Forget technology, focus on attention attractors.

My ScienceBusiness article no 2, can be found here or below:

I had an interesting meeting with a senior executive in charge of strategy and business development at one of the major European media group last Friday.

My friend is one of the smartest and most articulate media executive. I spend one hour telling her about the interesting infrastructure and technology play I was looking at, and she spend one hour telling me that she count not care less for super-encryption technology, or smart-delivery video infrstructure, but how she was looking for low-tech, mass-market services that would drive customer attention in the key customer segments market where her group was active.

Yesterday, Umair Haque in one of his well articulated post made exactly the same point:

The investment thesis behind infrastructure plays is simple - and too simplistic. It is often simply that demand is racing ahead of supply - and so it pays to invest along in those segments of the value chain which make production technically and marginally more efficient. Of course, the key hidden assumption is that dominant design of the value chain (the sum of business models, the way value is created and captured) is still valid; still in sync with industry economics.

Now, this is an investment thesis that has doomed most VCs to watch a disproportionate number of their highest-geek-quotient investments continue to go sideways - while puzzling over the accelerating success of of largely anti-technological plays like flickr, delicious, Skype, Habbo Hotel and MySpace.

Fox's acquisition (Scout media, Newroo, Ksolo, WhatIfSport, MySpace) thesis is a bit more complicated - but predicated on a much deeper understanding of the new media value chain. Fox invests in domains which are hypersocial (discontinuous shifts in social connectivity) or hypercultural (discontinuous shifts in cultural specificity): sports, karaoke, music. Further, Fox invests at the edge of the new value chain: at the interface with consumers. Further, Fox invests in the three roughly distinct models which live there : markets, networks, and communities.Why? Because Fox understands the deep economics of new media. Value capture in the new media value chain is a function of market power. And market power is a function of attention. And attention is allocated most efficiently by markets, networks and communities. Consider MySpace. MySpace's success is driven by it's proprietary music and now video player - the deepest social widget in the new media world. It is what lets fans connect to bands they might love - it is what allocates their attention hyperefficiently (more efficiently than Top 40 charts, corporatized radio robo-DJs, or even next-gen corporobots, like Pitchfork Media).

Infrastructure driven investments are nearly flawlessly discovering the wrong future. It's the future where infrastructure lays the pipes for scores of generic markets, networks, and communities. Of course, this is the future that already happened, which consumers thought sucked, and so they stopped using the www

What's different about today is that visionaries like Fox (surprisingly enough) understand that what drives attention allocation is the hypersocial and hypercultural; and what drives the hypersocial and the hypercultural in, for example, music and sports, is marginally, but deeply, different.

…If recent history teaches us anything strategic, it's that the Cambrian Explosion in media is about radically redefining the economic essence of media; redefining media production and consumption for an attention and interaction economy; redefining how media shapes the social and the cultural to allocate attention, exploding value creation and value capture.

3 Companies to watch that illustrated this :

• VPod.TV (who just announce a 4M€ A round last Friday)
• Zilio
• Wikio

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