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History Lessons: What Radio, Television and the Internet Can
Teach our Industry
By Terry Scannell Founder iP Signs
25 Jan 2007
Monetising radio took decades; are our expectations for digital
signage unrealistic? Photo: Paul George Bodea Agency:
Dreamstime.com
It is often said that the digital-signage industry is embarked on new
quests – for a business model, for measurement standards, for a
new market appropriate to a disruptive technology. But the reality is
that marketers and advertisers have gone down the same path at
least three times in the last century, following a predictable route.
First, new industries in this area are dominated by the technologists
and the entrepreneurs. The market is highly fragmented. Next, as
the technology gains a foothold, business models are adopted. Next,
standards are adopted.
Then, as these industries reach critical mass, networks are formed
which lower the costs of content production and delivery. As these
small networks grow they are inevitably linked together to bring
greater reach and even lower costs.
Unfortunately, for all involved the passage of time seems to also be
one of the ingredients. Consider three examples: radio, television,
and the Internet.
Radio
Radio was invented around 1895 (depending on which invention you
think was the really significant one). It took a quarter of a century to
find a business model that would work. It was a time when the
dominant ways to advertise were in newspapers and on outdoor
billboards. There is even evidence that newspapers threatened their
advertisers with not running their print ads if they bought radio time.
In its infancy radio was the province of do-it-yourselfers and ham
radio operators throughout the U.S.; in 1910 it is estimated that there
were 800 hobbyists who operated in the city of Chicago alone. Most
did their work for free.
In the same year the federal government acted to shut down United
Wireless, calling it “one of the most gigantic schemes to defraud
investors that has ever been unearthed in this country”. In short, it
was an industry filled with self-promoting scallywags of every sort
imaginable. Luckily, we are spared such issues in our industry...
Broadcast advertising, which is now the financial backbone of the
industry, was not invented until 1922 when Ma Bell (AT&T) came up
with the idea of a toll station. The station, located in the New York
City area, sold radio time to all comers. It was not until this concept
was invented that the industry found a business plan that would
propel it forward.
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Once a business model was in place, a race to build out networks
began. Also in 1922, AT&T and a group composed of GE,
Westinghouse and RCA began to put together the first radio
networks. From 1927 to 1934 radio revenues grew from $4.7m to
$72.8m.
There were vast innovations in content production. The original
‘content’ was the broadcast of signals to synchronize time. Later
came the broadcast of news, music and many other elements that
survive in today’s radio-programming mix. But the only real reason,
from a business point of view, for content after 1922 was to get more
people to listen to the advertisements.
Television
1907 was the first time that a cathode ray tube was used to produce
an image. Still, it was not until 1926 that what we would consider
something resembling television was demonstrated.
The 1930s were a time of limited availability of television sets.
Nonetheless, FDR was the first president to be televised in 1939.
Depending on when you start the clock running, it was 20 years after
its pre-Depression emergence before television became a dominant
marketing force.
In 1940 the U.S. Federal Communications Commission announced
the creation of the NTSC (National Television Standards
Committee). Its standards were adopted in 1941.
The first commercial in the U.S. was broadcast on 1 July 1941, just
before a Brooklyn Dodgers-Philadelphia Phillies baseball game. It
was for the Bulova clock-and-watch company, showing a
superimposed clock over a map of the United States, along with the
announcer declaring: “America runs on Bulova time!” This
commercial cost the Bulova company ten dollars to run. That would
be about $1400 in today’s money.
The medium’s development was all but arrested during the Second
World War, at the end of which there were only 7000 working TVs in
the U.S., and nine broadcast stations.
The earliest American television networks (NBC, CBS, ABC and
DuMont) were actually part of the larger radio network systems, and
many of the early television shows were simulcasts of popular radio
shows.
Networks offered centralized sales, distribution and production
services which lowered costs for individual affiliates. This system
was geared towards generating advertising revenue as well,
because advertisers were interested in the ability to reach
nationwide audiences
By the 1978-79 season the big-three broadcast networks had a 91
percent share of prime-time audiences. This represented the peak
for television.
