Linda Rodriguez
Toilet Paper History: How America Convinced the World to Wipe
by Linda Rodriguez
Since the dawn of time, people have found nifty ways to clean up after the bathroom act. The most common solution was simply to grab what was at hand: coconuts, shells, snow, moss, hay, leaves, grass, corncobs, sheep’s wool—and, later, thanks to the printing press—newspapers, magazines, and pages of books. The ancient Greeks used clay and stone. The Romans, sponges and salt water. But the idea of a commercial product designed solely to wipe one’s bum? That started about 150 years ago, right here in the U.S.A. In less than a century, Uncle Sam’s marketing genius turned something disposable into something indispensable.
How Toilet Paper Got on a Roll
toilet-paper-1The first products designed specifically to wipe one’s nethers were aloe-infused sheets of manila hemp dispensed from Kleenex-like boxes. They were invented in 1857 by a New York entrepreneur named Joseph Gayetty, who claimed his sheets prevented hemorrhoids. Gayetty was so proud of his therapeutic bathroom paper that he had his name printed on each sheet. But his success was limited. Americans soon grew accustomed to wiping with the Sears Roebuck catalog, and they saw no need to spend money on something that came in the mail for free.
Toilet paper took its next leap forward in 1890, when two brothers named Clarence and E. Irvin Scott popularized the concept of toilet paper on a roll. The Scotts’ brand became more successful than Gayetty’s medicated wipes, in part because they built a steady trade selling toilet paper to hotels and drugstores. But it was still an uphill battle to get the public to openly buy the product, largely because Americans remained embarrassed by bodily functions. In fact, the Scott brothers were so ashamed of the nature of their work that they didn’t take proper credit for their innovation until 1902.
“No one wanted to ask for it by name,” says Dave Praeger, author of Poop Culture: How America Is Shaped by Its Grossest National Product. “It was so taboo that you couldn’t even talk about the product.” By 1930, the German paper company Hakle began using the tag line, “Ask for a roll of Hakle and you won’t have to say toilet paper!”
As time passed, toilet tissues slowly became an American staple. But widespread acceptance of the product didn’t officially occur until a new technology demanded it. At the end of the 19th century, more and more homes were being built with sit-down flush toilets tied to indoor plumbing systems. And because people required a product that could be flushed away with minimal damage to the pipes, corncobs and moss no longer cut it. In no time, toilet paper ads boasted that the product was recommended by both doctors and plumbers.
The Strength of Going Soft
In the early 1900s, toilet paper was still being marketed as a medicinal item. But in 1928, the Hoberg Paper Company tried a different tack. On the advice of its ad men, the company introduced a brand called Charmin and fitted the product with a feminine logo that depicted a beautiful woman. The genius of the campaign was that by evincing softness and femininity, the company could avoid talking about toilet paper’s actual purpose. Charmin was enormously successful, and the tactic helped the brand survive the Great Depression. (It also helped that, in 1932, Charmin began marketing economy-size packs of four rolls.) Decades later, the dainty ladies were replaced with babies and bear cubs—advertising vehicles that still stock the aisles today.
By the 1970s, America could no longer conceive of life without toilet paper. Case in point: In December 1973, Tonight Show host Johnny Carson joked about a toilet paper shortage during his opening monologue. But America didn’t laugh. Instead, TV watchers across the country ran out to their local grocery stores and bought up as much of the stuff as they could. In 1978, a TV Guide poll named Mr. Whipple—the affable grocer who implored customers, “Please don’t squeeze the Charmin”—the third best-known man in America, behind former President Richard Nixon and the Rev. Billy Graham.
Currently, the United States spends more than $6 billion a year on toilet tissue—more than any other nation in the world. Americans, on average, use 57 squares a day and 50 lbs. a year.
Even still, the toilet paper market in the United States has largely plateaued. The real growth in the industry is happening in developing countries. There, it’s booming. Toilet paper revenues in Brazil alone have more than doubled since 2004. The radical upswing in sales is believed to be driven by a combination of changing demographics, social expectations, and disposable income.
“The spread of globalization can kind of be measured by the spread of Western bathroom practices,” says Praeger. When average citizens in a country start buying toilet paper, wealth and consumerism have arrived. It signifies that people not only have extra cash to spend, but they’ve also come under the influence of Western marketing.
America Without Toilet Paper
Even as the markets boom in developing nations, toilet paper manufacturers find themselves needing to charge more per roll to make a profit. That’s because production costs are rising. During the past few years, pulp has become more expensive, energy costs are rising, and even water is becoming scarce. Toilet paper companies may need to keep hiking up their prices. The question is, if toilet paper becomes a luxury item, can Americans live without it?
The truth is that we did live without it, for a very long time. And even now, a lot of people do. In Japan, the Washlet—a toilet that comes equipped with a bidet and an air-blower—is growing increasingly popular. And all over the world, water remains one of the most common methods of self-cleaning. Many places in India, the Middle East, and Asia, for instance, still depend on a bucket and a spigot. But as our economy continues to circle the drain, will Americans part with their beloved toilet paper in order to adopt more money-saving measures? Or will we keep flushing our cash away? Praeger, for one, believes a toilet-paper apocalypse is hardly likely. After all, the American marketing machine is a powerful thing.
Saturday, November 14, 2009
Monday, November 2, 2009
Human face of Dirt Cheap moves on — as competitor
By Phil O'Connor
ST. LOUIS POST-DISPATCH
Monday, Nov. 02 2009
His family's legacy in the St. Louis business community traces back to 1812,
when his great-great-grandfather founded a pretzel shop near what is now the
south leg of the Gateway Arch.
But it was his television appearances, often alongside an oversized furry
yellow chicken that chirped "Cheap, cheap, fun, fun," for which Fred Teutenberg
may be best known. Those corny TV spots, regularly laced with low-brow humor,
made Dirt Cheap discount liquor and cigarette stores a hit, both as a business
and as a recognizable brand across the metro area.
Now the man, who not long ago was reminding viewers that "the more she drinks,
the better you look," has moved on. After spending the last 16 years helping
establish Dirt Cheap and nurturing its growth to 14 stores, Teutenberg is
starting a new line of liquor stores under a new name.
While he's excited about his new venture, Teutenberg declined to discuss how he
feels about competing against the company he helped build. Nor does he care to
discuss his departure from Dirt Cheap, including reports that he was forced
out.
"No use going into the nitty-gritty, but we had a parting of the ways," said
Teutenberg, who was the company's president.
Dirt Cheap is controlled by members of the Paul Taylor family. Taylor founded
U-Gas, which operates 15 gas and convenience stores in the St. Louis area.
Through an attorney, company officials declined comment about Teutenberg and
his plans. In fact, both sides signed a legal agreement that prohibits them
from discussing the split.
Already, it's clear Teutenberg won't stray too far from the strategy that made
Dirt Cheap such a success. The name — Fred's Cheapo Depot — is the first
giveaway. The stores also will carry many of the same product lines as Dirt
Cheap.
But there will be some changes. The Cheapo Depot stores will have a retro
atmosphere that harken back to a time when, as Teutenberg describes it, "people
were more comfortable drinking and smoking in public and not so politically
correct."
Competitors, friends and family describe Teutenberg as a kind-hearted
workaholic with a passion for his customers. At 70 years old, he has no
intention of retiring.
Instead, he is busy working on two new stores he hopes to open by the end of
the year. One store will be in downtown St. Louis, the other in South County.
"It's starting from scratch," said Stacey Page, a former Dirt Cheap employee
who is vice president and chief financial officer of the new stores. "But
there's a lot of people who care about Fred and want him to be successful."
Teutenberg says he's ready for the challenge. And besides, it's not the first
time he has had to start over.
