 I'm going to be talking about audience research, and the title of my thesis is Audience Research for fun and profit. Rediscovering the value of the television audience. So before we start to get into the value of the television audience, I want to start by telling two stories. The first happened at above this time last year. The show Chuck, which is on NBC, was about to be canceled. And while Chuck had pretty low ratings, it had a very active fan base online. And those fans organized. And instead of just writing letters to NBC, which is what fans would usually do in this case, these Chuck fans organized online, and they decided to go directly to one of the sponsors, one of the advertisers on Chuck. Subway sandwiches. So thousands of Chuck fans all over the world on one day went into Subway and bought footlong sandwiches. They then wrote on comment cards at the Subway saying, I love Chuck so much. I'm really glad that you're sponsoring Chuck. Please help Chuck on the air, or something to that effect. They also wrote letters to Subway executives and to executives at NBC. And here, this is a quote from one of the saved Chuck websites. The intent is to let the network and their sponsor know that we've received their message. This is something a Nielsen boss can't do. This is a transition of fan loyalty into real dollars that NBC and Subway can measure. So these fans were really smart. They understood that to both NBC and Subway, they were really only valuable as people who buy sandwiches. So instead of just talking about how much they love Chuck, they made themselves very visibly into people who buy sandwiches. And it worked. NBC kept Chuck on the air for another season. They credited the fans. And they also worked out a deal with Subway, where Subway is now a more prominent sponsor. Because Subway saw the value of this audience and wanted to get more involved with Chuck. So the second story occurred at the same time last year at the exact same network, NBC. And what happened was NBC decided to forego an hour of scripted programming every single weeknight at 10 o'clock. So instead of having something scripted on, they decided that they were going to have a talk show hosted by Jay Leno, who used to host The Tonight Show and now hosts The Tonight Show again. And this case is just almost 180 from the way the Chuck audience was made valuable. NBC basically ignored the cultural value that anyone would have gotten from something they put at 10 o'clock and gave everybody a whole bunch of Jay Leno that they didn't really want. And the reason they did this was because producing a talk show is super, super cheap. So even if the ratings were low, they could recoup their costs and even squeak out a little bit of profit by putting Jay Leno on instead of an expensive scripted show. Unfortunately, because they ignored the cultural value that people get from programming, this plan backfired. This is one of my favorite of many state interviews of the Jay Leno show. Nancy Franklin in The New Yorker wrote, The forensic evidence so far indicates that a kind of death is taking place before our eyes. NBC's attitude toward the Jay Leno show signals a whole new level of indifference, resignation and laziness. So by ignoring the reasons why people watch TV and programming to their bottom line, NBC really messed this one up and managed to create what you can see in the weekly called the number one and biggest TV bomb ever. So these two stories illustrate to me that there's something wrong with the system in place that is making audiences valuable. Both of these sort of went around the system of meals and ratings to try and make audiences valuable in a different way. In Chuck's case, they were trying to translate their cultural value into that space. And in NBC's case, they were just programming to their bottom line rather than to people. So the first issue this raises is what I'm calling a crisis in innovation. And I'm not talking about technological innovation. Technological innovation is actually part of the problem, but I think that that is pretty much covered. I'm really talking about a crisis in innovating the relationships that make these business models work. So just briefly, here are sort of all the players in the television industry. A corner up there, you've got the TV audience. This big guy here in the middle is Mr. Nielsen himself who started the business of meals and ratings. Then you've got advertisers represented by Mad Men here. And the networks, the program, the shows. And then there's the cable guy in the middle who you use to respond to the content. So the way that the system has worked traditionally is that programmers create content that is then distributed to audiences, either through cable or through broadcast or satellite or whatever. Then the audiences are measured by Nielsen. So Nielsen essentially takes the audience, measures what it's doing, and turns that measurement into a currency that's called ratings. The networks then subscribe to Nielsen ratings, they give Nielsen money, and in return they get ratings. The networks then give those ratings to the advertisers that the advertisers use to decide where they're going to place ads depending on what kind of