It just occurred to me that my recent quotes on Fierce Content Management make me sound like the Statler and Waldorf of the content management industry. I really don’t mean to sound so negative but, from where I sit, software company acquisitions are nearly always bad news. My clients are software customers and my job is to help them be better software customers by making better technology decisions. Mainstream software analysts, who are mainly speaking to the vendors, spin acquisitions in terms of what it means to competitors. They talk about how the acquisition changes the landscape and competitive dynamics. Mainstream analysts get pretty excited by mergers and acquisitions. It means that there is movement that needs to be understood and explained. It means that they get to re-answer the question that their software vendor and investor customers always ask “who is the best company in the market and why.”
The software customer has a different question: “which one of these products is the best for me right now and in the foreseeable future.” Market dominance plays a role but customers should be more concerned about their requirements and that the vendor will stick around and continue to focus on what matters to the customer. Customers should care less about who acquired who (today and yesterday) and about more who is at risk of getting acquired tomorrow. Acquisition adds uncertainty and risk that a customer would do best to avoid.
The dirty little secret about software company acquisitions is that, in most cases, they have nothing to do with technology. When one software company buys another, it is usually buying customers. Implicit in the transaction is the understanding that the customers are worth something and the acquiring company can more effectively make a profit from them.
An acquired CMS customer is valuable because switching costs are really high. To switch to another product, a customer would need to rebuild its web site, migrate its content, and retrain its people. Unless the product is totally doomed, the customer will probably stick around and pay support and maintenance for a for a while. The acquiring company can increase profitability by cutting down on product development, support, and sales. Most of these cut-backs directly affect the customer. The vision for the product will get cloudy. Enhancements will come out slower. Technical support and professional services will be less knowledgeable. Market-share will gradually decline. In some cases, the product will be totally retired in favor of an alternative offering by the same company. If there is an option of terminating support and maintenance, it is probably a good idea to exercise that option because the value of the service is likely to decline steadily.
The sad thing is that this dynamic is practically built into the traditional software company business model. A typical software company burns through investments to first build a product and then build a customer base. At a certain point, the growth trajectory will flatten (or decline) and investors will want to move their money into another growth opportunity. Some companies will be satisfied by having achieved a sustainable business. Others will cash out by being acquired. Others will look to grow by acquiring steady (but declining) revenue streams. The scariest companies to deal with are the acquiring companies — what I call “portfolio companies” that buy up products for their customers and then decide what to do with the technology. When you are a customer of one of these companies the future of the software you bought is vulnerable to the shifting attention of the vendor. If the vendor decides to keep the product around, it means they can successfully drain revenue from you. If the vendor gives you a “migration plan,” it means that they have another product that is in an earlier stage of the same destiny. Neither case is good.


Text Killed the Multi-Media Star
Wednesday, March 10th, 2010Recently it occurred to me that video and (to some extent audio) has become a less important requirement for most of my web content management clients these days. If I were to extrapolate the interest trend I was seeing back in 2004, I would expect to see the web resemble billions of tiny television stations. But that hasn’t happened. While video and audio remain important for companies in the business of developing and/or distributing multi-media content (primarily for entertainment), multi-media has not achieved ubiquity as a medium for communication. Instead, the focus is still heavily weighted towards text and images. There are some obvious explanations for this trend. Services like YouTube, Vimeo, and BrightCove are taking care of video hosting so my clients don’t have to worry about it. Also, companies have realized that, other than the large file sizes, video is just not so special that deserves so much special concern and attention.
But I think that there are larger forces at work. I experience issues with video both as a content consumer and a content management professional. As a content consumer, I don’t like how video takes control over my experience of the information. Unlike text, you can’t scan video for the little bit information that you want. You have to sit back and wait for the video to get to the point. This is great for entertainment (suspense!) but less so for information exchange. Take, for example, this video (below) where the spokesman just spurts out technical information about a computer. It would be so much better just to have a spec sheet so you could scan right to the part of the specification you want. For a while it seemed like all companies were looking to make their websites more “dynamic” by leveraging multi-media. Customers may have reacted positively at first to the novelty of seeing moving pictures but I think this has played out.
As a content management professional, my issue with video is that it breaks a key principle of content management: the separation between content and format. In video and audio, the information is inseparable from the format. Yes, you can transcode into different encodings and file formats, but reorganizing and editing audio and video is difficult to automate. As a result, video and audio content gets stale and out of date because it is too expensive to change. If you want to change the information, you need to re-produce the whole thing.
There are some things that belong in audio and video, like a recording of some performance or something that you need motion to understand. But in most cases, the production and maintenance effort that multi-media requires introduces an unnecessary barrier between the information source and consumer. This obstacle stands out even more in the social web that tries to blur the line between author and audience. In the social web, video is most successful when it is short, entertaining, and performance-oriented. It is less effective for basic information exchange. The best uses of video I have seen for information exchange is on some news sites where visitors are invited to upload short videos of their eye-witness account. In these cases, the video needs to be authentic (no need to edit!) and shows something that cannot be captured in text and still images. But information about that event is more accessible in plain text.
I am sure that there are people in the video field that have different experiences with the medium. If you have any insights, please leave a comment or send me an email.
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