The Rise of the Consumer-Generated Media Machine

  • by March 30, 2005
By Cable Neuhaus

If you buy the argument that the end of so-called "traditional media"is just around the bend, you need look no further than 30-year-old Rafat Ali to see the (minimally bearded) face of the new order.

The upending of the long-familiar paradigm, in which consumers drool at the laps of corpulent, ad-laden content-casters, is just about dead; a new citizen-centric media, a sort of me-to-you "minimedia," will soon rule. That's the vision of the youthful brigade driving this movement. And for now, the wind is definitely at their back.

A guy like Rafat Ali, then, represents all that Big Media fears, or at least should. He is neither rich nor well-connected in New York media circles. He and his wife, a pastry chef, live in a modest apartment in Santa Monica, Calif., and, like all recently wed couples, they have concerns about their future. But as it happens, Ali is the creator and sole owner of, a three-year-old Web site that has grown into one of the Internet's premiere Web logs and has made its founder, at least among the technorati, a superstar. He is attracting not only worldwide adulation, but also plenty of advertising and lately, well-heeled suitors that want a piece of the action. In Ali, they see the future of content creation and distribution  the very embodiment of minimedia.

The Face of Minimedia "He is a genius," proclaims Henry Copeland, founder of Blogads, a company that sells Web log advertising. "Everybody knows about Rafat and bangs on his door to advertise with him." The fact of the matter is that in the broadband Internet world, Ali can stand alongside a Time Warner or a News Corp. and feel his power. His is an achievement that could not have been possible before the advent of inexpensive Web logging software in 2001. Now, on the connection between media, technology, and finance, the topics paidContent covers every hour of every day, the self-effacing Ali is both a news breaker and a trusted source. Industry players around the globe regard him as a veritable new-age magnate. Ali, for his part, is modest about his rise, as befits his upbringing in a small university town in India.

"At the end of the day, what I've got is a content media company. I'm part of the media ecosystem." A seditious little smile crosses his face. "That's where I feel safe."

At the other, older end of the spectrum, mainstream media (or msm in digi-hipster parlance), should feel anything but safe. Blame it on hard-charging technogeeks like Ali, who fell hard and fast for the notion of an everyman's media: You make it, you shake it, you share it. What a simple, elegant, and suddenly possible concept. And yet, when the son of an Indian biochemistry professor, with only a thousand dollars in his pocket chose to study journalism at Indiana University in 1999, he could not have imagined that something called Web logging would transform his life and, more profoundly, media everywhere on the planet. Right place, right time, right mindset.

A series of fortunate career moves, lots of pluck, and the willingness to keep his paidContent blog going even while filing stories from leaky, low-rent flats in foreign cities eventually earned Ali twin prizes: his name among the blogosphere's leading lights and an old-fashioned bonus, an exit strategy. At press time, Ali was deep into negotiations with a group of high-profile investors (curiously, all from msm and the telecom sector) eager for a stake in his company, ContentNext.

Remember, he is 30, carries a cheap, old Motorola phone, and his first language is Urdu. "It's scary that people are looking to me for information about how to go about doing all this on the Internet," Ali says, knowing all too well that, to virtually textbook perfection, he is the ideal role model. The platform is the medium. Were it not for the Internet, which for a while, seemed frustratingly to have no impact on media behemoths, none of this hoo-ha could have happened. Attaching a serious-sounding name to the phenomenon  consumer-generated media (cgm)  has helped, it appears, to legitimize it among those who track such trends. The unstoppable wave remains very much in its formative stage and is still more potent in the United States than anywhere else.

We're talking here not only about blogs, but online user groups, discussion boards, the Wikipedia or people's encyclopedia, those fledgling audio podcasts, and the proliferation of popular consumer feedback sites, like,'s reader reviews, topical message boards, and the scores of auto, shampoo, and toy information Web sites. There are thousands of these destinations, although raucous political and media gossip blogs capture most of the headlines. The problem for bricks-and-mortar media is that the Web is a vast and somewhat messy sea of information that flows from person to person, unimpeded, without filters. For most companies, whether they produce content or cornbread, that spells nothing but trouble. How does Ford Motor Co. deal with online rumors that one of its engines is faulty? What does m&m Mars do to refute an online post about a candy bar that makes you gag?