audience. So Nielsen here you can see is the mediator. The reason that happened is that Nielsen saw the need to create a currency because if the networks are measuring their own audiences, the advertisers aren't necessarily going to take their word for it because they obviously have an incentive to make the audiences bigger and better than they are. So Nielsen sort of stepped in as a neutral mediator. The problem is that with digital distribution, this system that sort of worked before doesn't work anymore because all of a sudden TV doesn't just look like that, but it looks like this. We've got video on demand. This is this South Park full episode player you can watch online. This is a Facebook stream next to a live stream of CNN. We've got mobile TV. And then what happens when people are doing all the stuff it wants? All of a sudden this currency that works and the traditional space doesn't work anymore. So I'm suggesting a few things to fix this situation. First, the actual corporate culture of these institutions needs to change. They need to reevaluate the relationships. Now they're still thinking of television like this. So when a new model comes up, when we have a mobile TV or when we have online TV, because that relationship is so complicated and took so long to develop, they're trying to just shove these new things into that old model. But that model was made for this and this isn't what TV looks like anymore. It's digital now and who's good at digital things? These guys. So you've got Sony making PlayStation, making Internet-enabled TVs. You have Amazon and Netflix who are both really good at making sense of data and curating that data and helping people find it. And then you've got Microsoft and Apple, which, you know, Apple just announced that they're starting an advertising platform. Microsoft's got one. Microsoft's also manufacturing hardware like the Xbox. So the challenge here with these other industries is really twofold. First, the television industry needs to look at these businesses and see what they're doing that the television industry isn't doing. And they also need to see these guys as viable competitors because everyone on the slide is getting into the TV business and is threatening to do it better than the current TV business. So the first thing I think needs to be examined is that they really need to find value in context. These are all valuable ways to watch television, but, you know, the mobile and online is different, and it's not better or worse, but it's new. And it needs to be looked at as a new site of value and it needs to be understood as such instead of just trying to make these things look exactly like TV. The second thing that needs to change is the role of the mediator. We have Nielsen here. You know, he's trying really hard to get all these data streams to make sense, but it's just not working with the old model. This is a quote from the chief research officer at NBC in ad age. He said, this isn't just about television. The problem extends across all media platforms and it's not about the lack of data. We're virtually drowning in data. And in case you want me to make that more clear, all of a sudden there are all these data streams that the programmers need to make sense of and Nielsen just can't do that anymore. So what does a new mediator look like? You may have noticed that Google was not on that other slide because they're here. Obviously Google has pioneered, you know, a different kind of advertising model. And Google's really just one example of how this can work. But the value that Google really brings to the equation is that while Nielsen makes data, while Nielsen takes what the audience is doing and makes it into a currency, Google does that but they also make sense of the data. So, you know, they give people actionable things and they also create a marketplace where advertisers and programmers can actually, you know, interact with each other through Google. Now I'm not saying that that's necessarily the answer, but it is one way to re-evaluate the world's mediator given the affordances of digital distribution. So I want to take a step back now and look back to the two stories at the beginning. I think there's also a big problem in how the audience is made valuable. You know, we have the Chuck audience that makes itself valuable by buying sandwiches and then the Leno audience which doesn't even really exist but is valuable because it includes the network's money. So I'm going to walk through a bunch of assumptions that have sort of evolved in the television industry and sort of push back against how these assumptions work. So the first assumption is that consistency in the ratings currency is more important than accuracy or more important of even knowing what watching is. So when Nielsen rolled out their people meters, which is the boss that sort of like makes ratings, all these families got people meters and then that was kind of it. There was a big study done in 1992 and they found that although they're given the responsibility for Nielsen family, an operational definition of watching is not provided to anyone in the household. So they have this thing that's supposed to be measuring how they're watching but they