Transcript: McQuivey On Innovations That Work

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Interview with James McQuivey
OnCopyright 2014 Preview

For podcast release Monday, March 24, 2014

Q: From disruptive innovation to legislative evolution, the copyright conversation is getting plenty of attention. On Wednesday, April 2, at the New York Academy of Sciences, journalists, filmmakers, and musicians join media moguls and intellectual property attorneys to share ideas on the question that’s on everyone’s mind – what’s next?

Welcome to Copyright Clearance Center’s podcast series. I’m Christopher Kenneally for Beyond the Book. On Copyright 2014 is a one-day symposium on content and copyright that brings together the people who create, publish, reinvent, curate, and share. Host for the day is Robert Levine, author of Free Ride: How Digital Parasites Are Destroying the Culture Business, and How the Culture Business Can Fight Back. For the opening panel, Innovations That Work, analyst and author James McQuivey takes us beyond the given of digital disruption to understand better what we can do about it. James McQuivey joins me now from his office in Cambridge, Massachusetts. James, welcome back to Beyond the Book.

A: Thank you, Chris. Thank you for having me.

Q: We’re delighted you could join us for the podcast, and looking forward to seeing you in New York on April 2. We’ll tell people briefly about your background at Forrester Research. James McQuivey is vice president, principal analyst, serving CMO professionals. He is the foremost analyst tracking and defining the power and impact of digital disruption on traditional businesses. His consumer models identify ways consumers have embraced digital experiences and platforms, and his strategy models how companies can prepare to serve those consumers.

In February 2013, James published his book Digital Disruption: Unleashing the Next Wave of Innovation. He appears frequently on NPR, CNBC, and has been quoted in such publications as the New York Times and the Wall Street Journal. James, it’s great to have you back again, because it’s a subject that we follow pretty closely on Beyond the Book, this notion of digital disruption. I think the point to start with is that digital disruption is not only a possibility for businesses of all kinds, including the media, but in fact, it’s an inevitability.

A: Inevitability, necessity, absolutely what you have to do from now on. No matter how you want to say it, digital disruption is a transition in business maybe tantamount to what happened around the world when we went from not having electricity to having electricity. It changes the smallest parts of your business, and it enables entirely new parts of your business.

That’s what’s happening now in the way companies relate to their customers, the way they not only make or develop the products and services that they offering to the market, but how they then relate to their customer. It really expands their possibilities in one way, but at the same time, it removes old, tried and true possibilities that maybe some people will struggle to let go.

Q: In fact, that struggle, of course, it comes from fear, James. A question for you is how does a company, an organization, an author, or an artist really embrace this kind of possibility in a way that’s going to be successful? You have to shift your mindset.

A: You genuinely do. You have to think differently about what it is you’re being paid to do. Think about a business like the newspaper, which thought of itself as being paid to generate and report on the news. It turns out that the economic model of the newspaper was that they were being paid to aggregate an audience for classified advertisers and automotive advertisers, primarily. They were also doing these other wonderful things with that money.

But because they lost sight of what it was they were being paid to do, when digital took those things away and made classifieds and auto advertising so much easier to do in other ways, the newspapers were left without an economic model. You could feel bad about that, and you can mourn the loss of certain newspapers, as certainly you should, really, as a cultural experience, anyway. But it doesn’t change the fact that the newspaper model was dependent on something that no longer was feasible for them.

When you’re a creator of content, you do have to remind yourself – what is it that I’m paid to do, versus what do I aspire to do? If you’re a video producer, and you want to produce the next hit television series, there’s being paid to develop a piece of content that fits into the cable network’s programming lineup. That’s one thing. And then there’s reaching out and grabbing and enthralling an audience. That’s another thing. Those things don’t always line up. In the perfect circumstance, they do line up.

But sometimes you separate those two and you say, if I’m a video producer, how could I use YouTube to get that audience and enthrall them and make me care about my ability to tell stories? Then, go back to the cable distributor and say to them, you ought to finance me and put me into your distribution system, because look at the audience I bring with me. You actually go about it a little bit backward compared to how it used to be done in the old way, much like it’s happened in the book business, where many, many authors now go direct through Kindle or some other self-publishing platform, publish to their audience. Most of them fail. Some of them succeed in building an audience. At that point, Random House comes calling.

Q: Of course, technology is all about that flip that’s happened and shifted power and made it possible for disruption to happen quickly, easily, and to keep on happening.

A: Very much so. It’s really the low-cost tools and ease with which those tools can be used that makes it possible for someone like, say, an aspiring author who has been sending manuscripts in to slush piles of major publishers for years and has never gotten a good response. Now, all of a sudden, they can take their craft, just by writing it in Word, which is a tool that’s ubiquitous at this point, posting it on the Amazon Kindle platform, which is free to use and free to offer your content to, and then learning how to market it on Facebook and Twitter and in other free tools that are available to the author.

The point is clear – none of this guarantees that that author will succeed. As I indicated, most of them will fail. But most books failed in the published world as well. It shouldn’t be a surprise that most self-published books fail as well. But the cost of trying it has gone down so much that we’re seeing it in YouTube, we’re seeing it in Kindle, we’re seeing it everywhere we look. People are bringing their disruptive ideas to the market. Maybe they’re even asking Kickstarter as a platform to fund them.

Let’s say you’re trying to make a documentary film. You go to Kickstarter and you ask people if they like your idea enough, and if they trust you enough, to offer you the money to do it. There, again, not only is it that the tools to build it are cheaper and easier, but the tools to raise money to do it are cheaper and easier. That’s what digital disruption makes available.