For that matter, what does Ingersoll-Rand do when, as actually occurred last fall, someone discovers that its industry-leading Kryptonite-brand bike lock can be picked by a Bic pen? Not only that, but someone actually demonstrates, on film, how this can be done, then places the video right where it can do the most damage: a video blog. The company responded generously (45,000 locks have already been replaced) and as promptly as it was able at the time, but the damage was done. "Bloggers can sting you, they can turn on you," admits Donna Tocci, Kryptonite's spokesperson.

Damage Control Could the company have avoided the pain? Possibly. "They missed the boat" by reacting sluggishly and in the wrong ways, says Steve Rubel, author of the widely read public relations blog, Media Persuasion. Now, he observes, Kryptonite's leadership "is afraid of the big, bad blogosphere," which is unfortunate. "If they were smart," he advises, "they'd get up on a blog to rebuild their brand."

Given the unruly nature of consumer-generated media, could there be a more daunting challenge for big media and big marketers? In light of the unstoppable explosion of cgm, the stars seem aligned against them. How to respond?

More swiftly, for starters. Many companies, like Ingersoll-Rand's Kryptonite unit, have been too slow to grasp the implications of democratized media, late to adapt to its technologies, and laughably feckless in combating the onslaught of at-home bloggers, podcasters, and various forum scribblers (what some have dubbed "the pajama-clad army of the night"). Fortune 1,000 companies in particular have had a hard time adjusting. Diana Pohly, who runs the marketing and custom-publishing firm Pohly & Partners, says many of her largest clients "get bogged down in technology barriers." Every time they think about using the Web to communicate more intimately with their customers, "it stops the project. They won't allow it."

David Versus Goliath Too bad. In Hollywood, for example, trade magazines Daily Variety and The Hollywood Reporter still dominate the market, but a variety of online entertainment sites have begun to make inroads. The best known is Harry Knowles' Ain't It Cool News gossip site, run from Austin, Texas, which not only rattled Hollywood when it began breaking stories but, in the end, got Knowles a production deal with Paramount Studios.

David Poland owns rival site Movie City News. Noting that "entertainment is its own freaky little world," he says, that rather than battle print media, "we compete on smarts." Is it working? Poland employs one full-time associate, advertising has been plentiful, and Movie City News, according to its editor, had about 2.6 million unique visitors during peak Oscar season this year.

The unspoken secret of the blogosphere is that it's not yet as large as the recent hype would suggest. The power lies in its interconnectedness, the fluid linking from one node to another. Nevertheless, there are only about 5 million active sites, total, and most of those have but a handful of regular readers. According to Anil Dash, a vice president of Six Apart, the company that created the blogosphere's most widely used software, "The majority of bloggers are writing for only five to 10 friends. Fewer than 100 blogs have 100,000 readers. Maybe 50."

It turns out that's more than enough to wreak havoc on a corporation, a product, a service, and even a person's reputation. Some companies are finally beginning to comprehend the shifting landscape. To them, that may be confounding, confusing, counterintuitive, and sometimes unfair, but it needs to be confronted. Imagine: A 15-year-old schoolgirl in Kansas posts an accusation (Head & Shoulders brand shampoo turned her hair "icky" orange), one of her five readers passes it along to a blog buddy in Wisconsin, it sails around the planet over the next few hours, and before you know it, well, Procter & Gamble, has a really messy clean-up job on its hands.

This kind of chain reaction may be unavoidable on the Web, but corporations and big brands are finding that they need a third-party to monitor all the unedited commentary, if only to untangle its mixed messages. Intelliseek is one such company and, by the way, takes credit for coining the phrase "consumer-generated media." Like its competitors, Intelliseek has developed proprietary software to monitor cyberspace. Mostly, it wants to learn  in real time  what consumers are saying about its clients, and what it means.