don't even really know when they're watching, what watching means. And the reason that that was okay is because as long as the ratings currency remains stable, that's more important than what's behind it. If there's basis for the negotiation, the market can run. But I think now with digital data, things are a lot more visible and we can see that well actually maybe there's better ways to quantify tension. So the next short cut assumption they kind of make is that a passive audience is the best audience. Like these people just sort of misrun by the TV. You know, it's really easy. I mean you kind of laugh but it makes sense that this would be the easiest thing to measure. And this is a quote from David Pultrack who's the chief research officer at CVS. He says, we all agree that the best technology is a totally passive system that doesn't require any interaction with the viewer. And that's because as soon as the viewer has to interact with it, has to do something, there is, you know, you run the risk that something is going to get messed up and the data isn't going to be accurate. So they've sort of been pushing toward more and more passive systems. And this next assumption goes along with that one, hands in hands. This next assumption is that the more scientific a method of measurement, the better it is. So this is actually from the 60s. It's an eye scanning thing that they would put in front of people's eyes and like watch them, watch television, see what was happening. And this quote here is from an EEG study that was done in 2004. They concluded, viewer engagement is highly covert in nature. Although it may have observable behavioral correlates such as direction of gaze, it is not itself directly observable by others. So basically what they're saying here is that you need to have some sort of scientific mediator between the audience and, you know, the actual act of engagement. Because, you know, again, people themselves can't be trusted to, you know, express their own engagement in any kind of way. So all of these assumptions have given us this operational definition of a television audience that really based on the concept of exposure. And that's been the paradigm, really, because all you can measure is, you know, the person is in the room with the TV. The TV is on. That person has been exposed to the TV. That is the best we can do. It's the best we can give you. And that's the traditional way that television audiences have been made valuable. And I want to push back against that. So I'm suggesting that we move from exposure past the Internet idea of impression, which is, you know, basically another way of seeing exposure, to an idea of expression. And then there are, you know, Internet business models, obviously, that take that into account. Chuck here is really just a placeholder. Because we've got all different kinds of expression going on. Obviously there's, you know, fan expressions like this, like the Chuck example, which is very clear. But because we're dealing with digital data, there's now an active expression every time someone hits a button on their remote. You know, if you choose to fast forward a commercial, that's sending a message to the network and the advertisers. And that's all really valuable information that can help them learn more about their audiences. Same thing online with clicking. Obviously there are a lot of business models that have evolved around cost per click, cost per action, those kind of models. And the intelligent industry, you know, needs to sort of figure out how those are going to work for their own business. And now this is sort of like what the value reconfiguration looks like. You know there aren't really any arrows like saying how this is going to work, because that's really the challenge that faces these industries. And that's what I go into in more depth in my thesis. But basically I'm saying these changes need to happen soon. Because we're now in a position where the cultural value of content just isn't in line anymore with the commodity value that the networks are placing on the audience. Now, you know, I don't know if we've ever been able to measure the commodity value or the cultural value that people get from content. But now it's just even more apparent that we're really not doing it right. Because we can see these visible manifestations because of network culture. So is there a way to measure and anticipate the cultural value that people are going to get from things? So here are just some recommendations. I like to use the term relevant audience instead of getting into the more nitty-gritty of exactly what you're trying to deliver because I think it's going to be different in every case. So first, I suggest looking at fans only as a first point of intervention. Because I think Flores just, you know, gave us a great presentation about how fans are not monolithic and how fan behavior doesn't necessarily reflect what the rest of the audience is going to do. I think fans are a good place to start because their behavior has always been more visible. So it's a good place to at least get into understanding audience expression. But it's not the only way. Use patterns is another thing that digital data can tell us. It