsody just lowered its price to a $10/month subscription) but it’s still not enough. Because once people have the music they love, they don’t want to part with it. And on the onset, these services are saying, to keep the music you love you have to pay us a fee every month to keep it. It’s a concept that rubs a lot of people the wrong way. Still both services allow you to download and purchase the music. But many people think that’s paying double for their music.

If so many agree it’s a great service model, then why aren’t there more subscribers?

I believe there are many issues here.

• The model only leans towards true music enthusiasts who enjoy the experience of discovering music. That doesn’t define the average music consumer.
• People who test the subscription service end up gravitating towards music and artists they already own. They don’t explore and therefore they never see the value of the application.
• Users can’t take the music with them. This will soon change as MOG will be offering a service for iPhone and Android users that allows them to travel with their music library (Watch my video interview with the CEO of MOG on the subject).

Paid-for music more intrinsic to the desktop experience

I suggest that paid-for music could do better if it were more intrinsic to the desktop experience. Apple has successfully made iTunes a necessary desktop application. It’s grown in importance as they’ve add capabilities, content, and features. We’ve all witnessed it go from just handling music, to selling music, to handling video, to video, to selling applications and then managing them (funny how applications took the opposite path).

itiBiti, the white-labeled desktop communications application is going through a similar growth pattern. It offers first and foremost communications, but then it can handle any kind of content. But like iTunes, it’s starting small and growing. With itiBiti’s first release, the NBC Communicator, NBC is offering clips of NBC shows through the application. This is valuable to NBC because it’s giving them a desktop presence. It’s a location play they simply didn’t have before.

Similarly, the music industry could experience the same benefits but in a way they didn’t before. Since itiBiti is advertiser and ecommerce supported, the music industry could subsidize the monthly cost of its paid-for service through itiBiti. It’s a great opportunity for the music industry. Think about the opportunities. Your label is about to release a new album. On the day of release, the desktop application is completely reskinned with your album’s cover and the suggested songs for the day are pushed to that album as well. It’s the first thing people see before they launch their browser.

Just a modest suggestion for the music industry whether paid for or not. What do you think?

Photo credit: Creative Commons attribution to Tony J Case, Great Beyond.

Intertainment Media and Itibiti Systems’ CEO, David Lucatch, is not ashamed to admit how much time and money he spends playing virtual games, especially ones on Facebook such as Zynga’s FarmVille. He admits to watching almost no TV, but is completely addicted to social gaming. Ask him about it and he’ll tell you it’s “research” but we all know he loves bragging to his Facebook friends about how many tractors he has.

Lucatch is not alone. Every day, 67 million people that aren’t running public companies are playing Zynga’s social games on Facebook. They’re currently the best model of how to make money with online content. Within the game you can pay real money to purchase virtual goods. Well now, Zynga, the $2 billion valuated company, is poised to make even more money. They’re offering pre-paid game cards at major retailers such as 7-Eleven, Best Buy, GameStop, and Target.

This is a brilliant move on so many fronts:

• What game do we buy your nephew? I don’t know what he likes and I don’t know what he has, but I do know that he likes to play Mafia Wars. I constantly get his invites on Facebook. Let’s just get him a gift card.
• Every year, an estimated 10% of gift cards go unused (source: TowerGroup consulting). That estimate was more than four years ago. Today I would guess it’s a lot higher. Have you noticed the racks and racks of gift cards now available at your super market? Here are some other amazing numbers from a Seattle Post Intelligence article from 2006.

Limited Brands Inc. said last week that unspent gift cards contributed $30.4 million to fourth-quarter revenue, boosting profit 4 cents a share. Best Buy Co. reported 4 cents in earnings last quarter from gift cards that it concluded would never be redeemed. Home Depot Inc. in June reported $43 million in pretax profit from cards sold before 2002.

• A great marketing ploy to the physical world. They’re now going to expose their brand to physical spaces and be seen. In total, Zynga will be physically distributing their game redeemable cards at more than 12,800 retail outlets. They couldn’t do this at all before with the model they had.

David Lucatch’s birthday is coming up in June. He may be a man that has everything, but he could use a few more tractors.

The New York Times today has an article about real-time bidding for advertising. The idea is that once people make purchases, their behavior is tracked and auctions start going off to be able to advertise to that user. Real-time bidding has been going on for quite some time, but profiled in the article is a new company, AppNexus which helps advertisers automate the process of analysis and bidding.

This whole discussion got me thinking about the role of advertising as marketing, as content, as helpful, and as a nuisance. The latter is not something anyone strives for, but it’s the way so many people describe advertising.

Why do they do that? Are they just being pests? Do they just like to complain?

Yes, that all may be true, but I think the truth of the matter is that advertising becomes annoying when it’s unwanted. And since it’s so difficult to effectively target advertising on a one-to-one basis, so much of it becomes “annoying.” Yet no one realizes when an ad is targeted well. No one announces, “Wow, that ad was targeted so well to me, I’m so glad they sent it to me at just this time.” Instead, they might say, “Oh, that’s just what I want” and completely not be aware of the wizard behind the curtain moving all the levers to deliver an ad to you at just the opportune moment.

So when advertising comes in at an inopportune moment, which is most of the time, how can we make it more useful? Many advertisers realize this and that’s why we see so many ads that appeal outside of their core audience. A purely entertaining ad, even if it’s not targeted to me, is no longer annoying.

But if we get to the point that we can hyper target every single ad right down to the individual, and perfectly time it, will there be anymore need for creativity? If I know at exactly this moment that you want to get a coffee, I don’t need to be creative, I can just tell you that Starbucks is selling coffee right now. Come on in. I don’t have to do anything else. Maybe I have to give you an incentive like a coupon. But really, what more do I need to do?

Could efficient targeted advertising be the end of creative advertising?

Creative Commons photo attribution to: http://www.flickr.com/photos/autohistorian/ / CC BY-NC 2.0

If you’re a technology news hound, you’re probably well aware of Techmeme, a tech news aggregator that continually crawls the web looking for the most talked about and linked to tech news stories. The ones that get the most buzz appear on Techmeme. If all you want to know are the hottest tech news stories, then all you need to do is follow Techmeme.

Techmeme was launched by industry friend Gabe Rivera who has also launched WeSmirch for tracking hot celebrity gossip stories, memeorandum for political news, and Ballbug for baseball news.

Now, for all us media fiends, Rivera has launched Mediagazer which is for tracking media news. Prior to Mediagazer I relied on PaidContent, which is a meta aggregation site on all news about the industry of making money from content. They provide an editorial touch, but they don’t let you know which are the most popular stories. Mediagazer will do that for you. And what I like most about Rivera’s sites is that not only do you see the host story, but he also provides links to some of the hot blogs that are talking about the story as well.

And just recently added to all of Rivera’s “meme” sites is an easy to share button. Click on the icon next to the media outlet and you can share the original or the Mediagazer link with others through Twitter, Facebook, or just copy and paste the link. I prefer the Mediagazer link because it comes with a summary and all the other links of blogs that are participating in the discussion.