The Hub Cool News

Purpose Brands

New products fail at an alarming rate because the “prevailing models of segmentation and brand building” are all wrong, write Clayton M. Christensen, Scott Cook and Taddy Hall in The Wall Street Journal (11/29/05). “Carving up markets by product, price point or customer type” results in “products overloaded with unwanted features” or that “are designed to improve on a product or appeal to a demographic profile — but not necessarily real customers.” No wonder, then, that “of the 30,000 new consumer products launched each year,” more than 90 percent fail. Reason is, “a simple rule has been forgotten. To build a product that people want, you need to help them do a job that they are trying to get done.”

Well, duh. Clayton, Scott and Taddy call such products “purpose brands” because they are “so tightly associated with the job they perform that they become inextricably linked to it. They say that “most of today’s successful brands,” which they identify as “Crest, Starbucks, Kleenex, eBay and Kodak … started out as purpose brands. FedEx, too. In that case the brand was built to do a job that “had existed practically forever,” and that others had failed to deliver against.” And it “was not built through advertising. It was built as people hired the service and found that it got the job done,” absolutely, positively, overnight. “Purpose brands create enormous opportunities for differentiation, premium pricing and growth,” say Clayton, Scott and Taddy.

However, they caution that “there are only two ways to extend brands without destroying them: Marketers can apply the brand to different products that address the same job. Or they can apply the brand do endorse the quality of products that do other jobs and create new purpose brands that benefit from the endorser quality of the original brand.” Marriott, for example, initially “built its hotel brand around full-service facilities that were good to hire for large meetings.” It then applied its brand equity to various other jobs: Courtyard by Marriott for “a quiet place to get work done,” Residence Inn by Marriott for "longer-term travelers," for example. Because the extensions do their jobs well, they "actually reinforce the endorse qualities of the Marriot brand" even though they don’t necessarily look and feel like the flagship brand. That, they conclude, is the best way to "reverse the death spiral of new product failure" and grow your business. ~ Tim Manners, editor

The Thermomix

“It grinds, crushes, blends, kneads, weighs ingredients, sautes, steams and simmers (and stirs while doing so) — a Rube Goldberg contraption with German engineering” — and a somewhat counterintuitive marketing strategy to boot, as reported by Amanda Hesser in The New York Times magazine (11/20/05). It is The Thermomix, www.thermomix.com, “a blenderlike steel canister attached to a tall white panel with knobs for controlling the time, the speed and the heat.” Basically, it is a blender, mixer, food processor, scale and saucepan all rolled into one countertop appliance that “is about as handsome as a lawnmower.” It sells for $945, not including shipping and handling — if you can find one, that is.

Although something like 200,000 Thermomixes are sold in Spain each year (it is known as the “KitchenAid mixer of the Spanish home”), American distribution is anything but widespread. In fact, when Amanda Hesser called the appliance’s U.S. distributor she was surprised to find something less than a classically customer-centric attitude. As she relays it: “The man on the other end of the phone told me rather testily that he did not! not! not! want me to write about the Thermomix, a product that does not rely on advertising … It was a curious brand of salesmanship, using the kind of exclusivity usually reseved for nightclubs.”

The machine’s business model, as it turns out, actually is more Tupperware than it is Studio 54: "Thermomixes are sold … through demonstration parties given by its 600 American ‘demonstration associates’" who will show you how to use it. For example, pudding can be mixed, heated, thickened and pureed all in the same machine. Similarly, soup can be made using just the Thermomix. You can grind and toast bread crumbs in it. If you want, you can even steam fish using a special attachment. But the guy on the phone at Authorized Thermomix Distributors advises cooks not even to bother trying to turn the contraption on unless they can get a demonstration first: "We discourage them from buying one if they don’t already know how to use it," he says. But if you’re game, he’s standing by to take your calls at (772) 223-9639. ~ Tim Manners, editor

Wal-Mart v. Poverty

John Tierney, the New York Times op-ed columnist, says he tried really hard to spark controversy over Wal-Mart during a panel discussion of liberals and conservatives, but “there wasn’t much of a fight.” He says both sides were pretty much in agreement that “the government should keep pushing people off the rolls and into jobs. And because many of these people are unskilled workers who command less than $10 per hour, both sides agreed that the government should make work worthwhile by supplementing their income through more income tax credits and other programs. From that perspective,” he continues, “Wal-Mart has been one of the most successful antipoverty programs in America.”

Wal-Mart, says Mr. Tierney, “provides entry-level jobs that unskilled workers badly want — there are often 5 or 10 new applicants for each position at a new store. Critics say Wal-Mart’s pay, $9.68 per hour on average, is too low and depresses local retail wages when a new store opens. That effect is debatable,” he argues, “but even if wages do go down slightly, these workers still end up with more disposable income, as Jason Furman, a visiting professor at New York University concludes in a paper titled, “Wal-Mart: A Progressive Success Story (PDF).” Dr. Furman, a former Clinton and Kerry advisor, says that “the possible decline in wages is miniscule compared with what the typical family saves by shopping at Wal-Mart: nearly $800 per year on groceries alone.”

