At nearly every conference on interactive TV that I've attended recently, speakers have talked about Jennifer Aniston's sweater.
You may rightfully ask: Why this infatuation with the Friends
actress and her clothing?
Speakers cite a fictitious sweater modeled by Jennifer Aniston as an example of a product that can be sold through interactive shopping on TV, better known as television commerce.
In the process, the Jennifer scenario has become an emblem for the perils of t-commerce. Her sweater has become to t-commerce what ordering pizzas was to interactive home shopping in the '90s-a symbol used either to extol the service or to ridicule it.
A chief purveyor of the Jennifer story is Forrester Research principal analyst Josh Bernoff. He uses the sweater to illustrate a major issue facing the nascent t-commerce business: Namely, "Who gets the cash?"
Bernoff recently retold the Jennifer story by way of cell phone while boarding a plane to France. It goes like this: Jennifer is wearing a new name-brand sweater on NBC's Friends. A t-commerce "enabler"-a service such as Wink Communications Inc., RespondTV Inc. or Commerce.tv Corp.-can then offer viewers the ability to use their remotes to click on an on-screen icon and order a sweater of their own.
Jennifer looks fabulous in the sweater and 1 million fans order it. Excluding manufacturing and shipping costs, each sweater nets a profit of $8, for a total windfall of $8 million. Sounds good, eh?
Here's the rub. Out of that $8 per sweater, the t-commerce service gets the lion's share. But NBC wants its cut for usage of its signal. Its broadcast affiliates also want a share for passing that signal along. The cable operator or satellite service that provided the t-commerce application also wants a piece of the action.
producers also want to get paid. And then there's Jennifer, who, Bernoff notes, surely deserves something.
Suddenly there are too many fingers in the t-commerce pie and the economics of Jennifer's sweater quickly unravel.
Richard Fisher, president of RespondTV, is among the t-commerce executives who are concerned about this "division-of-spoils" issue.
"There are way too many players asking for a piece of [the transaction revenue], and that's not going to work," Fisher said in an interview.
RespondTV, which has provided applications for pizzas, CDs and various promotional offers, negotiates flat fees for its services-as opposed to per-transaction percentages-in hopes of creating some economic predictability.
The industry has yet to develop a uniform business model. Fisher said a larger volume of users is needed to produce the right metrics to equitably reward the participants in the distribution chain.
Besides, Fisher and other proponents say t-commerce's true revenue potential is not in selling products. They believe it's in the potential for direct marketing and generating leads-which means marketers would pay to promote products and obtain information about consumer preferences.
Legal issues over who rightfully owns the accumulated consumer data, mostly in the form of requests for information (RFI), remain unresolved. It's unclear how the data will be shared, or if the information can be shared at all without violating consumers' privacy rights.
The division-of-spoils issues likely will be hammered out at the negotiating table and eased through greater deployment. But t-commerce is growing slowly, and it's a long way from reaching critical mass.
AT & T Broadband vice president of marketing and new business Rich Fickle is among the operators who believe in t-commerce's potential. During a panel session at last year's Western Show, he predicted the technology would grow faster than cable home shopping.
But Fickle cautioned that surveys show low consumer interest in purchasing goods through their TVs.
Proponents say it's difficult to judge the potential until services are put into more homes. Yet they cling to the hope that viewers will follow like lemmings and click onto ITV icons in droves.
So far, most applications have not been well integrated into the TV viewing experience. There is little of the interaction between programming and shopping that's suggested by the Jennifer example.
Some on-screen interfaces sit uncomfortably over programming or commercials, like a guy wearing a bad toupee. Only recently has Wink demonstrated modern, translucent graphics instead of ones that looked as if they were made on a character generator from the 1970s.
One approach to speeding the rollout would be for operators, programmers, marketers, advertisers and t-commerce services to use cable airtime to experiment with applications.
The business also needs a driving force-the equivalent of an HSN. That network's honcho, Barry Diller, has expressed interest in ITV, but one has to wonder what's taking him so long to join the party.
Before debating how to divide the spoils, t-commerce needs spoils to divide. If providers focus on grabbing their revenue cut, rather than making t-commerce a fulfilling consumer experience, then all that Jennifer's sweater will leave is worthless lint.
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