tells us how people are watching TV. Again, it might not tell us what values are coming from it, but this kind of behavioral data is better than just guessing and better than just saying, well, you've been exposed to it, so it must have worked. And closely following that is this idea of context. It's more than just how people are watching, but it's also about where and when. I mean, we can see that people were able to stomach J-L-N-L late at night but got really mad when they moved to 10 p.m. And that's, you know, that's really an issue of context that, I mean, people, you know, should have been looking at all along, I suppose. But those are things that, you know, we really can't afford to forget. Again, context might not be able to tell us the cultural value of content, but it does help us know more about viewers. And then again, I just want to re-emphasize that the relationships here are really getting in the way. The way the industry is structured. And I'm suggesting that, like, these really cute baby animals, everyone needs to be a lot more flexible, willing to share. Because data, like, everybody has so much data now. And guarding that data closely isn't as important as it used to be because the key challenge is making sense of that data. So sharing, you know, as much as possible and trying to figure that out is really going to be the way to go moving forward. And then the last suggestion is to experiment. One of the coolest things about digital, especially online stuff, is that you can experiment in real time with almost real result, real time result. I mean, that's what Google does. They test their algorithm hundreds of times a day, and they make it better every day. And, you know, you're able to go in, try something, if it doesn't work, you can change it really quickly with little snowpots. Once you've got your fixed cost covered, like, digital distribution is really cheap. And another cool thing about this is that though the online space is different from traditional television, the learnings that you get online can really be applied back to television since, you know, it's all digital distribution. So if you want to play around in a space where you're not making as much money and then, you know, apply it back to regular TV, I think that that's the wisest strategy. And that concludes my presentation. I have a question about, this may be a dumb question, but so when you talk about things like viewer engagement and these cultural, this cultural connection with, they're connected with the content. It seems like a distinction for me that's important, so I can only speak from my own experience, I guess, is the difference between content that is content and content that is ad. And my engagement with an ad on TV or an ad on Hulu or a pre-world ad or whatever is different than my engagement with the content. And it seems to be, I know we've talked a little bit about this, the ugly thing that people don't talk about is whether or not engagement with the content actually translates to any kind of engagement with the other thing. And I'm not sure what, in your suggestions now, mediates that gap. Like, I understand the gap, but how understanding people and their engagement with the content that is content, but what about the content that is an ad, right? Like, some way, for example. Right, well, I mean, that's always sort of the question. You really get into questions of advertising effectiveness. Like, does this actually work? And that's something that I don't, maybe people disagree with me, but that's something that I don't think anybody's really just definitively ever been able to answer. So then you get into more nuanced questions of branding. You know, if you, exposure models work really well for branding. Like, you know, you see something everywhere, it makes an impression on you. If that's all you want, like, how engaged you are with the content. But then these changes, especially things like fast forwarding, that kind of thing, but also given rise to, like, the new era of product placement. Chuck, again, is a good example. Now, because of the deal with Subway, there's a lot more Subway in Chuck. So it's kind of being integrated into the content. So then if you are engaging with Chuck, like, you can't help but see that Subway's also there. And whether or not that translation to purchasing is another issue, which I do go into in my pieces. There's sort of been a push in the advertising industry to get single source data. So, like, one provider will tell them, like, from the point of exposure, like, I saw a commercial to the point of purchase. I bought the thing in the commercial. They've been trying to get that kind of data. And there have been some, like, huge, huge notable failures on that front to do it. So, I mean, I think that I personally think that that kind of thing is silly and that it should just be reconceptualized and that advertisers really need to say, what do I want to get out of my advertising, right? Like, is this about exposure? Is it about branding? Or is it about direct response, which is something that you can do more, you know, on the internet with behavioral targeting, you can say, oh, you were just shopping for a flight. I'm going