Mr. Tierney further notes: "The average income of shoppers at Wal-Mart is $35,000, compared with $50,000 at Target and $74,000 at Costco. Costco is touted as the virtuous alternative to Wal-Mart because it pays better wages, but it needs to because it requires higher-skilled workers to sell higher-end products to its more affluent customers." Mr. Tierney rounds out his case with Wal-Mart’s health-care flap (that it relies too heavily on Medicaid, etc.) saying that if Wal-Mart were forced to assume more health-care costs it would either be forced to cut wages or raise prices, either of which would be tantamount to "a regressive new sales tax" on its low-income workers and shoppers. He concludes: "It’s easy to understand the motives of some of Wal-Mart’s enemies. Local merchants don’t want to match its prices. Labor leaders know that they’ll lose members and dues if unionized stores suffer. But why would anyone who claims to be fighting for social justice be so determined to take money out of the pockets of the poor?" Ka-boom. ~ Tim Manners, editor

Kazoo v. Wal-Mart

“A flyspeck competes against Wal-Mart” — and wins, reports Paulette Thomas in a Wall Street Journal case study. The “flyspeck” is Diana Nelson, “a marketing veteran and the mother of two toddler boys” who “was in the midst of a divorce in 1998″ when she acquired Kazoo & Company, www.kazootoys.com, “an independent toy store in Boulder, Colorado.” First, she cobbled together $75,000 to make a down payment on a $500,000 loan on the store, her hopes based primarily on the strength of “the store’s staff and its ‘destination’ feel, selling educational, nonviolent toys for babies to 12-year-olds.”

But the linchpin of her success apparently is her “strong relationship with vendors.” She leans on them to tell her “what they are selling to Target, Wal-Mart and Kmart. And then where they zig, she zags. She doesn’t carry Mattel, Crayola or Fischer Price. But she carries the whole line of Gotz Dolls from Germany. When the big retailers carry the Playmobil pirate ship, she eschews the ship, but carries the pirate prison and the buccaneer figure to go with it.” Ahrrr. Her vendors were pivotal again when Diana opened a Yahoo store online, in 1999, working out deals with some of them to “drop-ship directly to customers.” Where drop-shipping isn’t possible, she has college kids shipping “out the products in the middle of the night from the inventory of her 11,000 square foot store. Customers ordering out-of-stock items get a phone call and substitution suggestions.”

A little customer service, yes. When Diana started the online business, it barely yieled $500 per month, but now it is 40 percent of her total, “and about a quarter of that is global, much of it coming from U.S. military bases.” She says “one soldier tells another,” giving a whole new meaning to “military buzz." So, today, not only are Diana Nelson’s loans repaid, but she’s got a $2 million business that the Toy Industry Association names "one of the top five independent toy stores in the U.S." Plus she’s at home every night for dinner and tucks her kids into bed … before going back online to tweak prices and inventory. ~ Tim Manners, editor

Store Brands

A “blind taste taste” of 300 consumers in 10 locations conducted by Meyers Research found that “store brands … edged their national counterparts, 51 percent to 49 percent,” reports Elizabeth Olson in The New York Times (11/27/05). The study was conducted by Meyers for the Private Label Manufacturers Association, plma.com, “which represents about 3,000 generic goods makers … Testers tried two national brands and two store brands in 12 categories, from orange juice and cereal to ice cream and pizza.” Good news for “national brands of chicken nuggets, cheese pizza, chocolate ice cream and potatoes au gratin.” Not so good, though, for raisin brand, where “testers chose the store brands … more than twice as often, 62 to 28 percent, as the national brands. The store-brand frozen broccoli was preferred, 64 to 36 percent, and store-brand chocolate chip cookies won 56 to 44 percent.”

Says Arthur Zimbalist, president of Meyers Research: “The obvious conclusion … is that private labels are on a par, if not better, than many national brands.” The Meyers study is echoed by Consumer Reports magazine, which reviewed “65 products as varied as facial tissues, plastic bags, French fries and yogurt” and decided that “many store brands are at least as good as national brands.” Specifically, the magazine “found that Stop & Shop and America’s Choice, an A&P brand, made the best low-fat strawberry yogurt, beating out others like Dannon and Yoplait. But in the tissues category, the magazine found that the Puffs brand from Procter & Gamble clearly trumped all others.” According to Mona Doyle of The Shopper Report newsletter, a willingness among consumers “to try store brands has grown partly because manufacturers have upgraded packaging and in-store marketing.”

In-store promotions can also be persuasive: “If I can actually taste it … I can be convinced it is good,” says Abby Bobb, who is now convinced that Giant’s store brand of white bread tastes just as good as Wonder Bread, for example. Most consumers also realize that the store brands are actually manufactured by national brands, including Birds Eye, Del Monte, Hormel, Kimberly-Clark and the Sara Lee Bakery Group. Bottom line: “Store brands now account for 16.1 percent of total supermarket purchases, worth $40.5 billion annually, up from 14.9 percent, worth $31.2 billion, in 1995, according to Information Resources. Those numbers actually are conservative “because big-box retailers like Costco and Wal-Mart and specialty stores like Trader Joe’s and Whole Foods don’t report sales totals for their own labels (and at Trader Joe’s “store labels make up 80 percent of its products”). The trend is global, too, as “sales of store brands … are expected to reach 30 percent of the worldwide market by 2020, from 21 percent recently,” according to M + M Planet Retail. ~ Tim Manners, editor

