Cisco adds social networking to its forte
The world's largest maker of Internet infrastructure equipment is now helping big media companies build social networking Web sites.
Correction: An earlier version of this story misstated that technology from the Five Across acquisition was the foundation for the new Eos service. It is not.
LAS VEGAS --Two years after it first started courting big media companies, Cisco Systems will finally launch a new product to help these companies harness the power of social networking and connect their brands to fans.
On Wednesday, Cisco will kick off the Consumer Electronics Show here by announcing Eos, a hosted software platform that allows media and entertainment companies to create, manage and grow online communities. Through Eos Cisco has compiled technology tools and slapped on an easy to use interface to make building and customizing Web sites easy. But most importantly, it's bundled into the software, technology that will allow media companies to build interactive Web sites so that fans can connect with musicians, TV shows, movies, or whatever brand a media company wants to promote.
Cisco first began looking for ways to help big media companies late in 2006, when it created the Media Solutions business unit. The idea was to develop and market products to digital media content owners. In February last year, the company bought a startup called Five Across, which developed social networking software.
Dan Scheinman, the Cisco executive behind Eos, believes that the new software platform addresses one of the biggest problems that media companies face today.
"The reality is that media is so disrupted by digital technology," he said. "Fans are looking for ways to connect to their favorite artists or TV shows and they are seeking out communities, but the media companies have been slow to provide this for them. Eos is centered around community and allows fans to participate."
The service provides tools that allow media companies to create blogs, live chats, message boards, rating and ranking systems.
Scheinman believes that social networking is the most important way for marketers and big media companies to reach consumers. Consumers are using sites such as YouTube and Facebook to share media, like videos, music and pictures. He also believes that media companies can combat piracy by offering fans an interactive experience through their own branded Web sites.
"In many ways digital destroys the value proposition for media," Scheinman said. "Other people can rip off the content and monetize it, aggregate it, and take pennies for it."
"Eos offers the answer to this," he explained. "If media companies allowed people to interact with the music or the video and do some things it with it, it enhances the experience and makes the brand more powerful. Eos won't stop piracy entirely. But at the very least it lets the media companies put up a fight by allowing the audience to participate."
Enlisting Warner Music
Warner Music Group is the first major media company to sign up for Cisco's Eos service. The company is using the software platform initially to create Web sites for two artists, Laura Izibor and Sean Paul. Michael Nash, executive vice president of digital strategy and business development for Warner Music Group, agreed with Scheinman about the importance of creating community for the company's music fans. He said that Warner Music has been looking to do just that for several years, but building the technology itself or cobbling together off-the-shelf tools has proven difficult and too costly.
"We have tried just about everything out there," he said. "We eventually realized that we are dependent on technology, but we are not a technology company, so strategic partnerships in terms of using a platform is a very desirable approach."
Nash said that Warner Music first started talking to Cisco about two years ago when the networking company initially conceived of the Media Solutions business unit. And it was Scheinman's team at Cisco that presented Warner Music with a proposal for Eos that could help the company build these Web sites. For the past year, the companies have been working closely to fine tune the Eos tools and service.
Nash admitted that Warner Music could have partnered with several other companies to build interactive, community based Web sites. But he said that Cisco's holistic approach was appealing because it provides a common platform that is easier to manage and much less expensive than building it from scratch. What's more it allows the company to focus on its core business instead of trying to keep up with technology innovations.
"We're a music company," he said. "We don't have the resources to make big technology investments and maintain those investments over time. But Cisco is a fantastic partner that has the money to invest in innovation and world class capabilities."
Cisco and social networking?
At first glance, it seems odd that Cisco, a company that sells hardware to shuttle bits around the Internet, would get into the Web 2.0 social networking business. Even though the company is the largest supplier of networking equipment to large companies throughout the world and powers over two-thirds of the Internet with its IP routers, it's not a software company. And besides its acquisition of WebEx it has little experience offering a managed service of any kind to customers.
But the truth is that Cisco sees social networking and the Web 2.0 experience as an important trend in Internet usage, which ultimately drives more demand for its traditional infrastructure business. People viewing videos from YouTube or listening to a friend's favorite song on Facebook consume more bandwidth.
And when consumers use more bandwidth, Cisco sells more infrastructure equipment. It sells gear, to the media companies creating and disseminating the digital content and to the service providers building the networks, and also to consumers who are accessing all that content at home.
Scheinman described the situation as a win-win for everyone involved.
"Eos gets the media companies out of the infrastructure business, which they weren't happy about spending money on anyway," he said. "Fans get a more interactive experience. We also get the infrastructure benefit. And even service providers benefit because people are consuming more bandwidth."