Email newsletters are not a new innovation.

Distributing news content through email is an established practice, but the medium has re-risen over the last 3 years and now holds a prominent place in most inboxes.

Major news outlets want to send you a morning update and start-ups such as The Skimm and The Lenny Letter have built entire media juggernauts out of email alone. These start-ups have taken a page from Clayton Christensen’s Theory of Disruptive Innovation – that a more complicated product is not necessarily best for the consumer. The newsletter is a simpler platform for readers to consume the news and learn about that is going on in the world.

But why now – what happened to bring this content distribution platform back into the spotlight?

  1. Content Proliferation. They say “content is king,” but too much of it can be overwhelming. The number of new websites and blogs has exploded over the last 3-5 years and social media provides an easy way to share and comment on stories, which creates even more content the poor reader must consume to stay up to date. Readers now want curated content on topics they deem interesting, and they want it seamlessly delivered. Newsletters have provided the perfect platform to fill the demands of busy people. Newsletters arrive on a predictable timeline and are a trusted source of the key things subscribers need to know. Subscribers rely on these sources so much that according to a 2015 Quartz Global Executives Survey 60% of executives say an email newsletter is one of their first 3 news sources they check daily.  Newsletters have become the subscriber’s way of creating order in the chaos that is digital news media.
  2. Attention spans have gotten shorter.  With attention spans declining, subscribers to e-newsletters want curated content in digestible formats. 75% of the executives in the Quartz survey say they spend at least 30 minutes a day on news consumption and readers are consuming more news that ever before – which means readers demand quick, eye-catching, and memorable stories.
  3. The shift to mobile. Facebook has proven the shift to mobile is real, and the same is true in the news business. 61% of people say they now consume news on a mobile device and 44% of people say they do that consuming right when they wake up. People are reading news and email often before they even get out of bed on their mobile devices. The e-newsletter is therefore very important to content producers, and subsequently their advertisers, who have a captive audience in the mornings. Despite the best efforts of news app creators, the mobile hierarchy of email, social media, and then other news apps is still real and makes e-newsletters ever more important in today’s distracted world.
  4. Better email technology. Technology innovations have made it easier to both send and receive email newsletters. Companies such as the email marketing service Mailchimp have made creating a subscriber list and reviewing analytics easy, lowering barriers to entry for publishers. Users of Mailchimp alone sent over 100bn emails in 2014, which is a 43% increase year-over-year. On the receiver side, Gmail and other email providers now separate primary emails from everything else making it easy to skim content from a lot of newsletters quickly.

As newsletters continue to infiltrate inboxes, I’d argue that the consumer will only have time or tolerance for 1 or 2 in each subject matter. With over 1.5m subscribers as a first mover, The Skimm has cornered the general news vertical and topic-specific newsletters are the new focus. Within the specific verticals, I believe that sports is the most attractive domain.

Sports news is as an ever-prominent topic of conversation and an email newsletter is a logical platform of delivering content to subscribers. An email provides a defined list of the most important sports stories in an age when people have become increasingly obsessed with sports. Games are the most watched TV programs and fantasy sports are now played by over 50m people in the US and Canada. Sports events are often the center of social gatherings and being fluent about relevant games has become table stakes for many professional and social networking situations. The high educational barriers to entry for many sports conversations and the time required to move up the learning curve makes a curated list of relevant sports stories ever more important. Sports Ketchup is one of the early entrants into this market and has shown there is demand for curated content for the non-fan or the busy fan.

With the growth of email newsletters, I believe the biggest question is who will succeed. I think there is room for winners across verticals, but within topics readers likely only have mindshare for 1 or 2 providers on a consistent basis – making them winner take all segments.

By: Britt Danneman


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We live in an online world, don’t we? We are forgetting what yellow pages are, where the nearest local bookshop is or where we can find the nearest newspaper stand. We would rather use Google, Amazon and read news online.

But do we really live in an online world? One of the industries largely unaffected by online technology are professional services in general, and law profession in particular.

