Olympics: What Was It Like on the Green?

In the Hutong

Watching the press-laden planes climb into the sky

2102 hrs.

Okay, last Olympic post.

Media Asia did a fun behind-the-scenes review of how the various sponsor pavilions on the Olympic Green came across.

A hint to sponsors for Vancouver and London: think experience, something that will really knock people’s socks off. Media correspondent Dominic Fitzsimmons found some expected winners (Coca Cola) and some surprises (Johnson & Johnson, GE) among the winners.

Olympics: There’s Life in the Old Tube Yet

In the Hutong

Home-made quesadillas and salsa

2057 hrs.

If you’re a regular reader here in the Hutong, you will know that despite something of a history in the TV business, I have swallowed the New Media Kool-Aid in the belief that the halcyon days of television and print are over.

If the Olympics proves one thing, however, it is that television remains a singularly powerful medium in this day of , particularly in delivering live events. In such cases, the idiot box remains a superior means of content delivery.

When I wrote it up in AdAge, however, several of the responses floored me. There is apparently this meme in the business that while television has immediacy, the Internet has memory, and that makes it a superior medium.

I get that, but I still have a hard time understanding why “memory” trumps a huge-screen HDTV with surround-sound in terms of conveying the experience of a live event, and you can experience it with friends and family in a way that staring at your computer screen can’t touch.

To paraphrase the old AT&T commercials, HDTV is the next best thing to being there.

Now, lest you think I am a TV partisan, keep in mind that I still think that outside of live events and maybe breaking news, television is an inferior medium of content delivery to the Internet. My three TVs are dark. My video is delivered via iTunes and (legal) DVDs. My news comes over RSS. Games on my computer and PSP have replaced much of my TV time.

I subscribe to magazines, have the hard copies sent to my mom’s house, and read the articles online or download PDFs.

Books, on the other hand, are still 75% print. But then, Kindle is not available in China yet.

Television is in trouble, to be sure, but live events are the exception. If broadcasters focus on that opportunity, there may still be life in the old tube yet.

Olympics: Selling Phelps in China

In the Hutong

Going a bit bonkers buying stuff on iTunes

2017 hrs.

Maybe it was because I’m in China and did not get the chance to see the NBC coverage, but I have to admit to being surprised to hear some marketers I respect suggesting that Michael Phelps was going to get rich doing product endorsements in China after the games.

Whatever happens to VISA and Speedo’s efforts to turn spin the über-swimmer’s eight medals into marketing gold, it ain’t gonna happen in China. Here’s why, from my piece in AdAge.

iTunes Unblocked and The Corporation as a Social Change Agent

Starbucks Pinnacle Plaza, Shunyi

Another fabulous post-thunderstorm fall day

1113 hrs

The Olympics have ended. The athletes are heading home. Songs for Tibet is off of the iTunes main page, but it is apparently still available for sale. The iTunes music store is once again accessible from China.

Maths over at Music2dot0 did us all a real service by expanding my Bipolar Apple post into a broader discussion. BTW, apart from excellent coverage of the realities and the posturing of all sides as the music industry evolves, Maths has the additional upside of having a very international view of the related issues. A superb blog and well worth a regular read if you follow the music business, and not just because he agrees with me.

Paul Resinkoff makes some wise noises at Digital Music News. He walks the line between two points of view: he urges Apple to weigh its response carefully.

Eliot Van Buskirk over at Wired, on the other hand, represents the “common wisdom” on the issue. He thinks I am urging Apple to “censor” their content in order to appease the Chinese government. He takes me to task for suggesting that Apple become a censor on behalf of the Chinese. He misreads my point, and misses the larger picture around this particular incident.

What Really Happened

One of the reasons I usually hesitate to post on something right as it is happening is that it is impossible under such circumstances to have the benefit of perspective. As it turns out, I should have waited on posting on this – not because it would have changed my point, but because I got my psychological terminology wrong and, mor important because the post would have been made stronger had I included some important chunks of information.

I won’t recount what all of those chunks were, but do take a look at Joe MacDonald’s piece for the Associated Press here.

A read through the story makes it clear that this was not a simple matter of Apple-carries-album-Chinese-slam-door.

The salient points:

– The album was featured on the front page of the site – a choice I would wager was made by Apple, not by the activist organization that produced the album;

– The album went live in the days leading up to the Olympics;

– Pro-Tibetan activists have been attempting to leverage Beijing’s hosting of the Olympics to draw attention to their cause;

– The activists told the Associated Press that they had contacted athletes directly and provided free downloads to the athletes and urged them to play it in Beijing as an act of solidarity.

The activists then issued a press release telling the world that this was, in effect, a protest, and that at least 40 athletes in the village had downloaded the tunes.

– The site was then blocked, fifteen days after the album went up.

– The Games ended, the athletes went home, and the site was unblocked.

– The album is available for purchase here in Beijing under the same conditions as everything else on iTunes – got a foreign credit card that bills to a foreign address, and the songs are yours.