Airplane Frills

“…The legacy airlines have become no-frills airlines while the discounters such as Southwest Airlines and jetBlue Airways now offer more perks and free services,” reports Scott McCartney in The Wall Street Journal (11/22/05). “We’re not a full-service society anymore,” says Tim Wagner of American Airlines, a legacy carrier, which now charges $2 for curbside skycap, $10 to buy a ticket over the phone, and packs no pillows for its passengers on domestic flights. By comparison, “no-frills” Southwest, charges nothing for skycaps or telephone tickets and not only has pillows on board, but they are free. Then there’s the bankruptcy reorganized Air Canada, where you can get pillows, but they’ll cost you two dollars each, packaged up as “comfort kits,” that include both “an inflatable plastic pillow with a cloth covering, and a blanket,” which you can keep.

“It’s all about providing options,” says John Reber, an Air Canada spokesperson. “Customers can choose what they value.” Air Canada also lets you buy “less worry”; if you pay a higher price for your ticket you can “change a reservation without an added fee” and also get a “free” meal on board. Says Robin Urbanksi, a United spokesperson: “At the end of the day, the customer who pays more, and even flies more miles, gets more in return from United.” American Airlines says it saves $600,000 a year by eliminating pillows, and that its “passenger surveys show that its frequent-flier program is a far bigger factor in buying decisions than pillows.”

American has stopped serving pretzels, too, as has Northwest. If you want some trail mix on Alaska Airlines, that’ll be a dollar. Want some extra leg room? On United flights, the extra-spacious seats in the exit rows carry “a price tag of between $24 and $99.” Does the nickel-and-diming anger or alienate customers? Doesn’t seem to. “Most customers just shrug, especially since elite-level frequent fliers are often immune to fees and are plied with added perks like first-class upgrades and preferred seating.” Says Steven Allen, a frequent-flier: “With fuel prices what they are, all one should feel entitled to for the price of many flights these days is a seat … That everything else costs extra only makes sense.” Meanwhile, passengers are still treated to two packs of peanuts on discount-carrier Southwest, and free satellite television and radio on no-frills jetBlue. ~ Tim Manners, editor

Tribal Foods

“Even in the largest tribes, knowledge of how to forage and farm traditional food has faded,” but a determined group of traditionalists, chefs and marketers are re-introducing native food to Americans, reports Kim Severson in The New York Times. It’s a big job because “native foods encompass hundreds of different cultures,” notes Louise Erdrich, a book author “whose mother was Ojibwa” and who “writes about tribal food in many of her books.” She elaborates: “You’re talking about evolving a cuisine from a people whose cuisine has been whatever we could get for a long time.” It includes familiar items like wild rice, salmon and corn, but also encompasses less-familiar ingredients such as persimmons, pawpaws and buffalo meat.

What it doesn’t include is “fry bread, the puffy circle of deep-fried dough that serve as a base for tacos or are eaten simply with sugar or honey and are beloved on Indian reservations. That bread is fast becoming a symbol of all that is wrong with the American Indian diet, which evolved from food that was hunted, grown or gathered to one that relied on federal government commodities, including white flour and lard — the two ingredients in fry bread.” Instead the focus is on “dozens of squashes, beans, berries and melons,” including the coveted tepary beans, which are either white or brown, and also appear to help fight diabetes. Once plentiful, tepary beans are now grown in only small quantities, some of which are now showing up in dishes served by “big-city chefs.”

Chefs — big city or not — are seen as critical to the task of popularizing tribal foods, and John Sharpe, the chef at La Posada Hotel in Winslow, Arizona is only too happy to help. Much of his menu is based on “local tribal foods.” One of his favorites involves “turning tepary beans, roasted corn, a little French mustard and some olive oil into a dip that echoes a traditional Hopi dish.” He says his Hopi customers “kind of laugh at it, but they love it. They say, ‘This is a crazy white man who likes our food.'” Equally crazy, perhaps, is Larry Pourier, who is “developing a snack bar based on a recipe for wasna, a patty Lakota elders used to fashion from the kidney fat and beat of bison mashed with chokeberries.” He is developing the bar in cooperation with Lakota Express, "an economic development company" and hopes to market "an entire line under the brand Native American Natural Foods" that could be sold in the ethic food aisle at "mainstream grocery stores." ~ Tim Manners, editor

The Tantamounter

For a week, five artists and one psychiatrist have been holed up in a giant wooden box in a Chelsea gallery, turning whatever objects visitors give them into handmade replicas, as reported by Holland Carter in The New York Times. The project, the work of “the Vienna-based collective Gelitin, www.gelitin.net … has turned the gallery into a sociable, raunchy, pixilated all-night version of Santa’s workshop, pumping out free art on demand, and turning the image of a money-choked, object-clogged New York art world on its head.” Visitors “are invited to place an object, any object” into the box, “close the hatch. A yellow light goes on.” Items have included “wallets, photographs … and memorably a two-year-old child” (a daughter of one of the artists).