How does the typical cooperation with a lawyer look today? Image that you are an CEO of a small company and you need a legal advice from your lawyer. You call them and you agree to meet at their office in three weeks. After the meeting your lawyer will inform you that he is working on many cases at the same time and that he will need couple of weeks to work on your case. After two weeks you get a voicemail asking for a copy of one more document required for you case. After sending it through overnight mail it will take another two weeks to get a call from your lawyer’s assistant that your petition was finally filed. You are slightly disappointed that it took so long, but at the same time you are afraid of changing your lawyer.

And now imagine the world, where you would go to a web page, where you would post a question and you will get an answer from the lawyer under 60 minutes. You will get an answer from a different lawyer every time, but you wouldn’t mind because all lawyers would have access to all your files. After reading the response you will scan and upload couple of documents you would be asked to upload and next day you will get an email saying that all legal paperwork was done and your petition was filed to appropriate institution.

If both models worked and provided the same quality of legal advice, it isn’t hard to guess which one would more people prefer. But how do we get from the traditional face-to-face dedicated attorney model to the new online shared attorney model?  There are three important decisions to be made:

1) Start with the right segment – one that is considered the most transactional part of the law services. Good segment is very simple, repeated transaction where the risk of bad outcome is relatively low. Starting with the simplest tasks will enable you to focus on making the process right, which will ultimately determine whether you succeed or not – hiring lawyers is the easy part, making sure that customer really gets an answer under 60 minutes is the hard part.

2) Build a revenue structure that current players will find hard to copy. Most lawyers are paid for each hour they work on the case. Offering a low flat fee pricing structure is not only attractive and transparent to customers but it also creates incentive for the company to further improve efficiency in the future. Incumbent players will find it very difficult to copy low flat fee structure. Mostly because they make much more money on more sophisticated cases for which flat fee structure in not suitable (because amount of work is not easily predictable). As it is hard for one lawyer to offer two different pricing structures, he will choose pricing structure suitable for his more profitable cases – which is hourly fee.

3) Win the right customers early on. Persuading the business to move away from the traditional way of getting legal advice can be extremely complicated. Companies are afraid of changing their suppliers. Companies tend to stick with their current lawyers. And companies are afraid of moving to B2B e-commerce (according to Forrester, e-commerce represents 9% of all B2B sales). What if you started with Silicon Valley online companies? They should be the ones least afraid of changing to the online model. And getting some of the big names as a showcase would help a lot, but how to get to the first one?

Companies like VISANOW are seeing this opportunity and making their choices. VISANOW chose to start with immigration law (filing green cards and H-1B petitions) and they are offering a flat pricing structure. Winning the right customers early on seems to be the hardest part.

We don’t know yet whether VISANOW will be able to attract the right customers. We don’t know whether they will stay in immigrations services only or whether they will move to other parts of the law profession. But we do know that big online revolution for the law profession and potentially all professional services is coming.

By: Palo Cvik


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9:25AM: Wake up to my phone’s notification that class starts in 5 minutes. Mildly panic.

9:26AM: Wash face and make myself look somewhat presentable (at least from the torso up).

9:30AM: Open laptop. Class starts. Still wear pajamas on the bottom.

It’s a university. 4-year accredited. 121 students in this year’s first-year class. Everyone lives in the same dorm. All classes have less than 20 people. No lecture, only classroom discussions. But here’s the real kick: all the classes are done online.

Welcome to Minerva Schools at KGI, with a bold mission to take down Harvard. Minerva was born in San Francisco, when a successful entrepreneur and former CEO of Snapfish Ben Nelson wanted to build a new kind of university that directly challenges what he views as a broken higher education system. Everything about the university is meticulously thought out. In the two years between Minerva’s founding and its admission of the first wave of students (that they lovingly call the “Founding Class”), Minerva questioned and restructured every aspect of an undergraduate education, from content (curriculum) to structure (lecture format) and admissions (SAT scores)*. But what may be most interesting is that all of their innovation is based on an online platform.