HARD KNOCKS
For five generations, the Teutenbergs operated several well-known bakeries and
restaurants in the area, making it at one time the oldest continually operating
business in the Midwest.
But with creditors closing in, it was Fred Teutenberg who made the decision to
close the last of the restaurants in 1991.
"It was no longer economically viable," he said. "We couldn't go on."
The family sold their home in Ladue and moved to a smaller house in Clayton.
"It's fair to say we struggled," he said.
Teutenberg's wife of 42 years recalled the months after the restaurants closed
as an introspective period for her husband. "It was time when he figured out he
wanted to go in a new direction," Janet Teutenberg said.
About that time, cigarette outlet shops were opening across the country that
took advantage of tax variances among neighboring jurisdictions to sell their
products at a lower price.
Teutenberg went into business with Taylor, a friend he had been classmates with
in high school and college. The first Dirt Cheap store opened in January 1993
in a strip shopping center that Taylor's mother owned at Highway 30 and Valley
Dell Drive in Fenton. They hoped Jefferson County's lower cigarette taxes would
lure customers from St. Louis County seeking cheaper alternatives.
The second and third stores opened later that year at Telegraph and Forder
roads, and at Dunn and Bellefontaine roads, locations aimed at drawing Illinois
buyers. Buying in bulk, selling at a discount and operating on thinner margins,
the business took off. Then came the television spots.
Teutenberg offered customers "the last refuge for the persecuted smoker." His
reminder to "be careful out there" became a staple. The chicken arrived when
the store needed a logo for its own line of beer.
"We struck some kind of chord," Teutenberg said.
Haim Mano, an associate professor of marketing at the University of
Missouri-St. Louis, said he often discusses the Dirt Cheap ads in classes.
Despite their low-value production, the ads effectively use humor to draw in
viewers and boost brand awareness.
"The fact that they've been going on for so many years, and we talk about them
and love to watch them even though we hate them, means they're doing something
right," Mano said.
A television commercial for Teutenberg's new stores — minus some of the
trademark lines of the previous ads but featuring a cartoon version of
Teutenberg — began running earlier this month. On the new store's website,
Teutenberg wrote, "We have ditched the pesky chicken and the big company
bureaucracy and left them behind."
FRUGALITY LEARNED
Friends and business associates say Teutenberg's common-man approach isn't just
a marketing ploy.
Teutenberg grew up in Webster Groves and attended public schools before
graduating from Washington University. Despite their success, his parents were
frugal, influenced by the Depression and World War II, a trait they passed on
to their son, according to his wife.
From his father, Teutenberg said he learned to work hard, not waste money, be
diligent and treat everyone fairly. But he said one lesson didn't stick.
"He always said, 'You have your business so you can live, you don't live so you
can have your business,'" Teutenberg said. "He might accuse me of living too
much for my business. But I think he would be proud of me."
Along the way, Teutenberg said he has learned that karma and luck have as much
to do with success as anything. "I know people in business who worked hard and
were successful and other people who worked just as hard and weren't. Working
hard, per se, doesn't guarantee it."
The couple, who have four grown children, now live in a modest-size brick house
with an American flag out front on a quiet street in Brentwood. Teutenberg
drives a 4-year-old Jeep Cherokee. He has no real hobbies, belongs to no
country clubs. He sleeps only a few hours a night, smokes a pack and half of
Kent Lights a day, and relaxes with Beefeaters gin and a good book.
He wears rumpled, off-the-rack suits and rarely dons a tie.
"It's who he is," said Jon Rand, president of Discount Smoke Shops. "Fred could
afford as nice a suit as anybody, but that's not his image. He'll wear a suit
every day, but it's a common man's suit, isn't it?"
REFLECTING ON LEGACY
If Teutenberg ever had any guilt about not passing the family restaurant
business on to his children, it has been alleviated.
Three years ago, his youngest daughter put the family name on a restaurant she
opened with the help of relatives at Seventh and Olive streets. Joanne
Teutenberg, 26, believes her father always had regrets about leaving the
restaurant business even though it opened up other opportunities for him.
"I think it was nice for him to be able to reconnect with that when we reopened
down here," she said.
Taking a break at a table in the restaurant's smoking section last week,
Teutenberg was asked to reflect on his family's legacy and his place in it. He
doesn't worry that he might one day be best remembered for his corny
commercials.
"I don't think about that kind of stuff at all," he said in his smoke-cured
voice. "That stuff's for presidents."
His competitor, Rand, suggested what he considered a most appropriate epitaph —
Fred Teutenberg: "He loved his customers."
ST. LOUIS POST-DISPATCH
Monday, Nov. 02 2009
His family's legacy in the St. Louis business community traces back to 1812,
when his great-great-grandfather founded a pretzel shop near what is now the
south leg of the Gateway Arch.
But it was his television appearances, often alongside an oversized furry
yellow chicken that chirped "Cheap, cheap, fun, fun," for which Fred Teutenberg
may be best known. Those corny TV spots, regularly laced with low-brow humor,
made Dirt Cheap discount liquor and cigarette stores a hit, both as a business
and as a recognizable brand across the metro area.
Now the man, who not long ago was reminding viewers that "the more she drinks,
the better you look," has moved on. After spending the last 16 years helping
establish Dirt Cheap and nurturing its growth to 14 stores, Teutenberg is
starting a new line of liquor stores under a new name.
While he's excited about his new venture, Teutenberg declined to discuss how he
feels about competing against the company he helped build. Nor does he care to
discuss his departure from Dirt Cheap, including reports that he was forced
out.
"No use going into the nitty-gritty, but we had a parting of the ways," said
Teutenberg, who was the company's president.
Dirt Cheap is controlled by members of the Paul Taylor family. Taylor founded
U-Gas, which operates 15 gas and convenience stores in the St. Louis area.
Through an attorney, company officials declined comment about Teutenberg and
his plans. In fact, both sides signed a legal agreement that prohibits them
from discussing the split.
Already, it's clear Teutenberg won't stray too far from the strategy that made
Dirt Cheap such a success. The name — Fred's Cheapo Depot — is the first
giveaway. The stores also will carry many of the same product lines as Dirt
Cheap.
But there will be some changes. The Cheapo Depot stores will have a retro
atmosphere that harken back to a time when, as Teutenberg describes it, "people
were more comfortable drinking and smoking in public and not so politically
correct."
Competitors, friends and family describe Teutenberg as a kind-hearted
workaholic with a passion for his customers. At 70 years old, he has no
intention of retiring.
Instead, he is busy working on two new stores he hopes to open by the end of
the year. One store will be in downtown St. Louis, the other in South County.
"It's starting from scratch," said Stacey Page, a former Dirt Cheap employee
who is vice president and chief financial officer of the new stores. "But
there's a lot of people who care about Fred and want him to be successful."
Teutenberg says he's ready for the challenge. And besides, it's not the first
time he has had to start over.
HARD KNOCKS
For five generations, the Teutenbergs operated several well-known bakeries and
restaurants in the area, making it at one time the oldest continually operating
business in the Midwest.
But with creditors closing in, it was Fred Teutenberg who made the decision to
close the last of the restaurants in 1991.
"It was no longer economically viable," he said. "We couldn't go on."
The family sold their home in Ladue and moved to a smaller house in Clayton.
"It's fair to say we struggled," he said.
Teutenberg's wife of 42 years recalled the months after the restaurants closed
as an introspective period for her husband. "It was time when he figured out he
wanted to go in a new direction," Janet Teutenberg said.
About that time, cigarette outlet shops were opening across the country that
took advantage of tax variances among neighboring jurisdictions to sell their
products at a lower price.
Teutenberg went into business with Taylor, a friend he had been classmates with
in high school and college. The first Dirt Cheap store opened in January 1993
in a strip shopping center that Taylor's mother owned at Highway 30 and Valley
Dell Drive in Fenton. They hoped Jefferson County's lower cigarette taxes would
lure customers from St. Louis County seeking cheaper alternatives.