The wait can range “from a few minutes to more than an hour,” but eventually the Tantamounter returns the original object “joined by a brand-new, handmade ‘duplicate, or at least something that more or less resembles the original … An expensive camera goes in, and out comes a matching camera made from a cardboard box with a plastic foam cup for a lens and a handwritten Nikon label.” In goes a container of sushi and out comes “a similar container with a careful arrangement of broken eggshells filled with lime rinds and sprinkled with wet tea leaves.” What replicated the little girl was not disclosed, and even more mysterious is exactly what is going on inside the windowless, wooden box.

What we do know is that the box “is equipped with beds, a toilet, cooking facilities and food,” but “it has no telephone, television, radio or computer … The box dwellers (the pyschiatrist “is presumably there to keep the workforce on an even keel”) have no way of telling the time of day or the day of the week.” They do, of course, have a large supply of art materials, along with “their personal garbage” with which to work. So what’s the point? “The … installation throws a spotlight on collectivity as an alternative model for how to make art and live life” that gives “precedence to giving over getting, mobility over fixity, imagination over polish and collective over personal identity,” Holland Carter writes. The show, at the Leo Koenig (545 W 23rd) closes tonight, but the box will remain on exhibit for "a few weeks" and, yes, a book about the happening is on the way. (Happy Thanksgiving! Cool News will return on Monday.) ~ Tim Manners, editor

Million Dollar Homepage

A 21-year-old kid from the U.K. has made $623,800 selling ad space on his homepage — one pixel at a time, reports Gwendolyn Bounds in The Wall Street Journal. Alex Tew, who says his goal is to make a million dollars, landed on his online advertising innovation as a way to pay for college. He says “his strategy was to find an idea simple to understand and cheap to set up, with a catchy name that would garner attention online.” His solution was to create a page, “www.milliondollarhomepage.com, where he divided the screen into 10,000 small squares of 100 pixels each (a pixel is a tiny dot of light and color and each screen has tens of thousands of them). His plan: to sell pixels for $1 a piece, with a minimum order of 100 pixels.

“In each space, buyers could put a graphical ad of their choosing that links back to their own site when clicked on. The end result is a cluttered collage of ads in various shapes and colors all amassed on a single digital billboard.” There’s no extra charge for clickthroughs. Alex launched the site on August 26, beginning with a handful of ads from friends and family; within two weeks he had sold $40,000 in ads, and “since its launch the site has received a total of about 1.5 million unique visitors.” Now, this was an unknown, untargeted website with no track record. Naturally, advertisers were all over it. Because it had buzz: “There was nothing inherently special about the page, but it was very obvious to us that at the very least, buying some pixels would be a good idea for the sheer number of visitors he was getting,” says Daniel Khesin, vp of marketing of DS Laboratories, who bought 800 pixels.

The purchase paid off for Daniel, who says traffic to his website “jumped almost 50 percent within a week of the ad going up.” He comments: “And unlike banner advertising where it goes away, people will always know where to find it to go back and purchase more products.” Predictably, the site has spawned copycats, such as moneypantsdreampage.com, which has raised $4,500 so far. And already the price competition has kicked in with the launch of millionpennyhomepage.com, where ad space goes for just a penny a pixel, and the goal is just $10,000 (only $974 to go). Meanwhile, Alex Tew, his college tuition covered, says he wants to keep his site up “forever,” but will stop accepting new ads when he gets his million dollars. He says he hopes the page will stand as a monument to “what’s possible on the internet” and that it “one day might be a piece of art in a museum.” ~ Tim Manners, editor

Nike Considered

John R. Hoke III, “Nike Inc.’s chief design guru … wants designers to rely on geometry, not chemistry, to figure out how to rebuild a shoe,” reports Stanley Holmes in BusinessWeek (11/28/05). His directive is all part of “a corporate-wide mission called ‘Considered’,” a “new ethos” of “sustainable design” at Nike. John wants “his designers to create products that deliver more based on less — less energy, less chemical content, less waste. He also tells the team to forget about glues, adhesives, plastics, and other toxic materials used in traditional sneakers.” Says John: “I’m very passionate about this idea … We are going to challenge ourselves to think a little bit differently about the way we create products.”

The result, so far, is shoes using “snap-fit systems that may be reinforced with organic cotton stitching. These fibers hold together mid- and top soles composed of natural leather instead of synthetics. In a basketball shoe, designers are replacing a plastic heel cup with one made out of natural materials. Instead of foam lining pack,” says John, “we’re looking at fillers of bamboo fiber, which are renewable … We’re taking out what is not necessary.” For inspiration, John “sends his team to the zoo to observe and sketch animals’ feet … The Detroit car show is another annual pilgrimage that is more about drawing inspiration from sleek lines, styling and color schemes than the fascination with automobiles.”