One might hear the word online platform and think, “MOOC (Massive Open Online Course).” Not quite. MOOCs are open to the public, largely imitating the form of a lecture and for the most part, one-way education where students are on the receiving end with the exception of “participating” through comments. Minerva is not open to the public (it has a stringent admissions process), and the classes are not one-sided (students are expected to fully participate in their classes).

Or an “online university” like the University of Phoenix. No again. Minerva simply has an online “platform” where students learn, but it has a dorm where every student lives in, co-curricular programs done outside the classroom (and outside of students’ laptop monitor) that incorporates the learnings from the classroom with offline visits and activities.

Then the real question is, why? They already seem to have a great curriculum and a great teaching model – why do they need an online platform? Wouldn’t discussions be more effective in an offline setting? Is this simply to lower the cost of education?

Let’s first take a deeper look at the platform. Minerva’s patented online program named the “Active Learning Forum” works like this. Students log in when class starts; professors also log in (from their respective homes that don’t have to be in San Francisco). All students’ faces are placed on the top of the screen, and whoever is speaking at the moment has the full stage (aka the middle of the screen; see image below). Professors guide the discussion, often cold-calling on people who haven’t spoken as many times in the class and asking students to back their opinions based on the poll they just took on the platform (see image below).

1) poll

To the “non-believers,” it may seem that while Minerva’s methodology looks very engaging (even resembling the HBS classrooms and the case-method), the online platform is more of a nuisance than a merit. To this concern, Minerva is adamant that their platform is not only practical but also necessary. For one, the tools help professors achieve high quality discussions. Professors can see who has spoken and who hasn’t on the screen, which marks those who haven’t spoken much as red and others as green (see image below). The system warns the professor when he speaks for more than 5 minutes – gently reminding him or her that the class is for discussion, not lecture. The polls show students’ responses in real time, facilitating discussions. Small group sessions can be broken out within the system, and 2-3 people are matched with a googledoc they can collaborate on the platform (no need for switching seats and shuffling about in the classroom). Another point is that the tool records everything, which allows the professor to give detailed feedback on students’ participation, fostering students’ development. Last but not least, the online platform allows students to have an international experience throughout college. Because all classes are done online, students go abroad every semester after their first year. For example, their sophomore fall, they go to Berlin where everyone lives together but still takes classes online. They get to still enjoy the high level of education that they have signed up for (which, some may argue that study abroad programs don’t provide) while experiencing a different culture.

2) green red

The students seem to think that the system works. They talk about how extraordinary the education has been, something that they have never experienced before. They actually say that, because the professor can see everyone’s faces facing the screen at all times, the online platform makes them be even more focused in class.

Reflecting this sentiment, Minerva accepted 220 students out of almost 11,000 applicants in their mere second year. It received almost $100 million in funding. Minerva certainly seems to be on a good trajectory in many measures. But there is something still foreign and discomforting about the concept of an online platform as an effective tool for heightening student engagement in class. Is it really the online platform that is effective and core to the success of Minerva? Perhaps the structure of the class with a tight discussions format keeps them on the feet enough to counter the effects of getting bored of staring at a monitor. Is a lower tuition partly due to having no lecture halls, gyms, or sports teams necessarily good? Who loses in this more “efficient” system? Who wins? Is their platform really a necessity or a practicality?

The source of this discomfort and pushback may be the fact that we ourselves are a product of those traditional education institutions. What is Minerva’s model implying about the level of education at existing institutions like Harvard or HBS? This hints at a real challenge for Minerva as a disruptor – convincing the population who have believed and lived in the legitimacy and prestige of the existing institution system.

If anything, Minerva found a niche that the first wave of “online platforms” lacked – human interaction that flows in both directions. It presents to us an option that only utilizes a technological platform in order to connect people rather than using it to replace people. In a world that is increasingly valuing algorithms as an answer to everything (e.g., dating), it can be a refreshing example that implies what needs to be there for the success of a tech-based platform – human aspect.