If this were a simple matter of censorship because of some content, access to the site and the album would not have been restored. It seems clear that the content itself was not a problem – what set the Chinese government off was the concern over a potential protest in the Olympic Village. Apple was a target only to the extent that it was seen by the Chinese authorities as aiding that protest.

The implicit message the the government seems to be delivering is this: carry objectionable content in your overseas sites if you must, but use those sites as a springboard for protests within China, and they will be blocked.

Regardless of your stance on the rightness or wisdom of Chinese regulators taking this stance, as a businessperson you have to take notice where China seems to draw a line over which it does not want to see companies cross.

What you do with that information is another matter entirely.

To Cave or Not to Cave is Not the Question

The moral quandaries many companies face in doing business in China, whether they come from the hearts of the managers and employees or from the voices of their customers and home governments, are a part of doing business here. They vary from company to company, but they exist and cannot be ignored.

For example, many foreign-operated websites operating in China collect and retain information that could identify the individuals who come onto their sites. After the experiences of Yahoo!, Google, and MSN, any company seeking to operate a site that collects such information had better deal with the issue of what to do when the government issues a warrant for that information in advance, not after the door opens and the PSB is standing there.

Or something else happens that calls into question the morality of doing business in China.

(Or, for that matter, what to do when somebody from some government agency makes it known that your company registration problems can disappear in return for some cash, a computer, a car, or a college education. Or when a reporter tells your PR manager that he’s happy to run a story on your press conference – for the reasonable sum of RMB1,000.)

But many companies do ignore these issues. A frustrating number of executives, activists, pundits, and others attempt to portray doing business here as a choice: either you check your morals at the airport when you arrive, holding your nose and hoping a some congressional committee, journalist, or activist doesn’t find out; you do business in China your way and risk getting thrown out; or you stay out of the market completely.

There is considerable debate as to whether Apple played an active role in assisting the efforts of the pro-Tibet activists, or the activists simply gamed the iTunes system, duping Apple into playing a role it would rather have not played. It almost does not matter.

If this was an effort to throw a sneaky punch at China, Apple risked its business in China without the upside of brownie points from its fans and others elsewhere because it never owned up to its role.

On the other hand, if this was a case of Apple’s systems being gamed by activists who used the company as an unwilling accomplice, Apple looks foolish, and risks its business in China, and calls into question whether this will happen again, all while getting no credit for it.

What is worse, none of the above affected any kind of measurable change. It was a net negative for Apple. As such, it needs to ensure that something of this nature does not happen again.

But that does not mean giving in to perceived, implied, or overt demands that go against the nature of Apple, its executives, or the people around the world who use its machines and want very badly to see the company as an unalloyed force for good.

The Middle Road

I am an idealist.

I believe – I know – that it is possible for companies to make money in China and be agents of positive social change. Doing so, however, demands corporate resolve, transparency, superb communications skills, and and a healthy understanding of Chinese politics and culture.

I believe those two goals are not contradictory but rather are mutually supporting, and that in playing that positive role you will win points in China with the government, the people, your shareholders, and your customers elsewhere.

But companies can best affect change when they are trusted and thoroughly integrated into the fabric of Chinese economy and society. Not only does that give you access, it also ensures that when you behave in a way that could be interpreted as anti-China, you are given the benefit of the doubt by both the people and by policy makers.

That influence is built over time – not necessarily a long time, but it doesn’t happen in a week or a month – and in a systematic fashion.

Unfortunately, most companies miss this. The process of gaining the access alters them, defeats their resolve, makes them pliant.

Apple need not follow that route to ensure its success here.

Apple is already deeply embedded in the Chinese economy, but because it is mostly through manufacturing intermediaries, Apple has been largely invisible to policy makers and the people. That began to change with the popularity of the iPod and the growing number of Apple resellers around China, but the Apple Stores are really going to drive home not only that Apple has cool stuff, but that it is making that cools stuff right here in China.

If Apple can do that, all while proving that it is a responsible employer, pays its taxes, turns its back on corruption, and does good in the community, it will have more than adequate foundation to become a driver for social change without endangering – and indeed enhancing – its bottom line.

The one no-go place is publicly embarrassing, threatening, or insulting the country. You go there, and you damage your ability to drive real progress.

Nota Bene

There will always be people who question the value or the morality of doing business in China. When their arguments are sincere, intelligent, and thought-provoking they form a critical check on the often unbridled enthusiasm about China. Whether those voices come from within the company or without, they deserve their due and balanced consideration not just in the PR department, but in the rooms where major decisions are made about a company’s future.

Woe to the company that ignores them. They deserve sincere, intelligent, and thought-through answers, regardless of what the decision may be.

As Paul Resinkoff suggests, Apple, for its part, would do well to consider those voices now. And if your company has not yet, it should as well.

Olympics: Li Ning’s Spanish Inquisition

In the Hutong

The kid’s last day of summer

2005 hrs.

Racism is always a sensitive topic, especially when it rears its head at the Olympics, and the people who appear to be delivering derisive commentary about another race live in a country with a controversial past.