The second and third stores opened later that year at Telegraph and Forder
roads, and at Dunn and Bellefontaine roads, locations aimed at drawing Illinois
buyers. Buying in bulk, selling at a discount and operating on thinner margins,
the business took off. Then came the television spots.
Teutenberg offered customers "the last refuge for the persecuted smoker." His
reminder to "be careful out there" became a staple. The chicken arrived when
the store needed a logo for its own line of beer.
"We struck some kind of chord," Teutenberg said.
Haim Mano, an associate professor of marketing at the University of
Missouri-St. Louis, said he often discusses the Dirt Cheap ads in classes.
Despite their low-value production, the ads effectively use humor to draw in
viewers and boost brand awareness.
"The fact that they've been going on for so many years, and we talk about them
and love to watch them even though we hate them, means they're doing something
right," Mano said.
A television commercial for Teutenberg's new stores — minus some of the
trademark lines of the previous ads but featuring a cartoon version of
Teutenberg — began running earlier this month. On the new store's website,
Teutenberg wrote, "We have ditched the pesky chicken and the big company
bureaucracy and left them behind."
FRUGALITY LEARNED
Friends and business associates say Teutenberg's common-man approach isn't just
a marketing ploy.
Teutenberg grew up in Webster Groves and attended public schools before
graduating from Washington University. Despite their success, his parents were
frugal, influenced by the Depression and World War II, a trait they passed on
to their son, according to his wife.
From his father, Teutenberg said he learned to work hard, not waste money, be
diligent and treat everyone fairly. But he said one lesson didn't stick.
"He always said, 'You have your business so you can live, you don't live so you
can have your business,'" Teutenberg said. "He might accuse me of living too
much for my business. But I think he would be proud of me."
Along the way, Teutenberg said he has learned that karma and luck have as much
to do with success as anything. "I know people in business who worked hard and
were successful and other people who worked just as hard and weren't. Working
hard, per se, doesn't guarantee it."
The couple, who have four grown children, now live in a modest-size brick house
with an American flag out front on a quiet street in Brentwood. Teutenberg
drives a 4-year-old Jeep Cherokee. He has no real hobbies, belongs to no
country clubs. He sleeps only a few hours a night, smokes a pack and half of
Kent Lights a day, and relaxes with Beefeaters gin and a good book.
He wears rumpled, off-the-rack suits and rarely dons a tie.
"It's who he is," said Jon Rand, president of Discount Smoke Shops. "Fred could
afford as nice a suit as anybody, but that's not his image. He'll wear a suit
every day, but it's a common man's suit, isn't it?"
REFLECTING ON LEGACY
If Teutenberg ever had any guilt about not passing the family restaurant
business on to his children, it has been alleviated.
Three years ago, his youngest daughter put the family name on a restaurant she
opened with the help of relatives at Seventh and Olive streets. Joanne
Teutenberg, 26, believes her father always had regrets about leaving the
restaurant business even though it opened up other opportunities for him.
"I think it was nice for him to be able to reconnect with that when we reopened
down here," she said.
Taking a break at a table in the restaurant's smoking section last week,
Teutenberg was asked to reflect on his family's legacy and his place in it. He
doesn't worry that he might one day be best remembered for his corny
commercials.
"I don't think about that kind of stuff at all," he said in his smoke-cured
voice. "That stuff's for presidents."
His competitor, Rand, suggested what he considered a most appropriate epitaph —
Fred Teutenberg: "He loved his customers."
Tuesday, October 27, 2009
Why Redbox Terrifies Hollywood
Why Redbox Terrifies Hollywood
Dorothy Pomerantz, 10.26.09, 4:15 PM ET
LOS ANGELES -
It's rare that a new business comes along and freaks Hollywood out quite as much as Redbox has. The video kiosk was born out of McDonald's' new business development project, which launched such unsuccessful ventures as Ticktok Easy Shop, a convenience store in a vending machine.
But in 2004, Redbox took off. The kiosks are incredibly easy to use and movies cost just $1 per night, less than a rental at Blockbuster or a video on demand. Redbox is now owned by Washington-based Coinstar.
At first, Hollywood seemed happy to indulge the little start-up, but as Redbox has exploded (there are 21,000 kiosks at 7-11s and supermarkets across the country), studios have taken evasive actions. Universal, Fox and Warner Bros. now refuse to distribute DVDs to Redbox when they are first released. Redbox employees have been reduced to raiding local Target and Wal-Mart stores to stock kiosks. (See "Red Menace.")
President Mitch Lowe insists Redbox can keep buying at retail for as long as it takes the studios to understand that with DVD sales continuing to plummet (down 14% for the third quarter of 2009), Redbox might actually be able to help studios. Lowe sat down with Forbes to talk about Hollywood's fears, lawsuits and Redbox's plans for growth.
Forbes: What's your relationship with Hollywood like right now?
Lowe: It's misunderstood. Half of the studios love us and get the opportunity. We do a lot for our partner studios. We promote theatrical releases at no extra charge to the studios. There's a group who get that we're not cannibalistic. Our users are also film buyers. Studios that don't get it aren't basing their feelings on facts. We're trying to be patient. At some point they'll turn around.
But it's understandable that the studios would prefer someone buy a DVD rather than rent it for $1.
The studios say Redbox is hurting sales, but we're just a convenient scapegoat. People's shelves are full of movies. They're being more selective about what they're purchasing. And with our huge presence we can help promote films. For example: Management [staring Jennifer Aniston]. It didn't do well in theaters, but we promoted it heavily, and it made more in the first week in rental than it did during its entire theatrical run.
Do you offer the studios revenue sharing if they work with you?
Yes and copy depth, which means there is a minimum number of DVDs we will buy. Also, we only sell used copies of movies from studios that don't work with us. We destroy old copies from our partner studios.
And you're buying movies at retail from three studios right now?
We have a huge workforce out there acquiring product. We've perfected our methods with Universal titles so that by Friday we have machines that are fully stocked.
Isn't that kind of inefficient?
It is. We'd rather be paying the studios. We just want the same deal Blockbuster gets. We're prepared to continue doing this as long as it takes. We have the ability to open one kiosk per hour. The only way the studios can stop us is if they don't stock stores like Target and Wal-Mart.
Why not just charge a little more and give the studios more money per rental?
We pay the same money for the movies as Blockbuster--sometimes even more. So why shouldn't we charge less to rent? Maybe the question should be: Why doesn't Blockbuster charge less? The most amazing way to deliver movies to people is where they shop. We cut out real estate costs, and we've come up with a much more effective model.
So you think the studios are being emotional and irrational?
Historically, they have been. I dare them to show that we're cannibalizing their sales. Not one studio has gone public with any proof of that. They just assume that renting at a low cost hurts their sales.
What will you do when movie distribution moves to the Internet?
We survey our customers all the time to find out what they want. They're telling us they want more stuff like Blu-ray, catalog films and digital downloads. We are testing Blu-ray discs at different price points. In two markets we're testing games.
But isn't there a limit to how many discs a machine can hold? How much stuff can you add?
Each machine holds about 700 discs. We're trying to maximize space. In many locations we have two or three machines. It's a great way to improve service. One of the biggest challenges we have is lines. And when we have more machines, we can have more inventory. Initially we were thrilled to have lines, but now it's become something we have to figure out.
Dorothy Pomerantz, 10.26.09, 4:15 PM ET
LOS ANGELES -
It's rare that a new business comes along and freaks Hollywood out quite as much as Redbox has. The video kiosk was born out of McDonald's' new business development project, which launched such unsuccessful ventures as Ticktok Easy Shop, a convenience store in a vending machine.
