Russell Davies: Kindle's offer shows how techy folk just don't understand us
A view from Russell Davies

Russell Davies: Kindle's offer shows how techy folk just don't understand us

It seems that there's another tech bubble going on. Venture capitalists are throwing money around, companies with no obvious business model are having multimillionaire-dollar IPOs and start-ups are raising money based on some PowerPoint and lots of references to the social graph and location.

And, once again, it seems that the payback from all these services is going to be your money - advertising and marketing money. The old assumptions are being trotted out and being made to underpin business plans - apparently, brands are still looking for more relevance, more media data, more feedback, more interactivity.

Really? Well, I'm not so sure. I suspect we're going to find, as with the last several bubbles, that there's a fundamental misconception in tech circles about the value of the channels they're offering us.

Think, for instance, about the new ad-supported Kindle. Amazon's plan is apparently this: you get $25 off the price of a Kindle if you allow them to turn the screensaver into an ad. Which, as this is an e-ink-type device, will be there whenever you switch the thing off. In regular media terms, I guess it's like an outside back, except on the front.

The instant reaction in tech circles was surprise that you only got $25 off for this. They seemed to be expecting a much bigger discount, even suggesting the Kindle should be free if it was going to carry advertising. This demonstrates, to me, how fundamentally technologists misunderstand the value of a new advertising channel. What they see is a new digital ad space, a continuously updatable personal, domestic screen with all sorts of new and meaningful metrics and deep possibilities for enhanced interactivity. This, they assume, will be hugely valuable to all sorts of brands and product companies that must be itching to reach their customers in new ways.

Unfortunately for bubble-merchants, I suspect all most media and marketing people will see is another fringe opportunity to supply different artwork to a niche channel with no direct comparability with anything else, unaudited numbers and an audience dynamic they don't understand. It's a tiny sliver in the great media fragmentation and it's increasingly clear to marketing pros that you can't build a media presence from a million different slivers. Apart from anything else, it's just too much work - too much work to be financially viable.

Which is why I suspect Amazon is right to be conservative about the value of its new channel. The key question will continue to be: when we're explicitly asked to put a dollar value on more commercial intrusion in our lives, will the deal we're being offered seem worth it? And, of course, will it fund a ton of IPOs and make the value of my pension go up?