The Internet
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Among several pioneers sometimes credited with conceiving the
idea of the Internet is J.C.R. Licklider. He articulated the idea in a
January 1960 paper in this way:
A network of such [computers], connected to one another by wide-
band communication lines which provided the functions of present-
day libraries together with anticipated advances in information
storage and retrieval and [other] symbiotic functions.
In 1962 Licklider was named head of the U.S. Defense Department’s
Defense Advanced Research Projects Agency (DARPA). There, he
and others developed the technological and other key concepts that
propelled the Internet forward.
Time again was a factor. It was almost 35 years between the
concept of the Internet and its commercialization.
The Internet as we now know it embodies a key underlying technical
idea – open-architecture networking. Simply put, this means you can
use any technology you want at the end of the line but, thanks to
standards, all the nodes can still communicate with one another.
The commercial development of the Internet was curtailed because
of its origins. Until 1980 commercial use was restricted and only the
government and academia were able to use The Internet.
As commercial uses began to evolve the open architecture of the
Net was threatened. In 1994 Michael Dertouzos of the
Massachusetts Institute of Technology and others formed the World
Wide Web Consortium to ensure that standards, particularly open
standards, would prevail.
Today, business models are still being discovered. But, subscription
services, ads, pay-per-click, buying words and the rest are all
playing a part in the huge move of money into this dynamic area.
How to speed things up
The history of radio, television and the Internet can teach us in the
digital-signage business something: that if we apply the lessons we
can glean from history we may be able to speed things up. But we
also have to accept that time is a factor, and has to pass before our
sector booms. Nonetheless, here are four things that I believe we
can do, based on the lessons of history, to make our industry more
successful in less time.
First, stop saying that measurement standards are critical.
History suggests that standard measurement systems are not critical
to the adoption of new media. No history that I reviewed gives credit
to the creation of Nielsen or Arbitron (for example) as being
essential to the success of radio or television. Generally what
happened was that when people advertised their sales went up. So
they bought more ads.
In our own lifetimes, it is obvious that standard measurement
systems were not essential to the adoption of the Internet and its
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commercialization. We are just now getting those standards in place.
While these standards are accelerating the use of the Internet for
marketing and sales, they were not a necessity.
I am not against standards of measurement. I think they will be nice
to have. What I am saying is that they are not a got-to-have, and
when we say they are, we slow up the adoption of digital signage.
Second, let’s agree on a name.
We should agree on some standards. Let’s pick an easy one. How
about we agree on a name?
I have experimented with Google AdWords. The terms relevant to
our business that get clicked on the most are “digital signs” and
“digital signage”. Let’s use one of those because that is what our
customers seem to think we should call it.
I suggest that at GlobalShop a group meet and decide on this or
some other name in short order. I will use what ever they agree on.
Third, let’s agree on open technical standards that will let one
network talk to another.
We need to sit down as an industry and agree as quickly as possible
to some technical standards. First on the list should be a technical
standard which will allow BroadSign to talk to Scala and Scala to
Nexus and so on.
I have not met a software person yet who does not believe they are
the master of the universe; every software person in our industry
came into it with the idea that they could drive the standard. The
problem is that with more than 100 proprietary platforms now
available, that thinking is slowing us all down.
It is also delaying what will inevitably be forced upon us by the
marketplace. To delay this only delays the day when the digital-
signage industry takes off.
Finally, recognize that there are three important things: networks,
networks and networks.
We need to put our differences and egos aside and start to create
networks. Networks for the creation of content, networks for the
selling of ads, networks of installers.
For example, the efforts of Mike DiFranza from Captivate Media,
PRN and others to create a digital-signage advertising bureau
should be supported.
If you see a network that has a chance of moving your business
forward, take some time and sign up. The law of the networked
economy is that the value of your node increases geometrically as
the number of nodes increase.
Think about it this way. What was the value of the first fax machine?
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It was zero. It had no other machine to communicate with. Now you
can buy one for $300 and leverage the total invested capital
worldwide in all fax machines. That is what will happen with digital
signage.
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