Consider the case of Viacom. As a recent WSJ story points out:

Web streaming is boosting Viacom Inc.’s profits —but it may be undercutting it as well.

On the one hand, content licensing deals helped lift subscription revenue by 16% in the latest quarter. On the other hand, the company saw advertising revenue for its TV networks fall by 3%. (Apparently, kids are watching SpongeBob SquarePants via Netflix.)

Obviously, big media companies have no choice but to play in the new world of digital media. That’s true for everyone from cable providers to movie studios to TV networks. But in the current fragmented landscape, it remains a huge challenge to find the sweet spot (as Viacom’s results show). As audiences migrate between platforms, revenue will follow them and likely take on new forms. Some revenue streams will dry up, others may roar to life.

Facing such a reality, the questions multiply: How do you ensure that your content monetization strategies (whether subscriptions, ad-based or hybrid models) in new channels make up for shrinking revenue streams in traditional or first-run channels? How can you use social media and mobile technologies to grow the whole pie?  How to measure user engagement and get a clear read on true customer value?

While there are no easy answers and it will take time to for each digital media business to find the right ones, there are several high-value steps to take in the meantime, such as:

• Ensuring that back-office online ad operations are streamlined and efficient – in our experience real savings are possible, as well as user experience gains;
• Defining the best metrics to track online operations relative to core business goals – the right measures provide key insights to enable better decision making, while preventing “data overload;”
• Fully integrating all marketing, sales and service processes into online businesses, for a seamless experience – rising user expectations mean little tolerance for siloed functions;
• Ensuring consumer data is captured, managed and secured in effective ways – the security and risk management implications of the digital media revolution are just being understood.

The bottom line is that we are in the early days of the digital media revolution, and companies that take smart action now will give themselves a sustainable advantage during the ongoing period of change to come – as SpongeBob SquarePants unleashes more creative destruction.

Much of this paradox is driven by rising customer expectations. That means marketing, sales and service leaders must strike a delicate balance as they try to strike the right balance. For instance, can measures designed to boost efficiency and reduce costs (like IVR technology and offshoring call centers) also be used to personalize and enhance customer interactions?

Roughly half of marketers plan to increase direct-response spending, compared to 64% who plan to increase online brand ad spending.

More social and mobile activity, plus increasing usage of online video, are the key drivers. Also interesting (though not surprising) is the finding that more marketers are moving their budgets from TV and print advertising to fund more of these digital initiatives.

There was considerable interest expressed by marketers in measuring returns on branding ad investments, saying they wanted standardized metrics that could parallel those used in the offline world. Standard metrics are a great idea, but tricky to pull off, as we point out here and here.

And as important as these “perfect” metrics are to measuring ROI, creating highly efficient operational processes within digital marketing is also critical in boosting value and effectiveness.

Just consider a few of our favorite fast facts:

• Multi-channel surfing: “According to data from Yahoo/Nielsen, 86% of web users now use a mobile device while watching TV.”
• Apps saving publishers:  “The Guardian revealed that its app has been installed more than 4 million times and is driving more than 1 million additional daily pageviews for the publication.”
• TV goes online: “While current estimates suggest about 35 million people have an Internet connected TV (either via the device itself, a set-top box or a gaming console), 65% of TVs sold in 2012 will be connected TVs.”
• Music in the cloud means music in the car: “Pandora users can now listen to their music through their car stereo in BMW, Ford, Mercedes-Benz and GMC vehicles, among others. And the online music service now accounts for nearly 4% of all radio listenership in the U.S.”

As mind-blowing as these numbers are, part of the untold story is the operational challenges they present. It’s not all about the whiz-bang technology on the front end, but also about how communications firms, publishers and other players in the digital media space can pay off the promise of a great user experience with real efficiency and effectiveness in their back-office operations, particularly online ad sales. Similarly, the ability to manage change and a wide range or interdependent initiatives may also be a competitive difference maker as the digital media era matures in 2012 and beyond.

The experiment was: if I put out a brand new standup special at a drastically low price ($5) and make it as easy as possible to buy, download and enjoy, free of any restrictions, will everyone just go and steal it?

It’s important to realize that Louis CK has a devoted following – more than 50,000 people downloaded in the first 12 hours after the video went up. That fan base was built up through a series of comedy specials and a cable series he controls. And offering a single video is a pretty straightforward proposition compared to a series or multiple shows through a network.

Still, this is an impressive experiment. The video opens with a simple request that users not steal it, and users are allowed three downloads and two streams. According to this report:

The show could be viewed as the consumer wished, with no rights protection or expensive subscription. A buy-it-and-watch-it proposition, no cable company involved. I went at this like a consumer, just looking at human impulses,” he [said].

“I buy lots of things online and I had a focus group of one. I thought about it, and five bucks seemed almost free and I figured if I took out the hassle, most of the speed bumps, it would almost be like hitting a link and streaming it. It’s been pretty damn great so far.”

What does it show larger media and entertainment enterprises, especially cable companies? Perhaps the key lesson to take away is that simplicity works. Good things happen when a minimal number of barriers or buying steps stand between consumers and the content they want to consume. In this case, there is no complex scheduling to figure out, as with Hulu’s latest configurations, which make it hard to know when the latest shows will be available for online viewing. There are no registration forms and no long-term commitment or repeating credit-card charges. Finding the right price point is also a clear enabler of success.

While not every DIY entertainer will be able to follow this model, the lesson for cable is clear – the user is largely in charge and likely to buy content that is simply and affordably priced and easily accessible.

