Why did Jaman fail?

Jaman seemed to be doing everything right.

• Help film makers distribute movies over the internet…
• Give viewers tools to publish their preferences and help filter content matching their tastes…
• Support buy, rent and free distribution… Support online viewing, download, and even on TIVO…
• Layer multiple levels of social engagement and help viewers connect with other viewers with similar interests…

However, Jaman as a consumer service will end soon.

For many people working in the online video world, we saw Jaman as a guiding light.  So why did they fail?

Customer Assumptions

Let’s first start by asking what the likely assumptions were about their customers;

People find it difficult to discover, buy and watch independent [non-mainstream] movies [over the internet].

There is only one fundamental assumption that drives the business and around which the service is oriented.  However, if you think about it, the market they are playing in already exists.

If you go to Netflix, Amazon, Blockbuster or into your local video rental shop, you will find much of the same choice of video alongside mainstream [heavily marketed] titles, albeit the brick and mortar shops are lacking in rich context with no indicators of quality like reviews and ratings.

Existing Market

It’s clear that Jaman are competing in an existing market (independent movies on DVD) and differentiating with ease of access over the internet and enhanced tools for discovery.  Consider the market for independent film on DVD is relatively small (8% rentals and 16% sales), and maybe Jaman can help grow the market size, but ultimately they are competing for viewers where viewer demand is relatively low, 84-92% of people are viewing mainstream titles.

Like many digital content businesses, the problem isn’t with supply of content, but with demand.

Driving Demand

It is no wonder demand is low, people are regularly bombarded with marketing messages about the next big blockbuster, we measure success based on box office takings, celebrity credits, use of special effects, and even movie budgets.  Independent film is hidden away in the major movie rental shops.  Only those that seek hard, find what they are looking for.

The potential audience lacks knowledge to make a choice to choose alternatives.  Knowledge about breadth of choice, about different forms of film, about different ways of telling stories, about film written in languages other than their native tongue, about amazing talent that doesn’t run in the hollywood circles.

Changing Assumptions

Armed with this perspective, should Jaman change their approach to the market?  Let’s add a further assumption about their customers from this point of view;

People lack understanding and knowledge about independent movies

Helping Viewers

Simply put, Jaman needs to deliver a film discovery experience that rocks (these filmmakers talk about their thoughts on discovery).  Discovery needs to work for all types of persona, but critically, for the uneducated and uninformed.

If I look at http://www.jaman.com today to see how this need is met, there is a editorial review section but not much else that helps.  There is a lot of context being created around the content from an active community but if I am lost to begin with, and not a participant, this wont help me.

I think we are really early in the video space with discovery tools, particularly if the viewer doesn’t know where to start.  Some interesting tools I have come across this week are Nanocrowd and IndieFlix.

IndieFlix is a competitor for Jaman and it looks like they are directly addressing the under-served market.  Both tools take the input of movies you like, and provide recommendations based on crowd sourced and editorially driven formulas.  They look good and seem to work well, particularly Nanocrowd which is far more encompassing.

Looking to the Music Industry

However one area where people have been tackling the same challenges is music.

The music industry as a whole has shifted the way it markets music to people.  Almost every single track from a mainstream publisher can be listened to for free prior to purchase.  From what I’ve seen from the independent music market, the same is true there.

This is a significant shift in the purchase experience because it reduces risk from for the buyer. In any market, the more informed a buyer, the less annoyed they will be when they buy something they don’t like.

Can you image paying even $3 for a movie rental or for a $15 purchase, to discover 10 minutes in you don’t like it?  Jaman lacks a critical part of the purchase process, visibility of the content itself.

There is a huge transaction risk to the viewer.  Yes some video is free to watch, but it seems mostly paid rental or purchase.  What is needed to drive consumption is far more flexible pricing and preview models.

For eMusic, they recently stated that all the community services and tools are great, but “we reinforce the music discovery experience with subscription pricing that encourages experimentation“.

Discovery is about Experimentation

There is a hint of Jaman trying to help with experimentation.  They offer 30 movies for 30 days.  This sounds great, but the movies are chosen by them, and you have to watch one a day.

What about models like?

– The first 500 viewers of each movie watch for free.  The next 5,000 pay $1.  The next 50,000 pay $5.

– Your first 3 rentals in each genre are free

– Watch the first 10 minutes for free.  For every movie

– Watch the movie, pay what you think it’s worth, a la Radiohead

– Advertising supported

What Next?

The trailer isn’t enough any more.

Unfortunately for Jaman they are sitting at the distribution end of an entrenched physical DVD distribution model.  There is little they can do to innovate around pricing on a large scale.  Fitting old media distribution models into new media consumption models is impossible.  Maybe they tried.

Where I see hope for independent film creators is with services like IndieGoGo.  Services that help creators build a fan base from the beginning rather than leaving it to advertising at the end.

There are some high profile creators like Joss Whedon, however I don’t see a lot of output from filmmakers going straight to the internet (maybe I’m looking in the wrong places?).  Many are still focussed on competitions, festivals and trying to hit out with a distribution deal before publishing online.