“I go to the show,” says John, “and I’m not even looking at cars … I’m looking at form, surfacing and silhouette. I’m looking at the assembly of materials, the depth of color.” Another favorite exercise involved bringing in an Israeli origami artist. “The ideas that came from that session are phenomenal,” he says. “It forced us to look deeper at flexibility and how geometry works.” Instead of “cutting and folding” the designers were forced to consider “crimping, folding and bending.” In another event, John had his team create ergonomic chairs from cardboard with no glue allowed. The chair that “could hold people in a game of musical chairs” was the winner. Whether the shoe designs are winners — well, have a look and decide for yourself, at: www.nikeconsidered.com. ~ Tim Manners, editor

Jim Collins Redux

At first Jim Collins thought perhaps his famous business leadership principles could be applied to the social sector, but now it looks like maybe it’s the other way around, as reported by George Anders in The Wall Street Journal. Jim’s current best-seller, “Good to Great,” espoused a certain ruthlessness, asserting that great business leaders “will sell the mills or fire their brother, if that’s what it takes to make the company great.” That book, now in its 75th printing, with 2.5 million copies in print since its release in 2001. Now Jim is out with a self-published pamphlet, a 36-page monograph, called “Good to Great and the Social Sectors,” for sale on Amazon for $11.95. In this new work, Jim suggests a kinder, gentler model, and advises that business leaders “would do well to learn from the social sectors.”

Specifically, Jim recommends more in the way of “persuasion, political currency and shared interests … the prosaic, City Hall knack of cobbling together coalitions to get things done,” a different kind of style he calls “legislative leadership.” He also says his breakthrough to this new insight came after speaking “to leaders of the Cleveland Orchestra. They weren’t trying to increase earnings per share or return on equity; instead they tracked standing ovations, invitations to perform in Europe, and the number of orchestras copying the Cleveland style.” In effect, social standing, or “becoming known for excellent work” replaces stock price as the “beacon that attracts funding and talented people, creating new opportunities for growth.” Jim started down this path because of substantial interest among social-sector organizations in applying the principles of “Good to Great” to their work.

However, “non-profit leaders often complained” that an autocratic style was not an option for them, and obviously driving profits was not exactly their focus, either. An especially “telling moment” actually came to Jim Collins more than a decade ago, while addressing a group of church leaders, after advising them that they needed “to think bluntly about succession plans and how to ensure that their values persist after they leave.” A pastor “leaped to his feet” and said “Our founder was born 2,000 years ago … And he lives to this day!” The audience laughed and Jim Collins decided he “liked the challenges of stretching his ideas in to new settings.” He started writing his new pamphlet in 2003, in collaboration with “an informal advisory group of more than two dozen leaders in law enforcement, education, health care, consulting and music.” The initial print run is just 50,000 copies, and based on early demand, says Jim, “We’ll need to print more.” ~ Tim Manners, editor<

Calit2 Collaboratory

Picking up where M.I.T.’s MediaLab leaves off, a new, $400 million research laboratory — dubbed a “collaboratory” seeks to integrate the work of scientists and artists in hopes of sharpening America’s edge “in technological and scientific innovation,” reports John Markoff in The New York Times (11/5/05). “Part of the artist’s insight is to be able to interpret the future earlier than anybody,” says Larry Smarr, director of the new, six-story collaboratory, called Calit2, www.calit2.net. “We regard the artist as fully equal with any scientist at Calit 2.” The two-winged building itself is designed to engender collaboration: “On one side is an ultrasterile set of nanotechnology clean rooms … On the other side is a new digital media arts center composed of auditoriums and computer visualization laboratories where the Calit2 scientists, engineers and artists can display their projects.”

One artist-scientist collaboration involves “the construction of a wall-size tiled computer capable of displaying 100 million pixel images of the brain, making it possible to view vastly more information than on a standard monitor.” The challenge is to “design a new control language to deal with the huge amounts of visual information, and the scientists and artists are cooperating on ideas for visualizing scientific information.” In another project, Natalie Jeremijenko, is “interested in how society interacts with and uses toys.” She is creating “a pack of ‘feral’ robotic dogs with artificial intelligence capabilities and” plans to “let them loose in a San Diego neighborhood. The robots could be assigned some socially useful function, like searching for or ‘sniffing out’ pollution.”

Yet another project, called Ecce Homology, insilicov1.org, seeks to “explore the relationship between genetics and culture … by visually comparing genes from humans and rice plants” (I am not making this up). The installation was interactive, tracking the hand gestures of visitors standing in the gallery and allowing them to interact, using body movements with an enormous projected wall display screen. They were able to discover similarities between the portions of the rice and human genomes stored in a computer database.” The overarching goal, however, is to reinvigorating “basic research” in the United States, because over the last decade “American corporate laboratories and government agencies” have pulled back on it. Calit2 is funded mostly in “state and federal grants” as well as some $16.5 million from Qualcomm founder Irwin Jacobs and his son, Paul, who comments: “We need this kind of investment in the infrastructure to do the kind of visionary research that will keep us competitive.” ~ Tim Manners, editor

Hollywood Breakfast

“Until it catches up — if it ever does — we can expect to see more instant hits and instant failures, more Hollywood tales of overnight heroes and goats,” writes Adam Leipzeig in The New York Times (11/12/05). We can also expect to see more sequels and remakes, because trying anything new or different is just too risky under today’s Hollywood business model, which goes something like this: “The movie business turns on DVD sales. Strong DVD sales are generally propelled by strong theatrical box office. And what propels theatrical box office?” Well, you might be surprised to hear that the answer is not buzz marketing. It’s awareness. In fact, “in most cases, nearly half of a movie’s total audience turns out in the first week of release, which means there has been very little or no word of mouth motivating most of the audience.” So it helps if the movie title is something familiar, like Rocky XXXVIII, for example.