The Spanish basketball team’s taste-free caricature of Chinese faces was an excellent example of how political correctness has yet to reach some quarters of the world.

My post on the topic – and what I think team sponsor Li-Ning ought to do about it as a Chinese company – garnered some interesting responses. Some people were totally offended, and one guy accused me of being unable to appreciate how offensive it was because I’m not Asian.

What the team did – and what their other, Spanish sponsor condoned – was stupid, infantile, and reprehensible. The question of how to react to it as a business is another matter, however.

Check the post out here.

Olympics: Let the Ambush Games Begin

In the Hutong

Trying to grow some thicker skin

1900 hrs.

My article on ambush marketing at the Olympics in AdAge.

When I first started covering marketing around the Beijing Olympics, I began with the belief that ambush marketing was a bad thing.

Now I’m not so sure.

The more I think about it, the more I feel that effective ambush marketing means a sponsor someplace is not doing a complete job.

Sponsorships buy you an opportunity, not an entitlement.

Apple’s Bi-Polar China Disorder

In the Hutong

To breakfast, or not to breakfast

0936 hrs.

So here is the deal.

Apple starts selling an album called “Songs for Tibet” on its iTunes Music Store (iTMS), and they do it right in the middle of the Beijing Olympics. Coincidence, or passive-aggressive middle finger to China? Apple isn’t saying anything about it, so we are left to reach our own conclusions.

Next, word gets around that a bunch of Olympic athletes staying here in China – reports say as many as 40 – have purchased and downloaded the album.

Yesterday, people around China began noticing that the iTMS is no longer accessible from China. A few of the more tech-minded actually decided to try to use traceroute to figure out why. They confirmed that access to iTMS was being blocked by China.

You mess with the bull…

Without getting into a debate over the politics, let’s look at the business issue.

Apple is in the early stages of a much belated (and arguably long-overdue) push into China. After nearly two decades of near-invisibility, the company opened its first Apple store in China just three weeks before the Olympics. A second Beijing store is under construction, and Ron Johnson, Apple’s senior vice-president of retail, said there are many more China stores to come.

At the same time, Apple is apparently deep into negotiations with at least one Chinese carrier to start selling a (fully-enabled) iPhone here in China.

And of course, Apple has finally begun making headway in the market against its rival computer, phone, and music player rivals.

By selling “Songs for Tibet,” Apple has placed these efforts in jeopardy.

Apple has given the government all the excuse it needs, not only to block the iTunes Music Store, but to raise extra barriers on permits for further Apple retail stores, to throw barriers in the path of Apple’s iPhone deals with state-controlled carriers, and to make the creation of a Chinese iTunes Music Store and App Store a distant dream (unless the let the carriers run it.)

Not to mention make the lives of thousands of dedicated Apple customers here in China just a little more miserable – especially those of us who count on iTMS as our sole source of legitimate (non-pirated) music.

And Apple is alienating the very market it is trying to create in all of these efforts, infuriating the legions of Chinese who believe that the situation in Tibet is far more nuanced than the media, activists, and general public outside of China understand.

…you get the horns.

I am sure there were valid marketing considerations behind the decision to sell “Songs for Tibet.” I’ll even grant the (specious) possibility that there was a good business reason to do so during the Olympics. If not, Apple was certainly within its rights to make a political statement.

But Apple – and its shareholders – must recognize that its own actions are sabotaging its efforts to build a market in China right as those efforts are showing fruit. Such a bi-polar approach to this market is not sustainable. Apple management needs to choose between developing China as a market or the freedom to engage in random acts of passive-aggressive panda-punching.

Making that choice, as much as real estate and labor expenses, is part of the cost of doing business in China.

Olympics: The Real Issues are not Pollution and Censorship

In the Hutong

I really need a fridge in this office

0939 hrs.

The folks at Advertising Age have asked me to contribute to their Olympic blog over the next couple of weeks, and my first post dove into an issue that I’ve been looking at for six months, namely whether Beijing may mark the end of what I have come to call the “Uberroth-Samaranch Model” of Olympic finance built largely on the pillars of private sponsorships and the sale of broadcast rights.

In the piece, I lay out five questions that will probably not be answered when the Olympic torch is finally extinguished on the 24th, and that together suggest it is time for the IOC to reexamine the way it does business, much as it did in the wake of the financially disastrous XXI Olympiad in Montreal in 1976.

Travel mogul Peter Uberroth, who took the reins of the Los Angeles Olympic Organizing Committee (LAOOC) in 1979, was given one major goal: help Los Angeles avoid Montreal’s debacle. The fact that Los Angeles already boasted a host of sports venues helped, but Uberroth was the first to systematize sponsorships and to price television rights to their market value. Since the Los Angeles Games (which turned a $250 million profit), those two revenue streams have done much to sustain the Olympics.

Much has happened since, not just in the Olympics movement, but in the marketing business and the television industry. Uberroth’s model may be past its prime.

Check out the article on AdAge.