to, like, serve you an ad about a flight, um, you know, that's directly, like, targeted to you. And then I can see if you click on it or whatever. So, um, yeah, I think, does that answer your question? Yeah, I guess the question is, like, if I'm engaged with Chuck, for example, even at Subway, even if he's holding a Subway sandwich and the thing, like, if you want to cut it across where it lies, I'm not necessarily engaged with the sales that he's holding. So it seems like there's always going to be this. Yeah, I mean, there's always that disconnect, and that's what you have, is, like, an advertiser supported medium. And then, obviously, like, you can get into the discussion of, like, are there other business models that would better suit this, like, you know, subscription models or something. Um, Thanks. Alien? Um, something that you could expand on the difference between, uh, the types of content and how that was advertising, like you talked about, uh, a scripted show as opposed to a non-scripted, like, day-low, is it more specific to that kind of non-scripted show that you don't think the audience engagement was the same, or is there something like inherent in scripted shows that caused people to be more receptive to advertising? Um, I mean, in the case of Jay Leno, it wasn't, I'm not really talking about, like, engagement. I'm just saying that, like, the ratings were horrible, and that no one, like, no one watched it, basically. Which, it's kind of like, well, we're people, you know, the five people who did watch it, were they engaged with it? Like, does that even matter? Um, so, I mean, I guess that, like, that's a very interesting question, and you know, if you do look at fan communities, I think that they tend to form around scripted content more than around, you know, reality shows, although I guess it depends on the reality show, or other kinds of, um, like, I don't know if there's any big, like, talk show fandoms, except maybe Wendy Williams, but that's for, like, totally different reasons. Um, but that's, I mean, that's an interesting question, maybe for someone in fan study. There's not anything around that I know of around the talk shows. I mean, like, there's stuff around puppets. There's, like, like, puppets fans, and there's, like, real persons fans, like, around politicians and pop stars, but there's no, like, too, but as far as I know, there's not a giant screening. What about the content? Yeah, the content thing is interesting. Um, there, yeah. Yeah, it's actually sort of a follow on, um, the next question that somebody has said and you bring their last statement and answer them about different models. And I guess what I was wondering is certainly I'm seeing more and more movement of people buying TV content the way they buy movies or books or music. And, um, I know it's beyond your study, but is there a chance that TV is just gonna go in that direction and stop doing advertising? Yeah, I mean, I think that that's, um, that's sort of one of the huge questions that's out there right now. Um, and I, I don't think so at least not yet. And because, because of, because of these relationships, um, like this, you know, these are the people who are making the content. And they have deals and they're actually getting money from everyone here except Nielsen. Um, so, you know, it's, it's, it's about more than just, like, oh, can we make a subscription model? It's about all of the fees that everyone is collecting from, um, people's subscriptions, um, you know, from advertising, um, and all of those deals. And, and syndication is another issue. Um, syndication DVDs filled, things like that. Um, so if, if you actually go to the industry now, it seems to be stepping back from that. We're hearing more about, um, authentication, which is something I actually do talk about in my paper. So, one of the ways that they're trying to make this relationship look the same online as on TV is they're saying, okay, you can watch TV online, but only if you already have a cable subscription. So, it's kind of like, we're no more hulu, like, you can watch my show if you already paid your cable provider for it. Um, and Comcast and Verizon have already, like, rolled out these programs where you have to go in and, like, authenticate yourself, um, improve that. Now, um, that's not to say that a subscription model may not take over. Apple has been working really, really hard. Um, because right now the cost of buying individual iTunes shows and getting a season pass for that is big costs more than, like, buying a nice box set of DVDs. So, most people, um, you know, haven't really adopted that yet. Um, but, I mean, I think that really, what needs to happen again is experimentation. So, you know, these guys do have, they can go out and say, like, well, what if we, you know, what if we make a cheap subscription of, like, one show? Like, let's see if people buy it. Let's see if people like that better than, um, you know, these authentication services or let's, you know, let's just see what happens. Um, and I really think that now is the time to figure that out before someone else figures it out. Um, and then, you know, disrupts the season more. Yeah, this is very interesting. And, uh, maybe