But in 2004, Redbox took off. The kiosks are incredibly easy to use and movies cost just $1 per night, less than a rental at Blockbuster or a video on demand. Redbox is now owned by Washington-based Coinstar.
At first, Hollywood seemed happy to indulge the little start-up, but as Redbox has exploded (there are 21,000 kiosks at 7-11s and supermarkets across the country), studios have taken evasive actions. Universal, Fox and Warner Bros. now refuse to distribute DVDs to Redbox when they are first released. Redbox employees have been reduced to raiding local Target and Wal-Mart stores to stock kiosks. (See "Red Menace.")
President Mitch Lowe insists Redbox can keep buying at retail for as long as it takes the studios to understand that with DVD sales continuing to plummet (down 14% for the third quarter of 2009), Redbox might actually be able to help studios. Lowe sat down with Forbes to talk about Hollywood's fears, lawsuits and Redbox's plans for growth.
Forbes: What's your relationship with Hollywood like right now?
Lowe: It's misunderstood. Half of the studios love us and get the opportunity. We do a lot for our partner studios. We promote theatrical releases at no extra charge to the studios. There's a group who get that we're not cannibalistic. Our users are also film buyers. Studios that don't get it aren't basing their feelings on facts. We're trying to be patient. At some point they'll turn around.
But it's understandable that the studios would prefer someone buy a DVD rather than rent it for $1.
The studios say Redbox is hurting sales, but we're just a convenient scapegoat. People's shelves are full of movies. They're being more selective about what they're purchasing. And with our huge presence we can help promote films. For example: Management [staring Jennifer Aniston]. It didn't do well in theaters, but we promoted it heavily, and it made more in the first week in rental than it did during its entire theatrical run.
Do you offer the studios revenue sharing if they work with you?
Yes and copy depth, which means there is a minimum number of DVDs we will buy. Also, we only sell used copies of movies from studios that don't work with us. We destroy old copies from our partner studios.
And you're buying movies at retail from three studios right now?
We have a huge workforce out there acquiring product. We've perfected our methods with Universal titles so that by Friday we have machines that are fully stocked.
Isn't that kind of inefficient?
It is. We'd rather be paying the studios. We just want the same deal Blockbuster gets. We're prepared to continue doing this as long as it takes. We have the ability to open one kiosk per hour. The only way the studios can stop us is if they don't stock stores like Target and Wal-Mart.
Why not just charge a little more and give the studios more money per rental?
We pay the same money for the movies as Blockbuster--sometimes even more. So why shouldn't we charge less to rent? Maybe the question should be: Why doesn't Blockbuster charge less? The most amazing way to deliver movies to people is where they shop. We cut out real estate costs, and we've come up with a much more effective model.
So you think the studios are being emotional and irrational?
Historically, they have been. I dare them to show that we're cannibalizing their sales. Not one studio has gone public with any proof of that. They just assume that renting at a low cost hurts their sales.
What will you do when movie distribution moves to the Internet?
We survey our customers all the time to find out what they want. They're telling us they want more stuff like Blu-ray, catalog films and digital downloads. We are testing Blu-ray discs at different price points. In two markets we're testing games.
But isn't there a limit to how many discs a machine can hold? How much stuff can you add?
Each machine holds about 700 discs. We're trying to maximize space. In many locations we have two or three machines. It's a great way to improve service. One of the biggest challenges we have is lines. And when we have more machines, we can have more inventory. Initially we were thrilled to have lines, but now it's become something we have to figure out.
Friday, October 9, 2009
'Friends' of Facebook: Studio Marketers
"Couples Retreat” doesn’t hit theaters until Friday, and it hasn’t had any festival exposure to speak of. But the Vince Vaughn comedy already has more than 13,000 “fans” on Facebook grabbing production stills and video clips provided by Universal.
Better still, it’s got the fans taking all that stuff back to their own pages to share with their friends.
With the youthful, moviegoing audience watching less TV than ever, studio marketers have begun to aggressively mine what has quickly become their preferred media platform – the web.
These days pretty much every major release now has promotional ties to Facebook, MySpace, Twitter or the other online watering holes where movie-watchers congregate. (The marketers' preferred social network? Find out here.)
“This is a huge part of our marketing now … creating an account and building a fan base -- and a lot of what we’re able to do is free,” said Nicole Butte, VP of new media for Focus Features, who recently oversaw a social networking campaign for the Tim Burton-produced animated film “9.”
Huge is right.
Paramount's "Transformers: Revenge of the Fallen" Facebook page has more than 1 million fans, who will receive notifications of the title's Oct. 20 DVD and Blu-ray release.
Last weekend's box-office champ, "Zombieland," has more than 250,000 fans -- 10,000 of which have signed up to play a Java-based game that lets them "kill zombies all over the Internet" with objects including banjos. As with most movie game apps, those who sign up to play not only agree to share profile data, they also post a promotion for the film on their own Facebook wall every time they visit a Sony-sponsored site that supports the online game.
Meanwhile, for its micro-budgeted horror film "Paranormal Activity," Paramount hired San Diego-based boutique marketing firm Eventful to, among other things, create a social media campaign built around driving users to the film's site so that they can "demand" that the movie open wide. As of Thursday, "Paranormal" was one of Twitter's top 10 "trending topics."
As for “9,” an aggressive Facebook campaign allowed the studio to frame the movie’s mysterious subject matter and characters for a core group of film enthusiasts. Even better, the smaller group virally disseminated the information they’d gathered to a broader audience – long before expensive TV ads began to run.
Indeed, the intersection between social media and the movie business became apparent this summer, when Universal’s “Bruno” got off to a hot Friday-night start. Unfortunately, that film also highlighted the downside of the new alliance when it cratered precipitously the following day and never recovered -- the victim of same unfavorable, real-time tweeting.
Studio marketers at the time gave birth to a new phrase, the “Twitter Effect,” to explain how dissatisfied moviegoers armed with smart phones and social networks were torpedoing films even before they left the theater.
According to information released last week by former New Line interactive marketing guru Gordon Paddison, who is now an industry consultant, 73 percent of 4,000 moviegoers in a recent study have established profiles on social media networks. The study was underwrittten Google, AOL, Microsoft, Fandango, Facebook, Yahoo and MovieTIckets.com.
“This is just where the audience is now,” said David Singh, executive VP of creative content for Disney of the use of social networks by studio marketers. “Something like 70-80 percent of frequent movie-goers under 25 visit Facebook eight or nine times a day.”
Singh said Disney started experimenting with MySpace for the launch of dance film “Step Up” back in the summer of 2006, a time when the News Corp.-owned property was still the dominant social media platform.
In the spring of 2008, he said the studio became enthralled with Facebook, which, despite the growth in popularity of Twitter, remains the social media network of choice for movie marketers, based mainly on its robust content-sharing features.
At that time, Disney bought out Facebook’s gift store and filled it with plush toys from the Pixar hit “Wall-E” -- only to watch the offering become so popular that the site crashed.
Today, pretty much every Disney release has a robust Facebook marketing component, with the studio’s interactive marketing team spending what Singh estimates to be about 40 percent of its time and resources on social media endeavors.
In June, for example, before romantic comedy “The Proposal” embarked on a theatrical release that would ultimately net $290.4 million worldwide and counting, Singh’s team posted a “how well do you know me” quiz on the Sandra Bullock film’s Facebook page.
The movie’s 4,000-plus “fans” soon dispersed the quiz all over the network. Ultimately, more than 400,000 took the quiz, clicking through and exposing themselves to all sorts of information about “The Proposal” in the process.
“That’s really the power of social media,” Singh said. “You can build on someone’s natural excitement for something and get them to evangelize on behalf of your film.”