* Minerva abolished the lecture format and does not require/consider SAT scores for admissions

By: Seong Min Lee

 


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I would like to introduce a new product I came across while reading the news a few weeks ago. According to its website:

AdTrap is a small, zero configuration device that removes ads from your Internet connection before they reach any of your home devices. Video, music streams and mobile apps and websites, all ad free. AdTrap works with any browser and all of your connected WiFi devices. You can also connect AdTrap directly between your computer and the wall/switch (work, hotel, conference room). AdTrap also works with all-in-one modem/routers provided by your Internet provider.

This product is currently priced at $139, and to date, is the only available hardware product that blocks ads before ad content actually reaches the PC or any other WiFi connected device. It thus offers a hassle-free and standardized way to block ads out of the internet browsing experience. Users, though, still have the option to “whitelist” certain websites and to view their ads.

The founders raised around $200,000 through a Kickstarter crowd sourcing campaign.

While a tech-savvy friend told me that banner advertisers could find their way around the capabilities of this product by making ads that have picture file formats, it is quite evident that such ad blocking hardware would have an impact on a wide range of lucrative ad platforms, such as YouTube’s video ads or hyperlinked display ads on practically all websites.

Also, even though AdTrap might not become very ubiquitous as a standalone piece of hardware, if manufacturers of WiFi routers find it appropriate to acquire AdTrap or its technology, the outcome could be an integrated router that incorporates ad blocking technology at a minimal markup over current router prices. If ad blocking hardware embedded within a wireless internet router becomes the norm, search engines and other advertisers might find it very difficult to win the fight against routing equipment manufacturers.

While having an ad free internet browsing experience is favored by many, opponents of such an outcome argue that it could bring about the end of free internet content, when users would have to pay for all types of previously ad-supported services.

Faced with a potentially dangerous disruption, internet giants that rely on ads as a major revenue stream should seek to devote their vast engineering resources to finding ways around this ad blocking hardware’s capabilities. Alternatively, they should acquire this company and its (hopefully) patented technology at a generous price tag to remove it from the market before it makes headlines again.

The following YouTube video illustrates AdTrap’s functionality: http://www.youtube.com/watch?v=MonxXYLV44U

 


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The music industry is perhaps one of those most affected by the advent of the Internet. Higher internet penetration and greater bandwidth have allowed more and more people to download music online. Online services that have emerged at the turn of the century such as Napster, Kazaa, and BitTorrent have made peer-to-peer file sharing increasingly easy (albeit illegal). This has resulted in a surge in music piracy, significant infringements on music copyrights and substantial losses to the music industry.

Later disruptions to the traditional music business model included YouTube, where artists could present their music and music videos without having to go through the more conventional “MTV” route; and of course, iTunes, which has made it very effective for consumers to buy a single song off an album. The combination of the iPod and iTunes store has made the need to buy a CD or any other form of physical record virtually obsolete. Consumers can now “break up” an album and choose only the song(s) they like – instead of buying the record in its entirety – at a significantly lower price per song (between $0.99 and $1.29 per track[i].) The latest wave of change in the way people consume music is the growing use of online streaming. Many people now do not buy songs at all; instead they stream them using music sites such as Spotify and Pandora. In this new model record labels and artists make money out of advertising revenue and ever-smaller music licensing fees.

As a result of these successive disruptions to the music industry brought about by the Internet, it is estimated that in the last decade, album sales dropped by a quarter in the period between 2001 and 2005[ii]. Album sales went from an all-time high of 785 million units in 2000 to a little over 247 million units in 2010[iii]. The highest revenue source for record labels in 2011 was iTunes, generating $3.2bn. A distant second is Spotify, which, between its free and paid subscription models, now stands at 23mn subscribers[iv].

Of course, there is the counter argument that instead of killing the music industry, the Internet has actually set music free. Instead of being at the mercy of one of the four major record labels (Warner Music Group, Sony Music, Universal Music, and EMI[v]), musicians now get to produce their own music, share it online with their fans (inexpensively or free of charge), and leverage social media to build a strong following. This ultimately gives them more creative freedom and stronger leverage to negotiate better deals with the majors. What is more, the ubiquity and low cost of offering music online allowed for the fragmentation of the music market. It is now possible for artists with very peculiar tastes in music to express themselves creatively and yet still find a niche market interested in their offering. This would have never been possible with the large music labels looking only for artists with reasonably wide appeal[vi].