The internet democratises distribution.  I’m excited to see new filmmakers buck the trend and start to experiment online, set their own distribution models, define their own pricing, free of the constraints that hold back every talented artist out there.

Note–

I am not close to Jaman and they could have tried all of these pricing models in their history.  I would love to see some data about uptake and usage of their service, I think they would have some valuable information to educate us all.

Update–

I just came across an excellent example of free distribution, Star Wreck, they distributed the movie for free online and focussed on making money later with merchandise and DVDs. A very different approach to pricing.

Music…beyond purely economic value

There are a lot of cool music sites springing up, that move the discovery experience away from a typical local (itunes) or social (last.fm) experience.

http://www.thesixtyone.com/
http://blip.fm/
http://www.thenextbigsound.com/

These companies all have one thing in common.  They are using crowd sourcing in a game format to help drive people to discover new music, and more importantly, help artists find new listeners.

Essentially people submit their interests/preferences for a certain artist, and others are able to vote on that recommendation.  The role is that of a DJ or record producer.  It a bottom-up way of harnessing a network of people to filter through the massive amounts of music out there.

In the context of the music industry where p2p file sharing is rife, record labels are suing fans and aggregators alike, where production tools and distribution are virtually zero-cost, MC Hammer asks a pertinent question, “what is the value of music?”.

It’s these crowd sourcing services that provide the answer.

Music has traditionally been about creating or harnessing social and cultural memes, mostly delivered through an emotional message.

These new services serve to directly harness the social capital, cultural capital and emotional capital of a crowd of people as it applies to music that passes their ears.  Once the music is in the system, social/cultural/emotional constructs and attributes are created by people and used to help define the value of the music from an individual to an aggregated level.

These new services simply use these constructs to connect people to new music.  They replace the role of the record label and they do it more efficiently and more scalably than a record label can, who are constrained by a limited pool of physical talent in A&R, Marketing and Distribution.

So to answer MC Hammer, the value of music is the same as it always was.  The focus is first and foremost on value that is meaningful to people at a fundamental human and social level, the money comes later.

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Rethinking the Fundamentals of Media Investment – Part 1

Publishers [Studios, Broadcasters, Networks] currently constrain the whole media value system by absorbing the financial risk of investment in media supply, controlling media demand by ensuring distribution scarcity [controlled by them and possibly by regulation]. In return they take a lions share of the value, financial and otherwise. This strategy works.

However, when there is no distribution scarcity and an abundance of media supply, i.e., on the Internet, the model is blown. The current value system can no longer efficiently [and effectively] allocate financial resources to invest in the right Talent to ensure a blockbuster. In fact, the blockbuster can no longer be realised using todays methods.

Any change to the existing model means shifting who participates in the risk of funding media, without guaranteed returns. Looking across the rest of the value system, there are candidates who can take this of investing in supply; the Viewers, the Marketers and the Producers.

A. Viewer Funding. One or more Viewers fund the production of for-profit and non-profit media. The Viewers take the risk, and could have an option and desire to participate in the return. However, funding with an expectation of a return is likely to be treated as a security, limiting the options for how this model works due to regulation.

B. Marketer Funding. One or more Marketers take the risk and fund the production of media (This was how soaps were originally created). The current ROI revenue model for video entertainment, in-stream advertising, is driven by marketer money and this model flips the investment to the beginning of the production process. By committing marketing money up front, and by participating early in the process, marketers have an opportunity to be significantly more involved and relevant to the experience and therefore more than just an interruption to the experience. This however should not mean branded programming and heavy product placement. This is an opportunity to innovate how marketing experiences are created for video.

C. Producer Funded. One or more Producers take the risk and self-fund production. This gives Producers complete control but the only people that can do this are the ones that have funds at their disposal; These are a) Producers with existing revenues to reinvest (high up in current Publisher funded hierarchy) b) Producers with VC backing who are trying to establish a pedigree in the market (there are so many of these today), and c) Producers of user generated content, mostly a labour of love from people with financial and/or time freedom. However, producer funded systems are not financially or creatively scalable as they are inherently limited by reinvestment of revenues. A series of failures, and a Producer could fall just like the Studios today.

So, which will it be? or will a combination of two or all three of the models above?

EMI forgets the other half of economics

Guy Hands is laying off big time and talks the talk but so far all he is talking about is increasing supply.

Taking some key facts from FT article;

* 200 of the 14,000 artists EMI deals with each year account for more than half its sales
* Record companies lose money on 85 per cent of new artists, even before overheads
* More than 30 per cent of EMI’s artists have not produced an album. Many never will

What does this tell you about talent and creatively driven media? It’s impossible to predict success.

So his idea, increase A&R! Find more talent. The problem is, they don’t have a shortage of talent, i.e., supply.

EMI (and the rest), have a shortage of demand.

The decline of the music indsutry

Seth Godin posts on the decline of the music industry, “Music is social. Music is current and everchanging. And most of all, music requires musicians. The winners in the music business of tomorrow are individuals and organizations that create communities, connect people, spread ideas and act as the hub of the wheel… indispensable and well-compensated.”

If you replace “Music” for “TV”, we face the same opportunity.  Just a few years behind.  Let’s not leave it to the last minute to do something