"Everyone knows something powerful is going on," says Pete Blackshaw, Intelliseek's chief marketing and client satisfaction executive. "The idea is to catalog, measure, and index" the information, then sell it to chief marketing officers, he says. Every large company should be mining cgm for signs of trouble, Blackshaw says, although some have a more compelling need than others. "The auto industry has to do this. They don't have a choice," he says. There are so many car comparison sites and user forums these days that the auto manufacturers "are highly vulnerable on the [cgm] front."

Another company that specializes in analyzing cgm is Cymfony, run by Andrew Bernstein. Cymfony's origins are in classified government intelligence work, where its software was put to use mostly for the u.s. Air Force and Navy. The engineers and analysts at Cymfony are using essentially the same software to filter online chatter about banks, pharmaceuticals, and packaged goods marketers. Executives "are very worried about blogs, especially their viral nature," Bernstein says. On the positive side, "what excites me about blogs is the wealth of information that's there for marketers" to sift through. Indeed, some forward-thinking executives are finally starting to show an increased interest in leveraging the Web's considerable potential for viral marketing.

CGM, a Goldmine for Advertisers? Advertisers have not been blind to cgm either. Ever so gingerly, they are joining the festivities. Okay, not exactly joining, but hanging out on the fringes, watching with a mix of curiosity and amusement. Henry Copeland, founder of of Blogads, guesses that ad bookings are still exceedingly modest. "Somewhere south of a million dollars a month" is where he pegs the total figure. However, there are signs that big brands may be ready to wade into the water. Recently, Nike, Audi, General Electric, and Sony all booked advertising on blogs.

It's a tricky thing, advertising on a blog. A company can put up any old banner, if it wants, but that may be a wasted opportunity. So argues Blogads' Copeland, a onetime journalist who came away from msm so jaded that, even now, "the whole publishing organism gives me the heebie-jeebies." According to Copeland, "There's still a strong element of keeping up with the Joneses [on the Web]. 'Sony did it this way; we better do it too.' Advertisers that come into blogs and try to impose a message, 'Buy two, get one free!,' are completely missing the point of what's happening in the blogosphere."

The point, he maintains, is to "catalyze and amplify conversations," that is, to create ads that link to sites that can assist the consumer. Advertisers might be instinctively averse to directing eyeballs away from their message, Copeland realizes, but that's what they need to do if they intend to be acknowledged by bloggers. There's hardly a social critic who hasn't weighed in, one way or another on the long-term impact of cgm. Experience suggests that, in time, all these new forms of Net-enabled communication will probably find their rightful place at the media banquet table, although the table itself will be somewhat reconfigured.

One can easily envision big media rolling out literally thousands of blogs and discussion boards, launching its own podcasts, snapping up existing, high-profile sites, and trying, in essence to co-opt cgm. But ultimately that scheme can't work, at least not well; minimedia, by its essential nature, resists control. That's the whole point. As a game-changer, it will continually be in breakaway mode.

A more realistic scenario has minimedia, chiefly the blogs, influencing established major media. Already, many news organizations have introduced blogs, and in a development that's troubling to some, newspapers are beginning to reflect the conversational personality of online chat.

"Their audience is looking for a voice, the authors' outlook on the world," says Rich Gordon, chairman of the New Media department at Northwestern University's Medill School of Journalism. That, he says, is definitely a by-product of blogs. However, "Newspapers can't afford to have too much of a voice because they need to reach the largest number of people to sell them to advertisers. They're in a bind. The reaching-the-largest-possible-audience business model is disintegrating," he explains.