Indeed, the number of fans who actually come to a Facebook page are “just the tip of the iceberg,” Focus marketing president David Brooks told TheWrap. “People share what they found with the world. It’s way more interactive than the usual movie fan page.”
Brooks wouldn’t reveal how much money Focus is spending on social media at this point. “It’s not a lot of money,” he said. “But it’s a significant part of our plan.”
Of course, there is a downside to this bargain marketing, as “Bruno” proved.
Much like the early days of harnessing nuclear power, studios admit that they’re still not always in control of the online forums they establish.
In fact, things can turn bad. Fast.
One studio marketing exec, who spoke to TheWrap on the day prior to a recent major release said he was “fantastically thrilled” with the results of the film’s MySpace and Facebook campaigns.
His viewpoint changed dramatically when the film’s September premiere tanked.
“We hyped the s--- out of it on MySpace and Facebook, and as soon as the movie was made available to the public, that turned on us,” he said. “We saw it happening hour by hour -- people were telling each other on our Facebook page how BAD they thought the movie was.’
“As soon as the product is available in the marketplace,” he said, “the same campaign that you created to let everyone talk about it can kill you.”
Disney’s Singh agreed. “Audiences on these social networks tend to be really savvy,” he said. “They don’t want to be marketed to in the traditional sense. As we’ve seen, positive feedback can spread like crazy, but so can negative feedback.”
Better still, it’s got the fans taking all that stuff back to their own pages to share with their friends.
With the youthful, moviegoing audience watching less TV than ever, studio marketers have begun to aggressively mine what has quickly become their preferred media platform – the web.
These days pretty much every major release now has promotional ties to Facebook, MySpace, Twitter or the other online watering holes where movie-watchers congregate. (The marketers' preferred social network? Find out here.)
“This is a huge part of our marketing now … creating an account and building a fan base -- and a lot of what we’re able to do is free,” said Nicole Butte, VP of new media for Focus Features, who recently oversaw a social networking campaign for the Tim Burton-produced animated film “9.”
Huge is right.
Paramount's "Transformers: Revenge of the Fallen" Facebook page has more than 1 million fans, who will receive notifications of the title's Oct. 20 DVD and Blu-ray release.
Last weekend's box-office champ, "Zombieland," has more than 250,000 fans -- 10,000 of which have signed up to play a Java-based game that lets them "kill zombies all over the Internet" with objects including banjos. As with most movie game apps, those who sign up to play not only agree to share profile data, they also post a promotion for the film on their own Facebook wall every time they visit a Sony-sponsored site that supports the online game.
Meanwhile, for its micro-budgeted horror film "Paranormal Activity," Paramount hired San Diego-based boutique marketing firm Eventful to, among other things, create a social media campaign built around driving users to the film's site so that they can "demand" that the movie open wide. As of Thursday, "Paranormal" was one of Twitter's top 10 "trending topics."
As for “9,” an aggressive Facebook campaign allowed the studio to frame the movie’s mysterious subject matter and characters for a core group of film enthusiasts. Even better, the smaller group virally disseminated the information they’d gathered to a broader audience – long before expensive TV ads began to run.
Indeed, the intersection between social media and the movie business became apparent this summer, when Universal’s “Bruno” got off to a hot Friday-night start. Unfortunately, that film also highlighted the downside of the new alliance when it cratered precipitously the following day and never recovered -- the victim of same unfavorable, real-time tweeting.
Studio marketers at the time gave birth to a new phrase, the “Twitter Effect,” to explain how dissatisfied moviegoers armed with smart phones and social networks were torpedoing films even before they left the theater.
According to information released last week by former New Line interactive marketing guru Gordon Paddison, who is now an industry consultant, 73 percent of 4,000 moviegoers in a recent study have established profiles on social media networks. The study was underwrittten Google, AOL, Microsoft, Fandango, Facebook, Yahoo and MovieTIckets.com.
“This is just where the audience is now,” said David Singh, executive VP of creative content for Disney of the use of social networks by studio marketers. “Something like 70-80 percent of frequent movie-goers under 25 visit Facebook eight or nine times a day.”
Singh said Disney started experimenting with MySpace for the launch of dance film “Step Up” back in the summer of 2006, a time when the News Corp.-owned property was still the dominant social media platform.
In the spring of 2008, he said the studio became enthralled with Facebook, which, despite the growth in popularity of Twitter, remains the social media network of choice for movie marketers, based mainly on its robust content-sharing features.
At that time, Disney bought out Facebook’s gift store and filled it with plush toys from the Pixar hit “Wall-E” -- only to watch the offering become so popular that the site crashed.
Today, pretty much every Disney release has a robust Facebook marketing component, with the studio’s interactive marketing team spending what Singh estimates to be about 40 percent of its time and resources on social media endeavors.
In June, for example, before romantic comedy “The Proposal” embarked on a theatrical release that would ultimately net $290.4 million worldwide and counting, Singh’s team posted a “how well do you know me” quiz on the Sandra Bullock film’s Facebook page.
The movie’s 4,000-plus “fans” soon dispersed the quiz all over the network. Ultimately, more than 400,000 took the quiz, clicking through and exposing themselves to all sorts of information about “The Proposal” in the process.
“That’s really the power of social media,” Singh said. “You can build on someone’s natural excitement for something and get them to evangelize on behalf of your film.”
Indeed, the number of fans who actually come to a Facebook page are “just the tip of the iceberg,” Focus marketing president David Brooks told TheWrap. “People share what they found with the world. It’s way more interactive than the usual movie fan page.”
Brooks wouldn’t reveal how much money Focus is spending on social media at this point. “It’s not a lot of money,” he said. “But it’s a significant part of our plan.”
Of course, there is a downside to this bargain marketing, as “Bruno” proved.
Much like the early days of harnessing nuclear power, studios admit that they’re still not always in control of the online forums they establish.
In fact, things can turn bad. Fast.
One studio marketing exec, who spoke to TheWrap on the day prior to a recent major release said he was “fantastically thrilled” with the results of the film’s MySpace and Facebook campaigns.
His viewpoint changed dramatically when the film’s September premiere tanked.
“We hyped the s--- out of it on MySpace and Facebook, and as soon as the movie was made available to the public, that turned on us,” he said. “We saw it happening hour by hour -- people were telling each other on our Facebook page how BAD they thought the movie was.’
“As soon as the product is available in the marketplace,” he said, “the same campaign that you created to let everyone talk about it can kill you.”
Disney’s Singh agreed. “Audiences on these social networks tend to be really savvy,” he said. “They don’t want to be marketed to in the traditional sense. As we’ve seen, positive feedback can spread like crazy, but so can negative feedback.”
Friday, June 19, 2009
How Self-Made Titans Launched Their Empires
Scan the Forbes list of the world's wealthiest people and you'll find moguls from startlingly humble origins
Take John Paul DeJoria--owner of Paul Mitchell Systems, a hair products company, and Partron Spritis, a high-end tequila brand--who started out as a door-to-door salesman in Los Angeles at age 9. First he sold Christmas cards but soon moved to newspapers and other subscriptions. After a short stint in the navy, he returned to his salesman roots, selling encyclopedias.
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I haven't been recognized yet (but I'm hopeful). Rowling and Carnegie both came from near where my mother was born. Carnegie at least gave up a large amount of his wealth so others could benefit from....
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In 1980, with just $700 and an iron will, DeJoria and friend Paul Mitchell, a hairdresser, decided to launch a new line of shampoo and other hair care products, based on a new formula Mitchell had developed. In the early months, when he wasn't pounding on salon doors and told to bug off, DeJorira bought supplies on credit and lived in his car. "Having sold other products door-to-door, I understood that rejection was just part of the process," says DeJoria, 65.
Is yours one of America's Most Promising Companies? Take our survey and find out.