Whatever buzz there is doesn’t happen until opening night. But when it does it does so with sickening speed, as “teenagers … send a text message to friends during the first show on Friday about whether a film is good or bad.” Net is, most of the potential audience for any given film has decided whether or not to see it within 24 hours of its release. Regardless of whether it’s thumbs up or down, the studios need to move quickly to the DVD phase, because their profitability likely depends on it. Of course, certain people in the audience have already beaten them to it, having camcordered the film and sent it into overnight distribution in Southeast Asia or Eastern Europe or the A Train. The reality is, the time between a movie’s theatrical and its in-home DVD release is now just four months, “down from six months a year ago; some industry leaders predict it will soon shrink to nothing.” As soon as January 27th, in fact, when “the Steven Soderbergh film ‘Bubble’ will be released at the same time in theaters, on cable television and DVD.”

For the moment, however, getting the DVD into retail distribution within a few months is the name of the game, which means dealing with some 30,000 retail outlets. Most of the volume (a third of all DVDs and "more than 50 percent of some titles") goes through Wal-Mart — and once again success or failure is determined with astonishing alacrity. By the time a studio exec arrives at his or her Hollywood office on any given Tuesday morning (when DVDs are released), "Wal-Mart stores in the East have been open for four hours; based on the number of sales in that short time frame, their computer programs will calculate projections, accurate to within five percent, of how many total units" of any given movie "will be sold in the first week, the first month, the first six months." By the time the exec gets to the office, "already the unsold units are being loaded onto trucks to be returned." Wow. No wonder Sylvester Stallone is still eating their lunch in this town. ~ Tim Manners, editor

Hollywood Lunch

"It’s like a movie," says a Hollywood publicist, explaining what it takes to create a restaurant where tinseltown’s power elite will eat lunch, as reported by Christine Muhlke in the New York Times magazine (11/13/05). “You have to have timing, location, talent and an interesting story.” Underscore location: “Proximity counts,” says David Gersh of the Gersh agency, noting that Hollywood execs don’t like to venture far from their studios. “And you want to create a mix of clients — but not really actors. You want producers, executives, industry lawyers and even TV people.” Yes, even TV people.

The food, as it happens, is somewhat less important, although it seems Hollywood types don’t like anything too fussy (meaning too much like Manhattan, apparently). “I don’t want to say ‘simple,’ that’s the wrong word,” says Jeff Klein, who in September opened the Tower Bar, a 60-seat restaurant located in the storied Sunset Tower Hotel (formerly the Argyle) on Sunset Strip. “They like cleaner food here,” he explains. “The atmosphere, the service, the food, it all has to be the most excellent of everything, but none of it can be formal, stuffy or contrived.” So Ahi-tuna burgers work, as do steak frites, Kurobuta pork chops, chicken paillard with arugula, grilled salmon with spinach and speck-and-mascarpone pizza.” You want some Sour Patches with that? As for the informal, unstuffy or un-contrived atmosphere, that would involve “a million dollars” worth of walnut paneling, with brass inlays.

“It’s the kind of room where it seems only natural to find Page Cavanaugh, the 83-year-old former pianist, tinkling his way through “Summertime.” Says Jeff Klein: “‘One night it’s Barbara Walters, the next it’s …’ he nodded toward Pamela Anderson clacking toward the ladies’ room.” The Tower Bar, he says, is where “a duchess can be a devil and a celebrity can dine with his family one night and his mistress the next.” Jeff says he doesn’t “pay some publicist” to get the right people to eat there and his maitre d’hotel, Dimitri Dimitrov, says "I don’t like to mention names … Our place is to serve them and keep things quiet." You know, the kind of "place where Sean Penn gets his gin and tonic as soon as he sits down, Jack Nicholson hides in a dim corner near Sofia Coppola and friends" and "Steven Speilberg brings the family for Saturday-night dinner." You know, real discreet-like. ~ Tim Manners, editor

Geoffrey Frost

All of us at Reveries are stunned and deeply saddened to learn of the passing of Geoffrey Frost, executive vice president and chief marketing officer at Motorola, who died suddenly yesterday. Geoffrey was a brilliant man, a true visionary, and a friend of Reveries. We will miss him. (more)

Black Friday

Just "how much the web is shifting the balance of power in retailing from companies to consumers" is evident in the growing popularity of sites like BF2005.com, which posts holiday circulars online before they arrive by mail, reports Michael Barbaro in The New York Times. BF2005.com is operated by 18-year-old Michael Brim, from his dorm room at California Polytechnic, and it features “sneak peeks” at so-called “Black Friday” circulars from retailers including Wal-Mart, Kmart, Sears, Best Buy, Toys R Us and Radio Shack. “Black Friday” of course refers to the Friday after Thanksgiving, the legendary single-biggest shopping day of the year. While the day may not be the “make or break” financial point for retailers, last year “consumers spent about $8 billion on the day after Thanksgiving, compared with $4 billion the next Friday, according to ShopperTrak, a retail research firm.”