take a last take. I was thinking, the response, last question too, just that once I could get rid of cable guy there and get everything by subscriptions a little less, no problem. It's done. But until, as long as there is these relationships, it's hard. Yeah. You can't get some of it. My question's actually something else. So, I think it's great. I mean, this idea that we're moving from passive and exposure and content as the measure of value to a kind of active relationship, uh, thing is really useful. And I, I, I, I keep thinking that I think there are historical examples of this, right? I mean, the anime shows that were canceled were canceled, not just because of ratings, but because people didn't buy the toys. And so there was that relationship already that what was valued was not just people watching, but actually had a lot of stuff. I mean, there wasn't selling the toys and it wasn't, it wasn't working. And so this, you know, there's a kind of history of prehistory to the digital moment. Yeah, absolutely. Um, but I guess, so my question though is then, how do we think of that relationship? I mean, I think that, I've been thinking about this too in terms of can we say things to the content producers or the networks even about piracy that gets them to think differently, right? But I've always thought that people pirating the stuff and standilating the manga and fansubbing the anime are really great valuable groups of people that they ought to be paying a lot more attention to and saying, yeah, it's not for your business model, but these are the people most committed to your stuff in an interesting new kind of way. So, and that's what I'm kind of thinking of. Is there something that your model says, okay, now you can see the value here that you've seen only as a loss of that? Yeah, that's absolutely true. And Henry has written about piracy as a market failure rather than you know, it's not anything other than a market failure. You have people who want your content who for whatever reason can't get it. Obviously, there are going to be people who don't want to pay or don't want you to go through channels, whatever, and they're going to pirate it, but I think that percentage is actually really very small. Yeah, and we actually just had a C3 research memo by Gail Bacovic about the same thing where she was suggesting you sort of look at what pirates are doing and say, well, what is it that they're getting from the content that we're not getting them? So, you know, one of the big things was, well, you know, it's a file that you can keep and, you know, you can archive it and you can also, there's also more interplay between devices. So you can, you know, keep pirate sending, you can play it on your computer, you can play it on your phone, you don't have to worry about all the DRM and stuff. So, you know, the fact that piracy is happening and that's how people are using it sort of suggests, well, hey networks, maybe if you made an option like this available, people might want it. And like, I mean, I already have cable subscription and even with TV everywhere, I still can't watch it on my phone. If I want to watch it on my phone, I have to download it and put it on my phone. So, yeah. Nielsen, who was like, nipping at it in heels, and besides like Google AdWords, what, what, I think you talked about that maybe in previous presentations, but like, I'm wondering who's going to push them out, or do you think it's going to be more dispersed? Like, I guess the idea is just not to have this one big company doing all this and maybe have different ways of measuring it. Well, yeah, I mean the problem is that you've got like different people measuring all this stuff. And Nielsen is also like trying to measure it. The, the thing that, I mean I don't think that right now there's like a clear if someone's going to take this over, but what I'm really urging the industry to do here is to not just replace Nielsen with Google, but to actually you know, think more about this relationship because you've got, you have someone here who's in a monopoly position, which I didn't talk about, but I do talk about in my pieces, that you know, it makes, as a monopolist they're pretty slow to change. They're not, there's, there's no incentive for them to be on the cutting edge of things, whereas if you look at a company like, like Google that's, you know, in a maybe increasingly less competitive search market, they're still doing things to innovate and stand on top of the things that Nielsen just haven't had to do, so I mean, I would suggest not just putting a new mediator in, but like figuring that out. Wait, I have bonus slides, I'm not sure who it is. They have like, oh this is my this is my methodology slide. This is my favorite slide I've ever made in a while. Cause it's well, cause I'm I'm like using a lot of like Marxism, but I want a job in the industry so I gotta like tone down the Marxism. And Marxism as like an economic theory is not like antithetical to making money at all, it's just a way to describe power dynamics, but I think a lot of people hear Marxism and they're like, oh my god you're a communist, but like, no. Good. Socialism is just a thing for narrow social networks.