Thanks A Lot... Suckers!

GoPro Cameras Can Stream Video To Meerkat App  -- news item, July 25, 2015

We are reliving the space program.

You probably remember it; it was in all the papers: the United States of America spending just under a trillion dollars of taxpayer money, over half a century, to explore the final frontier. 

The investment (which doesn’t count the untold military expenditures obscured in black budgets) returned value in so many ways: astonishing and heroic achievements, including beating the Evil Empire to the moon. Major advancements in guidance and propulsion technologies, so that our ICBMs would destroy humanity far more efficiently than the USSR’s ICBMs could destroy humanity. Priceless treasure troves of data and imagery from our own solar system, distant galaxies, the whole universe. Major progress in materials sciences and electronics, data processing, communications and telemetry.

Plus TempurPedic mattresses. Dustbuster handheld vacs. Freeze-dried coffee. Buzz Lightyear. And most importantly of all, NFL Sunday Ticket.



It’s a fool’s errand to analyze whether the bet paid off. You can probably extrapolate some sort of ROI in commercial activity unleashed by NASA R&D, but all the economists in all the ivory towers in all the world can’t attach a value to knowledge, understanding, pride, nuclear deadlock and the sacred miracle of Eagles vs. Cowboys in a Virginia sports bar.

But here’s the thing about the space program. Although many a contractor profited quite handsomely, it was not a function of the heavily fetishized and allegedly omniscient Free Market. It was an expenditure -- the ultimate Big Government expenditure -- by society, as determined by politicians elected to serve the greater good. It required the vision of John F. Kennedy and successors, and the faith of thousands of legislators over many decades, all answerable to their own extremely irritable constituencies for their votes -- especially the votes that cost the citizenry cash money on April '15.

That is how government works. It makes decisions for everyone based on common interest, subject to prevailing political winds. Elected officials operate within what political scientists call the “jaws of consent.” There’s a lot of leeway, but when they stray too far, they are crushed. In the meantime, though, we as taxpayers have to swallow what they serve up. Prix fixe, not a la carte

You don’t like public broadcasting or open carry? Tough noogies; elect yourselves a new Congress.

Anyway, here we are again. In the past decade, we have funded several hundred billions-worth of world-changing technologies, mainly in the form of social platforms and apps with varying degrees of utility and societal benefit, but almost all of dubious commercial potential. The mentality is very much "Field of Dreams": “build it and they will come.” Well, Twitter built it. Snapchat built it. Yahoo built it. YouTube built it. Instagram built it. Pinterest built it.

And they came. They flocked. And flocked again, endlessly, habitually, altering their daily lives on a mass scale. The only thing is, when they came, they forgot to bring money. Twitter, after, ahem, a “market correction” following missed revenue targets, has a market cap of $23 billion Pinterest recently raised $500 in a venture round to bring its valuation to $11 billion. Instagram, which Facebook snapped up for a piddling $1 billion, has a speculative value of $37 billion. Snapchat: $18 billion.

Hey, YouTube sold $4 billion worth of advertising last year. Unprofitably. Hey, Yahoo is profitable! -- but not without its stake in Alibaba, the Chinese e-commercial juggernaut. Still, its market cap is $39 billion.

As the late Sen. Everett Dirksen famously observed, “a billion here, a billion there and pretty soon you're talking about real money." And to show for it, what? Merely the knowledge that if you give away something useful for free, lots and lots of people will take you up on the offer. They won’t pay you a thin dime, and because the global ad spend is too tiny to cover costs for all but a few (1. Google, 2. Facebook, 3. Nobody else), nobody makes money but the early-stage VCs who make early exits at obscene multiples while later investors -- mainly common stockholders -- are left holding the bag.

In other words, a pyramid scheme. Ladies and gentlemen: your vaunted free market at work.

Which brings us Meerkat and GoPro. Here we have an actual manufacturing company that makes money by selling physical things -- cameras -- cutting a deal with the pioneer of live social streaming. I referred early to politicians’ faith in grand visions.  Well, this deal reflects a nearly delusional level of faith, like snake-handling and Keno. Because, for starters…

1)     Meerkat is the Betamax of live social streaming. Twitter’s Periscope has rendered Meerkat a marginal rival already.

2)     Live social streaming -- which cannot like a Tweet be reliably digested, ignored or clicked on an an instant -- will be wonderful for Rashomon-like multiple views of breaking news and other happenings, but has limited (legal) utility otherwise.  (Whereas Twitter merely lets you see pix of your friends’ lunch, Meerkat permits a live group, um, feed. Scintillating.

3)     Because its most likely mass use is to pirate content -- e.g., the Mayweather-Pacquiao fight -- no sponsor will ever be a part of subsidizing it. Hence, the business model is not merely wishful, it is nonexistent. 

So return to where this all began, we all owe a vote of thanks. For the fun Pins, for PewDiePie and Jenna Marbles, for the cool processed snapshots, for Yahoo news, for the free look at Michael Bay's next schlockbuster, we are heavily indebted to the investors who funded so many fields of inevitably broken dreams. You have been our space program, and not a red cent going to Uncle Sam. Much obliged, suckers.

When it comes time to pick up the pieces, may I recommend the Dustbuster?

5 comments about "Thanks A Lot... Suckers!".
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  1. John Zebell from Zebell, July 27, 2015 at 10:31 a.m.

    Lots of words, Bob, to say you don't get how social media platforms are valued.  But at least you were able to tie in how you don't understand the value of the space program.

  2. Douglas Ferguson from College of Charleston, July 27, 2015 at 1:16 p.m.

    Hidden in all thse words is something about disintermediation, a world where amateurs replace professionals and freedom abounds, even the freedom to stop showing a profit. I would have thought you'd appreciate more chaos.

  3. larry towers from nyu, July 27, 2015 at 1:22 p.m.

    Actually John, Bob correctly shows how they are valued, not how they should be valued. They are all solutions in search of non existent revenue.

  4. Pat Dunbar from DiMAS Group, July 27, 2015 at 1:36 p.m.


    You forgot TANG

  5. dave swartz from Hang w/, July 27, 2015 at 2:27 p.m.

    Bob, I've been reading your opinion since I was a copywriter back at Mullen in the 90's. And I have to say, this has to be the most wrongness that I've heard come out of your fingers - possibly ever.

    In no particular order, Meerkat did not cut a deal with GoPro. They figured out a way to pull the live feed directly from the camera itself. My company, Hang w/, did the same about three months ago. And our GoPro integration is far more seamless.

    Meerkat is not the pioneer of the live streaming space. They had a PR bonanza and leveraged it well. We launched the Hang w/ live platform in 2013 and to date we've had millions of users create and enjoy tens of millions of minutes of live content. As someone who has watched a wide cross section - I can assure that there's much more happening across our planet than the piracy of video. 

    On Hang w/ I've been w/ Kaskade in a hotel room while he put together a set list. This weekend I was w/ Terrell Owens while he prepared to walk in the opening ceremony for the Special Olympics. Last month, my mom and brothers in Boston were able to be w/ me in California while I shared a broadcast of my son in his school play. The use cases go on and on an on. 

    Further, the business model is not only existent - it's perfectly tailored to brands. In fact, as a former agency writer and creative director, part of the reason I created Hang w/ was to build a model for brands to authentically and seamlessly integrate into social media. For us, that means pre-roll and post-roll advertising that surrounds a live broadcast.  

    And if you honestly think that brands will not want to be associated with live broadcasts from tastemakers in their field, then you're not just wrong. You're crazy.


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