Michael, who actually started the site last year while still in high school, says the idea “came to him three years ago when he discovered ads from retailers like Best Buy and Wal-Mart circulating in online forums well before Thanksgiving. Patient web surfers could track down all the discounts if they had two hours to spend, but Michael wanted to organize the deals on a single site that would operate from mid-October to the end of November” (maybe next year he’ll try using Squidoo.com). He says the site costs him about “$600 to operate,” that he gets “more than 200,000 visitors a week” and that he supports the venture with Google AdSense. Retailers, predictably, are none too pleased with his handiwork, though. “We like to surprise people when they get their circulars in the mail,” says Charles Hodges of Radio Shack. Home Depot spokesperson Jerry Sheilds meanwhile notes that the site “could enable competing retailers to react and change their plans.” God forbid.

At least one retailer — Sears — has sent Michael a letter warning him “that his site infringed on the chain’s trade secrets and copyright” and “gave him 48 hours to removed scanned copies of the Black Friday circulars for Kmart and Sears (now owned by Kmart) and a typed list of the deals from his site.” Michael complied, but “left the product lists up under the labels ‘Sbears’ and ‘J+1-mart.'” He insists that he’s doing nothing illegal, that it’s a “legal gray area … It’s not like we are posting pirated materials, just materials the public would see in a few weeks anyway.” And he’s not alone: Two other sites, gottadeal.com and blackfridayads.com, compete against BF2005.com to be the first to publish the circulars (most of which apparently are leaked by retailer or newspaper employees). Brad Olsen, 26, who runs GottaDeal out of his parents’ house, says it’s really no big deal, saying that "the majority of stores don’t care … It’s free publicity for them." ~ Tim Manners, editor

Pentop Computer

“.. When it comes to children’s technology … a sort of post-educational age has dawned” with the launch of the Fly Pentop Computer,” writes David Pogue in The New York Times. Noting that Americans, last year, “bought only one-third as much educational software as they did in 2000,” David suggests that the rapid success of this new $100 educational gadget, created at a cost of about $100 million by LeapFrog, portends brighter days ahead. The Fly Pentop Computer, www.flypentop.com, (so named because “focus groups found the term ‘pentop computer’ infinitely sexier than ‘pen computer'”), “contains an AAA battery, a computer chip, a speaker and, mounted half an inch from the ballpoint tip, a tiny camera.”

You use the Fly with “a special paper whose surface is imprinted with nearly invisible micro-dots. As you write, the pen always knows where it is on the page, thanks to those dot patterns and the camera that watches them go by.” Basically, the pen is reading software off the page, which enables “crisp, instantaneous audio feedback” to the task at hand. So, with a program called Fly Through Math, “the Fly’s little voice-over elf comments immediately when, for example, you forget to carry the one or misplace a decimal point. This in-problem feedback,” says David Pogue, is far more helpful than a computer program that just tells you that your final answer is wrong.” With another program (stored in the pen’s cap), the Fly pronounces the names of capitals or plays national anthems as the user taps “countries on a world map.” Perhaps even cooler still is Fly Tones, where “you draw a piano keyboard … and then you can play it. You can even draw and operate buttons that change the instrument sound, adjust the tempo, record and play, and so on.”

Just plain fun is "a sheet of stickers that, when tapped, produce appropriate sound effects" (or inappropriate, as the case may be, as with "the belching mouth"). For all its razzle-dazzle, the Fly is not without its glitches, of course. It doesn’t always pronounce words perfectly, for one thing. For another, the lack of a computer screen makes menu choices a bit cumbersome because "you have to wait for the pen to read off your choices." But LeapFrog says it is working on those issues, and in the meantime most kids (the Fly is intended for tweens, 8-12) don’t seem to care about them. As David Pogue enthuses: "… You can’t imagine how engaging the Fly is until you witness it in a young person’s hands; my youngest Flyers were so hooked, they tolerated an amazing number of frustrating glitches." ~ Tim Manners, editor

CourierWare USA

At first, Eric Truran saw the internet as a way to make his fledgling business bigger, but today he is using the web to make his business better, reports Katie Zezima in The New York Times. Eric’s enterprise is called CourierWare, courierwareusa.com, which sells high-end courier, camera, and travel bags. Where he used to have eight employees and a storefront in Harvard Square, he now has just an internet connection and he works out of his basement in Randolph, Vermont. And while he used to have sales of $500,000 and a salary of about $100,000, Eric’s sales are now just $100,000 and he makes just $50,000. If that doesn’t sound like progress to you, it does to him: “My whole business philosophy is, enough is enough … Anything more than that and you just work all the time.” What was enough, for Eric, was the online side of his business, which he says “was the only part of the business that was truly growing.”

By moving his entire business online (he also accepts phone orders) Eric figured he would take a short-term hit economically, but that ultimately he would be in a better position to take his venture to its fullest potential. His goal “is to sell the licensing and name rights to a manufacturer who can produce thousands of high-quality bags annually.” Says Eric: “I’ve been polishing this jewel for 20 years … the real value it has is if someone licenses the name, the reputation and the design, and already has the distribution and production in place.” Eric has indeed carved out a niche in high-quality courier bags: “The bag itself is its own advertising,” he says. “It’s the outermost garment. Because of the rarity of them you don’t see them everywhere. We’re guerilla market, word of mouth. Our phone number (800-678-2247) is on every bag. People will ask other people where they got their bag, and they’ll call.”