Q: What’s fascinating is the way the incentive for innovation really has skyrocketed, because the opportunity is really whatever you make of it. And the risks are, if not minimal, at least they’re not catastrophic. If the investment hasn’t been so extensive – it’s really an investment of your own time, your own intellectual energy – if you’re successful, you can be proud of yourself. If you’re not, you move on to the next thing.

A: It’s certainly true that at least from the creator’s perspective, the content creative, there is really no risk. You put your content into the world. You see what you can get in terms of audience response or interest from other creatives. In theory, it’s an ideal environment for testing ideas, for testing concepts and stories and music, or whatever it is. In practice, it’s true that it’s a cluttered environment, because so many people can get in, and it does take some hard work to get people to hear your words. But if it doesn’t work, you haven’t lost much more than the energy that you put in as a creative artist.

From a company’s perspective, this is a big challenge. Because companies that have big buildings in New York City and have broadcast towers, or have recording studios or film cameras, whatever equipment that they have purchased over the years or leased, because they expected that they would have a unique opportunity to deliver content to the world, and now all of that equipment is sitting there, being paid for. There is still a risk for the big companies because of their overhead. That’s a challenge. They’re now competing with kids out of college who are grabbing a Panasonic camera for a couple thousand dollars and going out and making HD-quality action footage.

Q: It’s remarkable. We are speaking today with James McQuivey of Forrester Research, where he’s vice president and principal analyst. He’s also the author of Digital Disruption: Unleashing the Next Wave of Innovation. James will be appearing on April 2 at the New York Academy of Sciences for Copyright Clearance Center’s On Copyright 2014 symposium. You’ll be speaking, James, with a panel that includes Jeff Jarvis of BuzzMachine, Fred Seibert of Frederator Studios, an animation studio, and Katharine Zaleski from NowThis News, an online news aggregator. The panel will be moderated by Justin Hendrix, executive director of the NYC Media Lab.

James, what’s interesting there – in that panel are the kind of people who are doing the sorts of innovation that you’re speaking about. No doubt they come to you and your practice at Forrester with important questions. I wonder whether the large companies can be successful as disruptors, as well.

A: They can indeed. That is the encouraging thing about this, is that because it’s so easy to engage in this new content model of content creation and distribution, really anyone can do it, even a very large company. The one thing that will hold them back is their historical culture and practices, and sometimes policies, where they won’t be allowed to do something because it was historically a bad thing to do.

You take content that you’ve created to distribute – if you’re Disney, you have Phineas and Ferb, very successful children’s TV show, but you have all these clips that you’d love to put on YouTube so that you can get a worldwide audience to follow your characters, love your characters, share about your characters. But you can only do that within certain limits, because your prior policies of the rights to you gave to your distributors in each geography now preclude you from engaging your audience directly.

Companies like Disney have been disruptive not by taking their existing content, but by creating new content. Disney created a top-selling mobile game called Where’s My Water?, where they created a completely new character called Swampy. It’s a cute little alligator who’s just trying to have a bath in the New York City subway system or sewers. I don’t know exactly where.

In the game, they’ve created this lovable Disney character who has no encumberances, no digital geography that he has to adhere to. Disney could take that character, make a YouTube series, put it on YouTube, and see what the response was globally. They can actually test their creative juices in this new environment. But it just means as a company, they have to think a little differently. They have to think outside the old media box that they were built in.

Q: And the way that they can learn from that experience is by listening to their customers. That’s the other important piece of the technology here. It allows not only for a company or an organization to be innovative, but it also allows the customers to respond and to give their feedback.

A: That’s really exciting, when you think about it, especially from the creative professional’s perspective. You now have the chance to see whether your art was appreciated. Sometimes that can hurt. I get that. But if you’re creating meaningful content that you want people to experience, the only way you’re going to be satisfied as a professional is if you find out that people enjoyed it.

In the past, you’d make a television show, and then Nielsen comes back and tells you, you got an 8 rating, or whatever. That means something, sure. But to then have instead millions of people retweet something that you did and said also means something as a creative professional. Learning to value that direct feedback from the audience, and in fact encourage it, that’s something that a lot of media professionals took some time to get adjusted to. But now that they’re in it, you can see what someone like an Ellen DeGeneres does by just having a direct, personal relationship with her audience through social media.

You can do the same kind of thing with apps, where you put them out there, if you get 500,000 downloads in a weekend, that tells you something. Then you can learn, as they use the app over time, just how much they’re engaged by it. This is all new territory and very exciting territory.

Q: It is very exciting, and we’re looking forward to having James McQuivey join us at Copyright Clearance Center for our On Copyright 2014 symposium, coming to the New York Academy of Sciences on Wednesday, April 2. James, we look forward to seeing you there.

A: Wonderful, thank you.

Q: Beyond the Book is produced by Copyright Clearance Center, a global rights-broker for the world’s most sought-after materials, including millions of books and e-books, journals, newspapers, magazines, and blogs, as well as images, movies, and television shows. You can follow Beyond the Book on Twitter, find us on Facebook, and subscribe to the free podcast series on iTunes or at the Copyright Clearance Center website, Just click on Beyond the Book.

Our engineer is Jeremy Brieske of Burst Marketing. My name is Christopher Kenneally. For all of us Copyright Clearance Center, thanks for listening to Beyond the Book.

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