Without ever borrowing a dime, Paul Mitchell Systems became the largest salon-only hair care company in the U.S., with products in 10% of salons across the country. Then came his (and partner Martin Crowley's) agave assault with Patron. DeJoria currently owns a 51% stake in Paul Mitchell Systems and 70% of Patron. At last count, DeJoria's net worth was $2.5 billion.
Gift for gab helped Jeffrey Katzenberg, a high school-educated Manhattanite, climb to the top of the entertainment game. While he didn't launch a business on a shoestring, Katzenberg did spend decades building a network that would eventually help him launch one of the most storied movie studios of all time.
Katzenberg began honing his skills at age 15 as a volunteer in John Lindsay's campaign for mayor of New York in 1965; Lindsay won, and Katzenberg stayed on, foregoing college for the snap and crackle of politics. Through a connection at Lindsay' office, he later met Barry Diller, then president of Paramount, who invited him to Los Angeles to work as his assistant. "No one did more for my career than Barry," says Katzenberg, 58. "He taught me the entertainment business--not just the fun parts, but the not so fun parts that you need to learn in order to be successful."
During his 11 years at Paramount, Katzenberg also befriended Michael Eisner, then chief executive of the movie studio. When Eisner left Paramount for Disney ( DIS - news - people ) in 1984, he took Katzenberg with him, and there they pumped out hits like The Little Mermaid, Beauty and the Beast and Aladdin. After a falling out with Eisner in 1994, Katzenberg left to launch his own studio, DreamWorks SKG, with the likes of Steven Spielberg and David Geffen. With partners like that, little wonder this guy is worth $750 million.
Old-fashioned bartering helped put Kirk Kerkorian, farmer's son and future Wall Street titan, on the map. In the late 1930s, Kerkorian, who is 91, offered to look after famous female aviator Pancho Barnes' cattle in return for flying lessons. During World War II, he took a job with the Royal Air Force transporting planes from their Canadian factory to England for $1,000 per month--an especially treacherous journey, as the planes weren't designed to withstand the long trip or the harsh weather over the North Atlantic.
With savings from his wartime job, Kerkorian purchased Trans International Airlines for $60,000 in 1947. (It is unclear whether he needed additional financing.) He later sold it to Transamerica for $104 million in stock, used to fuel further investments. His private investment firm, Tracinda, now owns 39% of MGM Mirage ( MGM - news - people ), down from 53% in May.
Billionaire financier George Soros, 78, socked away a few pennies to jump-start his entrepreneurial career. Born in Hungary in 1930, Soros and his parents fled the Nazis and landed in England. After putting himself through the London School of Economics while working as a railway porter and waiter, Soros moved to the U.S. in 1956 and found work at several investment firms, including Arnhold and S. Bleichroeder, where he worked his way up to vice president. After running several offshore investment funds, he launched his own investment firm with colleague Jim Rogers. Their Soros Fund began with just $12 million under management (it's unclear how much of that was their own capital); it has since grown into the multibillion-dollar Quantum Fund. Soros' current net worth: about $11 billion
Sometimes sheer talent and persistence is enough. As a single mother on welfare in Scotland, J.K. Rowling, 43, began writing the first Harry Potter novel in Edinburgh cafés whenever she could get her infant daughter to sleep. After being rejected by 12 publishing houses, Bloomsbury, a small publisher in London, offered an advance of 1,500 pounds (about $2,400)--even while one its editors, Barry Cunningham, advised Rowling to get a day job.
Good thing she didn't listen: The following year, U.S. publishing rights to the first Potter book sold for $105,000. Rowling, who is now worth around $1 billion, has since moved nearly 400 million copies worldwide, and is the only author on our list.
Take John Paul DeJoria--owner of Paul Mitchell Systems, a hair products company, and Partron Spritis, a high-end tequila brand--who started out as a door-to-door salesman in Los Angeles at age 9. First he sold Christmas cards but soon moved to newspapers and other subscriptions. After a short stint in the navy, he returned to his salesman roots, selling encyclopedias.
Rate This Story
*
Your Rating
*
Overall Rating
Reader Comments
I haven't been recognized yet (but I'm hopeful). Rowling and Carnegie both came from near where my mother was born. Carnegie at least gave up a large amount of his wealth so others could benefit from....
Read All Comments (3)
Comment On This Story
In 1980, with just $700 and an iron will, DeJoria and friend Paul Mitchell, a hairdresser, decided to launch a new line of shampoo and other hair care products, based on a new formula Mitchell had developed. In the early months, when he wasn't pounding on salon doors and told to bug off, DeJorira bought supplies on credit and lived in his car. "Having sold other products door-to-door, I understood that rejection was just part of the process," says DeJoria, 65.
Is yours one of America's Most Promising Companies? Take our survey and find out.
Without ever borrowing a dime, Paul Mitchell Systems became the largest salon-only hair care company in the U.S., with products in 10% of salons across the country. Then came his (and partner Martin Crowley's) agave assault with Patron. DeJoria currently owns a 51% stake in Paul Mitchell Systems and 70% of Patron. At last count, DeJoria's net worth was $2.5 billion.
Gift for gab helped Jeffrey Katzenberg, a high school-educated Manhattanite, climb to the top of the entertainment game. While he didn't launch a business on a shoestring, Katzenberg did spend decades building a network that would eventually help him launch one of the most storied movie studios of all time.
Katzenberg began honing his skills at age 15 as a volunteer in John Lindsay's campaign for mayor of New York in 1965; Lindsay won, and Katzenberg stayed on, foregoing college for the snap and crackle of politics. Through a connection at Lindsay' office, he later met Barry Diller, then president of Paramount, who invited him to Los Angeles to work as his assistant. "No one did more for my career than Barry," says Katzenberg, 58. "He taught me the entertainment business--not just the fun parts, but the not so fun parts that you need to learn in order to be successful."
During his 11 years at Paramount, Katzenberg also befriended Michael Eisner, then chief executive of the movie studio. When Eisner left Paramount for Disney ( DIS - news - people ) in 1984, he took Katzenberg with him, and there they pumped out hits like The Little Mermaid, Beauty and the Beast and Aladdin. After a falling out with Eisner in 1994, Katzenberg left to launch his own studio, DreamWorks SKG, with the likes of Steven Spielberg and David Geffen. With partners like that, little wonder this guy is worth $750 million.
Old-fashioned bartering helped put Kirk Kerkorian, farmer's son and future Wall Street titan, on the map. In the late 1930s, Kerkorian, who is 91, offered to look after famous female aviator Pancho Barnes' cattle in return for flying lessons. During World War II, he took a job with the Royal Air Force transporting planes from their Canadian factory to England for $1,000 per month--an especially treacherous journey, as the planes weren't designed to withstand the long trip or the harsh weather over the North Atlantic.
With savings from his wartime job, Kerkorian purchased Trans International Airlines for $60,000 in 1947. (It is unclear whether he needed additional financing.) He later sold it to Transamerica for $104 million in stock, used to fuel further investments. His private investment firm, Tracinda, now owns 39% of MGM Mirage ( MGM - news - people ), down from 53% in May.
Billionaire financier George Soros, 78, socked away a few pennies to jump-start his entrepreneurial career. Born in Hungary in 1930, Soros and his parents fled the Nazis and landed in England. After putting himself through the London School of Economics while working as a railway porter and waiter, Soros moved to the U.S. in 1956 and found work at several investment firms, including Arnhold and S. Bleichroeder, where he worked his way up to vice president. After running several offshore investment funds, he launched his own investment firm with colleague Jim Rogers. Their Soros Fund began with just $12 million under management (it's unclear how much of that was their own capital); it has since grown into the multibillion-dollar Quantum Fund. Soros' current net worth: about $11 billion
Sometimes sheer talent and persistence is enough. As a single mother on welfare in Scotland, J.K. Rowling, 43, began writing the first Harry Potter novel in Edinburgh cafés whenever she could get her infant daughter to sleep. After being rejected by 12 publishing houses, Bloomsbury, a small publisher in London, offered an advance of 1,500 pounds (about $2,400)--even while one its editors, Barry Cunningham, advised Rowling to get a day job.