Over many years of coaching kids’ sports, I’ve only had a few instances where a child has cried in response to my coaching.  Trust me, when it happens, I feel terrible and I immediately talk to the child to let them know I am sorry for upsetting them.  Most importantly, I certainly tell the parents and ask their advice on the best way to motivate and coach their child.  From then on, I use different coaching techniques to get that child motivated to do the right things on the field.  Now, please refrain from giving me grief about making a kid cry…I promise it doesn’t happen a lot!

It’s the same in business.  If you supervise each person the same way, they won’t cry but they certainly won’t be as productive as they could be.  In fact, they may be more unproductive as a result.  As a leader (or supervisor or boss), you must let them know you care.  And they know you care if you reach out and ask them the best way for them to be coached or supervised.  Some people don’t like being too closely supervised, others need lots of direction and to be praised often.  Everyone, whether they tell you or not, enjoys being praised at least a few times.

I always hear leaders must demonstrate compassion and I believe it.  For people to follow you, they need to know that you care about them.  And I’ve learned one way to show compassion is to individualize your leadership style whenever possible. If you don’t believe me, try coaching youth sports.

The strategy is to make owning more compelling than renting by loading digital portability into purchases.

By purchasing Flixster and developing a new movie access and storage platform called UltraViolet, Warner Brothers studio is hoping to “move consumers in mass numbers toward collecting movies digitally.”

Interestingly, the studio will work with retail partners to promote the digital storage service and potentially launch a service to allow consumers to convert their discs into digital copies, also to be stored in the cloud. Here is our take on the exploding online video space, and the key issues and challenges faced by publishers, traditional media companies and advertisers.

This analyst does clarify that it’s the year of the “social-mobile customer,” and this makes much more sense. The idea is that companies and marketers in particular must be:

customer-obsessed rather than channel-obsessed because we saw the dawn of a new consumer, one who uses tablets while they watch TV, uses social networks more often on their phone than on their computer, and who doesn’t think of their “inbox” as just their Gmail account, but as any message they happen to get on any screen they happen to be looking at.

Certainly we agree with that assessment. See the expert take of our Analytics team on this very issue here, with some fun historical perspective on 1990s TV built in.

While new “channels” and “screens” for customer interactions get all the headlines, we think “operational excellence” is a truly underrated element in CRM success. So what does “CRM OpEx” really mean?

By integrating data, process and technology around a singular vision, companies can ensure that their customer experiences deliver value consistently and that dreaded silos between channels and back-office functions can be broken down.

The bottom line is that mastering the online ad sales process or integrating customer retention programs or consolidating customer billing pay huge dividends in freeing companies to focus on customer needs. That’s how 2012 can truly be the year of the customer – and the profitable customer at that!

AT&T’s deal with Apple was thought to be the dumbest of the dumb pipe deals, with AT&T giving away too many revenue opportunities, according to some analysts, to keep its association with the iPhone.

But T-Mobile’s deal with the recently launched Google Music service looks like an improvement. Obviously, music wants to be mobile today, and mobilization is an increasingly important way for record labels to monetize their content and mobile network providers to strengthen bonds with customers. That’s what T-Mobile learned when it asked its user base about music consumption:

A quick poll of T-Mobile fans in October confirmed that many of them are already rocking out on their smartphones. More than half of the T-Mobile customers who responded said they use their smartphone to play music, and more than a third who do, do so all the time or at least once a day.

On other hand, T-Mobile recognizes that “dedicated media players, not smartphones, continue to be the dominant form factor” for listening to music, citing comScore research. So should T-Mobile be looking into designing and manufacturing a portable music player or keep training its customers to use its phones as “personal stereos,” as the Sony Walkman once called itself.

T-Mobile didn’t overlook the social and sharing dimension either, and their agreement with Google Music enables sharing across its 4G Network, in addition to free downloads. Lastly, customers will be able to charge their Google Music purchases directly to their T-Mobile accounts.

This type of operational integration looks like a net positive for telco half of this deal. Of course, it puts real pressure on the efficiency of T-Mobile’s back-office systems and processes to ensure a positive overall customer experience. In T-Mobile’s overall customer ecosystem, Google Music is another touchpoint (like stores and call centers), albeit an important and highly visible one.

It’s clear that T-Mobile wants to be more than a dumb pipe. But as music becomes mobilized it’s worth asking if mobile operators in general can really be full partners with the online music services. After all, the record labels – the original music content companies – have almost become invisible in the music industry. They cling to their back catalogs and have become, to some extent, dumb libraries. They don’t own the customer relationship, as T-Mobile is seeking to do with Google.

Communications firms make huge investments in faster and more extensive networks to try and wrap up customers with smarter pipes. It seems ridiculous to suggest that they should instead design and manufacture devices or sign bands. Of course, it wasn’t long ago that it seemed just as ridiculous that Apple would make phones or Amazon would be in the data center business.

The platform providers – Apple, Google and Amazon – seek to dominate the online music landscape, with significant activity from the likes of Pandora, Spotify and Rhapsody. There are reports that Amazon is readying a phone of its own. You can be sure the integration with its music and movie service will be extensive, however smart the pipes of its likely mobile partners.

There is a musical chairs quality to the many music and mobility partnerships, but it looks like the song will play on for some time to come, and it will be fascinating to watch the developments.

There is no way to price a traditional book release at $3. You have to help the publisher meet their numbers. So not only does the book have to be priced much higher, but the time commitment to promote it via traditional book tours is much more. With an Ebook release I can sit here and promote it on social media and via email interviews, which I like a lot better.

Makes content monetization sound so simple, doesn’t it?