By opening up more avenues for artists to reach their audiences and establish a dedicated fan base, sources of revenue other than record sales have become more salient. Examples of these alternative revenue sources include live music ticket sales, merchandise sales, and music licensing for television shows[vii]. While record sales have been facing a steady decline, revenues from concerts and music festivals have in fact been on the rise[viii]. David Laing from the University of Liverpool estimated that live music revenues stood at $25bn in 2010[ix]. A live show experience is virtually immune to piracy and is arguably very hard to replicate via other media[x].

It seems, however, that that is exactly what the new online platform VyRT (https://beta.vyrt.com/) is trying to do. From its “About” page: “VyRT gives Artists the opportunity to sell digital tickets to live events that are broadcast worldwide in an online social theater.” For a pay-per-view fee (around $10), virtual ticket holders gain access to a fully-produced, high quality live stream of their favorite artist’s live show; which they can then enjoy either on their laptop screen in their PJs with a pint of ice cream, or on an internet-enabled home entertainment system during a viewing party with their friends. In addition to the live broadcast, VyRT offers extra perks such as backstage access and artist Q&A. It also adds a social component to the fans’ experience by allowing them to interact with each other and with the artists via live chats and comments.

VyRT is still a pretty young platform (it is still in beta testing.) So far, it has supported three events by the band Thirty Seconds to Mars (Jared Leto, lead singer of the band, is actually the entrepreneur behind VyRT.) Earlier this month, VyRT acquired its first “outside” client by featuring the Jonas Brothers’ performance at Radio City Music Hall in New York.

I have personally viewed one of the Thirty Seconds to Mars performances on VyRT (yes, I was in my PJs with a pint of ice cream) and I must admit, I have thoroughly enjoyed the experience. While there are still a few technical glitches that the beta version is trying to hash out (especially with the live chat feature), it definitely felt a lot more than an impersonal, one-dimensional live stream. The streaming quality was remarkably good, with a crisp image, clear sound, and few – if any – interruptions. For 10 bucks a show, I definitely felt that I was getting my money’s worth.

Of course, the question remains as to whether VyRT, and potential similar platforms, would do to live music what iTunes and Spotify have done to recorded music. My assessment is no. While VyRT is certainly entertaining, it is still very difficult to replicate the sheer energy of a live show. Instead of being a substitute cannibalizing the concert business, I view VyRT more as a complement, catering to those around the world who, like me, would not have been able to attend the live show anyway. In that regard, VyRT is reaching new customers and opening up a whole new revenue source, in addition to actually building up demand for both the records and the live shows. After my VyRT experience, I for one am not only ready for another one, but also for a real, loud, all-out-crazy concert.


Endnotes:

[i] http://www.businessweek.com/news/2011-11-14/record-sales-rise-as-lady-gaga-adele-find-a-future-with-spotify.html#p2

[ii] http://voices.yahoo.com/the-music-industry-versus-internet-4552117.html?cat=15

[iii] http://www.businessweek.com/news/2011-11-14/record-sales-rise-as-lady-gaga-adele-find-a-future-with-spotify.html#p1

[iv] http://www.businessinsider.com/spotify-revenue-labels-2012-6#ixzz1yvGetHxA

[v] http://www.businessweek.com/stories/2009-03-06/the-music-industrys-new-internet-problembusinessweek-business-news-stock-market-and-financial-advice

[vi] http://www.time.com/time/arts/article/0,8599,1900054,00.html

[vii] http://www.time.com/time/arts/article/0,8599,1900054,00.html

[viii] http://www.pwc.com/gx/en/global-entertainment-media-outlook/segment-insights/music.jhtml

[ix] http://livemusicexchange.org/blog/whats-it-worth-calculating-the-economic-value-of-live-music-dave-laing/

[x]  http://voices.yahoo.com/the-music-industry-versus-internet-4552117.html?cat=15


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