Good thing she didn't listen: The following year, U.S. publishing rights to the first Potter book sold for $105,000. Rowling, who is now worth around $1 billion, has since moved nearly 400 million copies worldwide, and is the only author on our list.
Thursday, May 28, 2009
Interview: Mark Cuban
Published on May 27, 2009
by Peter Kafka
mark-cuban
Mark Cuban was lucky enough to make billions on Internet video during the Web 1.0 bubble and smart enough to cash out before it burst. He’s spent a bunch of that money on high-profile purchases like a basketball team and a Gulfstream. But much of his investment and energy since then has been directed… away from Web video and toward conventional video, in the form of movies and television.
Cuban’s portfolio companies make movies and television shows and distribute them to movie theaters and television sets. And he’s been loudly skeptical about the possibilities of Web video outlets like YouTube–around the time that Google plunked down $1.6 billion on the site, he declared that “only a moron” would want to invest in it. Time to see if he still feels the same way.
* Everyone says video on the Internet is great, but we spend 99 percent of our time watching TV, and that’s in large part because of HD TV.
* Walt: 99 percent?
* Mark: Well, I don’t know. But it’s a lot.
* Kara: Talk about Internet video. How do you look at it? Mark: It’s a real disappointment to see how far Internet video has come. We were working on hotspots, advertising standards, multicasting 10 years ago. Nothing happened. You can go on and on and on.
* Walt: Why is that? Mark: I have no idea. If you say one thing, it’s that when Google (GOOG) bought YouTube, they didn’t think about making money right away; the focus was on ubiquity, and because no one paid attention, that’s what happened. Now you can’t fight them; it’s like Microsoft (MSFT). You can’t do anything on video these days unless you work with YouTube.
* There are no hits on the Web. So the only way it works is if you can create a platform like YouTube. Hulu could do that, but they have big pockets to appease.
* Kara: No hits? Mark: There are hits. But they’re one-off hits. On TV, there’re hits, but they’re wrong 95 percent of the time, and there are 300-plus competitors. On the Internet, there are unlimited competitors, and YouTube subsidizes bandwidth. So the real cost is marketing. How do you stand out?
* Mark: Video for the Web has become a testing ground for mediums that actually have revenue.
* Kara: So what would the model have been had you bought YouTube? Mark: Like I said, I wouldn’t have bought it. They hid behind the DMCA, and they have huge copyright problems, and it’s a disaster waiting to happen. We still don’t know what’s going to happen with the Viacom (VIA) suit. And they’re paying for all that bandwidth.
* Mark: And by the way, if anything happens to Google, what happens to the whole video space? Everything gets flipped on its head. If you have to pay for it, maybe your kids stop posting videos of their bands.
* Discussion of bandwidth that I’m not catching entirely. But essentially, Mark is saying that the cable companies will have new bandwidth to play with, but they’re not going to necessarily hand it over to the Internet. So everyone in this room is trying to create all these apps and services to shove through one pipe, and the cable guys aren’t going to give them more room.
* Kara: Where do you see TV going? Mark: Television means different things now. Broadcast is one thing. Cable is another, and that’s healthy, because of that subscription business, and they’re never going to give up those subscription dollars for Internet nickels. We need to remember that the Internet is a staid platform. There has been very little innovation. It’s like the ’80s, when we were fighting between different word processing software. There’s only evolution, not revolution. But TV… you could have real innovation there.
* Kara: We’ve been hearing promises of innovation and interactivity for a long time. Mark: There’s been a problem with standards, and that needs to get fixed.
* Walt still wants to watch “Star Trek” on demand. When will that happen? Mark correctly points out that this is partly a programming issue, partly a technology issue. Tech is “easy.” Programming and windows are another story.
* Kara: OK. What do you think about the Internet? Yahoo?
* Mark: Yahoo (YHOO), Google, MySpace, Facebook, they’re all the same: “One hit and a lot of decent products that are second, third, fourth place, and living off the gravy train.” That’s been the tradition since Microsoft and Windows. They’re all the same.
* Kara: Twitter? Mark: The problem with them isn’t a business model. They have 10,000 ways to make money, and everyone in this room can come up with one. They’re just having fun and teasing you guys. I told Facebook, via Jim Breyer, that all those real names they provide via Facebook Connect and that they should charge for it. I think Twitter has similar possibilities.
* Walt points out that people do pay for some Web video, like baseball. Mark: Yup. I’m not saying you can’t have some number of Web users having a great experience. But there’s a limit to the number of people that can be there because there’s limited space, too congested. It’s like having a nice car on the 405. At a certain point it doesn’t matter how nice the car is, because there’s too much traffic. It’s like what Warren Buffet says: First come the innovators, then the imitators, then the idiots. Also: “There’s always going to be someone trying to rush the fat kid to the buffet.”
* Discussion of tiered pricing. Going to have it on mobile, and we should have the same thing on the Internet. What about content? Yes, we have that already.
* Kara and Walt: Tell us about your fight with the SEC? Mark: No. [Pause] “When someone in the government wants you, it’s not a good place to be. You don’t want to be someone’s skin on the wall.” Kara: “Do you know how it’s going to turn out”? Mark: “Yes.”
* Mark walks through how he inverts/breaks/changes traditional windows when it comes to movies, VOD, etc. Very interesting. Will have to come back to it, unfortunately.
* Walt: Does Internet help you run your basketball team? Mark: Yup: We watch video of prospects on YouTube. I follow free agent prospects on Twitter. I can accumulate information on searches, the real-time net is very helpful for the Mavericks. My Icerocket engine helps me track down info.
* Q&A: What do you think of 3-D? Mark: I think it has a great future. Cost is coming down, it’s a differentiated experience. We can put a huge digital screen in American Airlines Center and do 3-D with glasses. Screens are getting so big and prices are falling so quickly that people are changing the way they consume entertainment, and 3-D is a big part of that.
* Gary Shapiro from CEA has a confusing question. Ah. What should we do with the broadcast TV spectrum since 90 percent of people have cable? Mark: We should sell it.
* Kara wants investment tips. Mark talks about various start-ups he’s in, like some sort of mobile/SMS play. But I tell people who are in college today or 10 years from now that are going to look at the Internet and laugh. I think where it’s at is technology geared toward personal health. Walt: Are you investing? Mark: Looking. The problem is I don’t understand any of this stuff.
*
Mark Cuban is back at D7.Mark Cuban is back at D7.
*
Walt and Kara know that Mark Cuban is not a man of few words.Walt and Kara know that Mark Cuban is not a man of few words.
by Peter Kafka
mark-cuban
Mark Cuban was lucky enough to make billions on Internet video during the Web 1.0 bubble and smart enough to cash out before it burst. He’s spent a bunch of that money on high-profile purchases like a basketball team and a Gulfstream. But much of his investment and energy since then has been directed… away from Web video and toward conventional video, in the form of movies and television.
Cuban’s portfolio companies make movies and television shows and distribute them to movie theaters and television sets. And he’s been loudly skeptical about the possibilities of Web video outlets like YouTube–around the time that Google plunked down $1.6 billion on the site, he declared that “only a moron” would want to invest in it. Time to see if he still feels the same way.
* Everyone says video on the Internet is great, but we spend 99 percent of our time watching TV, and that’s in large part because of HD TV.
* Walt: 99 percent?
* Mark: Well, I don’t know. But it’s a lot.