With increasing numbers of people participating in media making, traditional media is losing some of its traditional glamour. Or, so it's believed by author and commentator Douglas Rushkoff. "The advent of media that's free of production cost, like blogs, will further devalue the already sinking 'free' media gifted to the public by consumer-product sponsors, and send more people to pay media like hbo and high-quality journalism for their entertainment and news," says Rushkoff, author of 10 books on media-related topics. "That's an extraordinarily big deal," he concludes.

It is indeed, if he's right. However, another line of reasoning goes like this: new media, democratized media, minimedia  call it what you wish  is rubbish. Nothing matters except what's always mattered in the marketplace of ideas. It's the age-old game of creating a product, luring an audience to it, selling the audience to advertisers, and going home with some cash in your back pocket.

Nick Denton, founder of Gawker Media, probably the most successful packager of consumer blogs on the Web (Defamer, Gizmodo, and Wonkette), believes in those fundamentals. Denton is one of those shrewd British publishers who seem to "get it" in the way few others do. At 38, he straddles the generational divide between old media and new. But he doesn't believe there's a whole lot of difference between the two.

"What's worrying to me is the over-hyping of the sector. If people get overexcited about 'the revolution,' they're setting themselves up for disappointment," Denton says. "Publishing is publishing. Blogs won't change the human race."

Sidebar: What's all the buzz about? tell me what's happenin' Madison Avenue knows plenty about the media habits of people who consume media, but when it comes to consumers who generate media, relatively little is known. That's about to change, as media researchers begin measuring, tracking, and, in the ultimate turnabout, even begin using such consumers as a new form of media research.

Companies ranging from Intelliseek to Cymfony have already created panels to track what bloggers, user groups, opinion sites, and forums are saying about brands, products, and advertising on other media. That was the case in the period leading up to and following Madison Avenue's ultimate media event, the Super Bowl. These researchers began tracking the buzz about ads generated online as a gauge for the kind of water cooler talk Super Bowl ads elicit offline for weeks surrounding the big event.

"Consumers are relying on blogs as compelling new venues to post and spread their opinions, incubate news, and supplement, or even supplant traditional sources of information," says Pete Blackshaw, chief marketing officer of Intelliseek, which launched its blog tracking panel last year. "It's time marketers take note," Blackshaw says.

Cymfony goes one step further, defining any new form of consumer-generated media, a potential for new insights about consumer attitudes toward marketing and media. The practice evolved from the public relations industry, where research firms analyze clips of print and electronic media coverage to determine how the media are talking about corporate and consumer brands.

The difference now, says Julie Woods, executive vice president of product strategy and marketing, is that they are also tracking what media generated by consumers are saying about those brands. The company has already begun compiling a glossary of consumer-generated media platforms (see glossary page 32), and plans to add to them as they become influential factors.

While the marketing research field is beginning to define what consumer-generated media is and how to use it to understand brand communications, less well known is who these consumers are. In an effort to begin understanding that, media agency Universal McCann began asking them as part of its massive annual Media in Mind survey.

Since the field of consumer-generated media is still evolving, Universal began with the most obvious and well-understood format: blogs. It began by asking adults in the United States whether they ever kept an online journal. Only 1.9 percent of them said they had. Not surprisingly, the percentage is much higher among young adults age 18 to 24  5.2 percent.

The finding is interesting, because it suggests that a relatively small percentage of the population is beginning to have profound influence in shaping the way the majority think.

So who are these people? Well, according to Universal's research they are far from the average media consumer. They are above average users of online media, spending 62 percent more time online than the average adult, and e-mail (38.6 percent more). They're also users of video games and slightly greater users of TV and magazines, but significantly lower users of both radio and newspapers.

Among the younger set who comprise the bulk of the blogosphere, the patterns are even more extreme. Bloggers ages 18 to 24 consume less than half the print media of their non-blogging counterparts, but are much higher users of television.

Jim Kite, executive vice president, global research director at Universal, says the data is still new and that the agency continues to analyze it, but surmises that one reason why bloggers are less inclined to use print news media is that they are more involved in the dissemination of news content themselves, albeit consumer-generated news content. Joe Mandese

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