The design dates back to Eric’s past as a courier, when he realized that most bags had leaky seams. He came up with a design using waterproof Cordura nylon and featuring seams that “were joined between the layers of fabric so they would not split.” Twist is, few couriers buy the bags because they’re too expensive (most couriers quickly move on to other jobs and don’t want to make the investment). Most of Eric’s customers are just plain folks who want — and can afford — a high-quality bag. So, he’s not getting rich (yet), but Eric certainly seems to be having a good time. While he’s sewing bags in his basement, his wife, Diana, runs a yoga studio in the adjoining space. His two bands (one cover band; the other a “Jerry Garcia-inspired jam duet) rehearse in the living room and he also leases out a room to the Vermont Independent School of Music. "I’m in a good spot," he says. ~ Tim Manners, editor

Uke Fluke

What started as a flukey discovery at Pasadena, Calif., flea market 14 years ago has grown into a cult-like revival of that little four-stringed instrument most associated with Arthur Godfrey and Tiny Tim — the ukulele, reports Lisa Napoli in The New York Times. It was a Martin tenor uke, priced at $250 that caught Jim Beloff’s eye — “and … changed his life.” There was just “something about the quaint and misunderstood … instrument that inspired Jim and his wife, Liz … to hunt for more things ukulele-like.” They didn’t find much other than a few “dusty old music books.” So, he and Liz decided to design a songbook of their own: “I had this dream to put out one book filled with my favorite arrangements, and I figured there might be 10 people or a hundred who’d be interested, and that was it.”

Jim, who used to work in sales for Billboard magazine, was quite wrong about that. Not only did he and Liz (a graphic artist) find a publisher, Hal Leonard, for the songbook, “Jumpin’ Jim’s Ukulele Favorites,” but it was so successful that it led to a series of no fewer than 15 books that have sold a total of “more than 200,000 copies.” Apparently a lot of other people recognized the uke as something more than a prop for Tiny Tim’s “Tiptoe Through the Tulips.” Says Jim: “Rather than it being this simpleminded instrument, it was capable of making beautiful, sophisticated songs.” The problem was, ukes were in short supply. So, Jim and his brother-in-law, Dale Webb, “developed a prototype of a colorful plastic instrument.”

“They called it the Fluke — merging the first letters of flea (a nod to the birth of the idea) with “uke.” They began building them in an “old gas station in New Hartford, Conn.” and selling them online at fleamarketmusic.com, “ranging in price from $144 to $179.” Today, they’ve got five employees and make up to “5,000 ukuleles a year.” In addition to the songbooks, Jim “has recorded several CDs and instructional DVDs. He has also started an annual celebration called Uketopia, recently held for the 10th year.” Where had the uke been all those years? Jim blames Elvis and the Beatles for diverting everyone to electric guitars (obviously he never met George Harrison). In any case, Jim says his business is making about a half mil a year. "It pays the bills and keeps us out of trouble," he says. ~ Tim Manners, editor

Gas prices may be up, and Arnold Schwarzenegger may be down, but GM’s Hummer is humming along, reports Joseph B. White in The Wall Street Journal. In fact, “U.S. Hummer sales are up 87 percent so far this year. What’s more Hummer is gearing up to expand sales in Europe and Asia — where people take global warming (and gasoline that costs $4 to $5 a gallon) seriously.” Hummer sales had been declining as gas prices began ascending. But such troubles were mainly affecting the Hummer H1, “the civilian version of the military-grade Humvee troop vehicle,” the model popularized by the Governator of California, and the Hummer H2, “which was basically a Chevy Tahoe in a chrome-trimmed Hummer suit.”

The saving grace, for General Motors, has been the “new, smaller Hummer, called the H3. Derived from the underpinnings of the Chevrolet Colorado pickup, the H3 had an unusual in-line, five-cylinder engine that even in the 5,850-pound SUV was rated at 16 miles per gallon city, 19 highway (with automatic transmission) … Of course, there is also the H3’s price, which GM cleverly set just under 30,000. That makes the H3 leasable at the magic, entry-level luxury-car price point of $399 a month.” Relative fuel economy and great leases alone are probably not enough to silence the Hummer’s critics, www.fuh2.com, however.

So, Hummer has “formed an alliance with the Red Cross under which Hummer donates vehicles to the aid agency and promotes the association in its ads. Hummer also created an owner’s club — ‘Hummer Owners Prepared for Emergencies.’ For a $45 fee, the club affords Hummer owners the opportunity to be trained and registered to help out in disasters, such as the recent hurricanes.” And, yes, “there might be gas-electric hybrid Hummers or Hummers that can run on 85 percent ethanol fuel" available at some point. However, the Hummer’s successes won’t help GM all that much: "Hummer’s total worldwide sales this year will only be about 71,000 vehicles — about a third the capacity of one GM assembly plant." ~ Tim Manners, editor