* Kara: Talk about Internet video. How do you look at it? Mark: It’s a real disappointment to see how far Internet video has come. We were working on hotspots, advertising standards, multicasting 10 years ago. Nothing happened. You can go on and on and on.
* Walt: Why is that? Mark: I have no idea. If you say one thing, it’s that when Google (GOOG) bought YouTube, they didn’t think about making money right away; the focus was on ubiquity, and because no one paid attention, that’s what happened. Now you can’t fight them; it’s like Microsoft (MSFT). You can’t do anything on video these days unless you work with YouTube.
* There are no hits on the Web. So the only way it works is if you can create a platform like YouTube. Hulu could do that, but they have big pockets to appease.
* Kara: No hits? Mark: There are hits. But they’re one-off hits. On TV, there’re hits, but they’re wrong 95 percent of the time, and there are 300-plus competitors. On the Internet, there are unlimited competitors, and YouTube subsidizes bandwidth. So the real cost is marketing. How do you stand out?
* Mark: Video for the Web has become a testing ground for mediums that actually have revenue.
* Kara: So what would the model have been had you bought YouTube? Mark: Like I said, I wouldn’t have bought it. They hid behind the DMCA, and they have huge copyright problems, and it’s a disaster waiting to happen. We still don’t know what’s going to happen with the Viacom (VIA) suit. And they’re paying for all that bandwidth.
* Mark: And by the way, if anything happens to Google, what happens to the whole video space? Everything gets flipped on its head. If you have to pay for it, maybe your kids stop posting videos of their bands.
* Discussion of bandwidth that I’m not catching entirely. But essentially, Mark is saying that the cable companies will have new bandwidth to play with, but they’re not going to necessarily hand it over to the Internet. So everyone in this room is trying to create all these apps and services to shove through one pipe, and the cable guys aren’t going to give them more room.
* Kara: Where do you see TV going? Mark: Television means different things now. Broadcast is one thing. Cable is another, and that’s healthy, because of that subscription business, and they’re never going to give up those subscription dollars for Internet nickels. We need to remember that the Internet is a staid platform. There has been very little innovation. It’s like the ’80s, when we were fighting between different word processing software. There’s only evolution, not revolution. But TV… you could have real innovation there.
* Kara: We’ve been hearing promises of innovation and interactivity for a long time. Mark: There’s been a problem with standards, and that needs to get fixed.
* Walt still wants to watch “Star Trek” on demand. When will that happen? Mark correctly points out that this is partly a programming issue, partly a technology issue. Tech is “easy.” Programming and windows are another story.
* Kara: OK. What do you think about the Internet? Yahoo?
* Mark: Yahoo (YHOO), Google, MySpace, Facebook, they’re all the same: “One hit and a lot of decent products that are second, third, fourth place, and living off the gravy train.” That’s been the tradition since Microsoft and Windows. They’re all the same.
* Kara: Twitter? Mark: The problem with them isn’t a business model. They have 10,000 ways to make money, and everyone in this room can come up with one. They’re just having fun and teasing you guys. I told Facebook, via Jim Breyer, that all those real names they provide via Facebook Connect and that they should charge for it. I think Twitter has similar possibilities.
* Walt points out that people do pay for some Web video, like baseball. Mark: Yup. I’m not saying you can’t have some number of Web users having a great experience. But there’s a limit to the number of people that can be there because there’s limited space, too congested. It’s like having a nice car on the 405. At a certain point it doesn’t matter how nice the car is, because there’s too much traffic. It’s like what Warren Buffet says: First come the innovators, then the imitators, then the idiots. Also: “There’s always going to be someone trying to rush the fat kid to the buffet.”
* Discussion of tiered pricing. Going to have it on mobile, and we should have the same thing on the Internet. What about content? Yes, we have that already.
* Kara and Walt: Tell us about your fight with the SEC? Mark: No. [Pause] “When someone in the government wants you, it’s not a good place to be. You don’t want to be someone’s skin on the wall.” Kara: “Do you know how it’s going to turn out”? Mark: “Yes.”
* Mark walks through how he inverts/breaks/changes traditional windows when it comes to movies, VOD, etc. Very interesting. Will have to come back to it, unfortunately.
* Walt: Does Internet help you run your basketball team? Mark: Yup: We watch video of prospects on YouTube. I follow free agent prospects on Twitter. I can accumulate information on searches, the real-time net is very helpful for the Mavericks. My Icerocket engine helps me track down info.
* Q&A: What do you think of 3-D? Mark: I think it has a great future. Cost is coming down, it’s a differentiated experience. We can put a huge digital screen in American Airlines Center and do 3-D with glasses. Screens are getting so big and prices are falling so quickly that people are changing the way they consume entertainment, and 3-D is a big part of that.
* Gary Shapiro from CEA has a confusing question. Ah. What should we do with the broadcast TV spectrum since 90 percent of people have cable? Mark: We should sell it.
* Kara wants investment tips. Mark talks about various start-ups he’s in, like some sort of mobile/SMS play. But I tell people who are in college today or 10 years from now that are going to look at the Internet and laugh. I think where it’s at is technology geared toward personal health. Walt: Are you investing? Mark: Looking. The problem is I don’t understand any of this stuff.
*
Mark Cuban is back at D7.Mark Cuban is back at D7.
*
Walt and Kara know that Mark Cuban is not a man of few words.Walt and Kara know that Mark Cuban is not a man of few words.
Friday, May 22, 2009
Malls: R.I.P.
This same spasm in American society that's killing tract homes and reduced car consumption is hollowing out another infamous eyesore of the land: the shopping mall.
It has profound consequences both on a cultural level and an economic level
WSJ has the grim story:
On the low-income east side of Charlotte, N.C., the 1.1-million-square-foot Eastland Mall recently lost a slew of key tenants, including a Dillard's and, next month, a Sears. Sales per square foot at the venue fell to $210 in 2008 from $288 in 2001.
...
But the long recession is helping to empty out the promenades. Some analysts estimate that the number of so-called "dead malls" -- centers debilitated by anemic sales and high vacancy rates -- will swell to more than 100 by the end of this year.
In the 12 months ended March 31, U.S. malls collectively posted a 6.5% decline in tenants' same-store sales, according to Green Street Advisors Inc., a real-estate consulting firm. The recent slump was led by an average 7.3% sales drop at Simon Property Group Inc., the operator with the largest number of mall locations.
At the moment, most malls are healthy. As it says, only 100 malls are really considered to be dead (sales per square foot of $250 is the cutoff). But the trends are against malls, even if the economy stabilizes, due to the internet, higher gas prices, social networking (a substitute for the malls food court, which means goodbye mall movies), and the permanent reduction in household credit.
It has profound consequences both on a cultural level and an economic level
WSJ has the grim story:
On the low-income east side of Charlotte, N.C., the 1.1-million-square-foot Eastland Mall recently lost a slew of key tenants, including a Dillard's and, next month, a Sears. Sales per square foot at the venue fell to $210 in 2008 from $288 in 2001.
...
But the long recession is helping to empty out the promenades. Some analysts estimate that the number of so-called "dead malls" -- centers debilitated by anemic sales and high vacancy rates -- will swell to more than 100 by the end of this year.
In the 12 months ended March 31, U.S. malls collectively posted a 6.5% decline in tenants' same-store sales, according to Green Street Advisors Inc., a real-estate consulting firm. The recent slump was led by an average 7.3% sales drop at Simon Property Group Inc., the operator with the largest number of mall locations.
At the moment, most malls are healthy. As it says, only 100 malls are really considered to be dead (sales per square foot of $250 is the cutoff). But the trends are against malls, even if the economy stabilizes, due to the internet, higher gas prices, social networking (a substitute for the malls food court, which means goodbye mall movies), and the permanent reduction in household credit.
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