The Business of Leaks

outsidr, Friday, June 20th, 2008 at 3:22 pm

Posted in business, technology

I just finished reading a very interesting article by Charlie Schick over on the Nokia Conversations blog entitled Product leaks just lead to trouble & headaches for all. Of course the title itself is flawed but I will get to that later. The article was quite insightful despite covering some ground that has been discussed thoroughly in the past; of particular interest to me was the account of an ongoing internal struggle to balance “openness” and security. Quite obviously, this is no easy feat.

Due to the nature of some of my work, I happen to have many friends that work for a variety of handset manufacturers (and internet companies) and other such companies. Truth be told, they often tell me things during conversations that are not yet public knowledge. Why? Because we share the same enthusiasm and passion for technology. Employees at a company like Nokia are most often in love with their jobs and with their products. As such, advancements excite them and when speaking to a person who shares their enthusiasm for technology, they feel good when they are able to tell said person something that they don’t know about yet. They are the “insidr” to my “outsidr”. It is the nature of the technology beast. Of course these conversations are always prefaced with, “Now you can’t tell anyone about this…” but the fact of the matter is this preface is entirely unnecessary.

The bottom line is that I have never, and will never, publish information given to me in confidence. Period. End of story. Believe it or not 99% of tech bloggers would likely make the same statement; that (s)he would never share information given to him/her in confidence. Firstly, by publishing information given to me in confidence I would be losing a friend or contact. At any given time, I have hoards of information that would be a tremendous traffic draw and most of it will go unpublished. Three or four days of traffic is hardly worth the cost. Beyond that, I am an inherently honest person and if I give my word to someone that I am going to keep information private, then that’s exactly what I am going to do.

Of course leaks sometimes occur due to accidents such as web pages going up early and whatnot, but most often leaks happen because the “informant” wants them to happen for whatever reason – be it money, power (yes, “informants” have power), payback or another motive. Bloggers don’t break into Nokia’s offices and steal handsets. No, when I publish information or images that fall under the category of a “leak” it was given to me with the express purpose of being shared with the world. I don’t have accidents. Not once during my tenure as a blogger has anyone come to me and said, “Oh no! I didn’t want you to publish that information!” Never. And I am even overly cautious at times – on many occasions I have replied to emails in order to question whether or not information is under embargo. You would be surprised at how often people do not make embargoes clear.

So why are blogs so interested in leaks anyway?

Again, it is the nature of the beast I’m afraid. While Charlie’s article is a direct response to an E71 video walkthrough on The Boy Genius Report, let’s have a look at the traffic for nokia.com as compared to two blogs that have historically been the most common sources of leaked information: engadget.com and gizmodo.com.

I’ve given this disclaimer before, but I typically find Compete to be very low with its traffic figures. Regardless, assuming people counts are off by similar margins for each site the comparison graph above says it all. The nokia.com domain is home to endless information about Nokia products and services along with interactive presentations and much more, straight from the horse’s mouth. Conversely, engadget.com and gizmodo.com are one-paragraph-at-a-time fire hoses with simple text, images and the occasional video. The fire hoses trump the horse’s mouth by a landslide. Why? Because people want new information and they want to know it before everyone else does. They want to be special.

Tech blogs currently flood the internet more so than ever before. Linkfests provide filler but the real content that tech blogs thrive on is leaks and other exclusive information. That is one of the few things that sets a few apart from the rest. Blogs like Engadget, Gizmodo and The Boy Genius Report are typically the sources of a great deal of leaked and rumored information and that is why their readerships are so high compared to the blogs where 90% of the content (or more) is simply regurgitated.

This brings us back to the title of Charlie’s post: “Product leaks just lead to trouble & headaches for all”. This is quite obviously not the case. Within Nokia, as Charlie was likely using “all” to mean everyone in the company, this may be true although I disagree. Outside of Nokia however, leaks mean big traffic which translates to big ad revenue.

In the US, Nokia’s high-end market share is currently flopping around like a fish out of water. The truth of the matter is that the E71 may help this flopping fish move a few inches closer to the water where it will thrive. Had it been released a few months ahead of the iPhone it likely would have done much better but that is another post entirely. It will still likely do well and guess what; The Boy Genius Report’s video will be directly responsible for selling thousands of E71 handsets for Nokia. Just as Apple recently gave the N95 more valuable exposure than it had ever received in the US prior to WWDC, The Boy Genius Report’s leak did for the E71 what Nokia is failing to do yet again: broaden exposure and build hype around a high-end handset. A “secret” announcement event in London with a few bloggers in attendance isn’t going to cut it.

With The Boy Genius Report’s video, eager consumers from around the internet (mostly in the US in terms of BGR readership) flocked to the site or one of plenty of other sites that reblogged the video walkthrough. They watched the leaked device and their desire for it grew. Nothing, I repeat, nothing builds desire, hype and anticipation like a leak. Nothing ever will.

One of Charlie’s final questions is, “How do we balance openness and privacy as a product manufacturer?” Wow, that’s a tough one. The first step is recognizing that the problem is 100% internal and I think Nokia basically has this base covered. Whether the source of leaked information is a full-time Nokia employee or a contractor, every leak starts at home. Rather than turn up the juice on the legal team as they spin their wheels to get nowhere, why not assemble an internal task force? Assess internal development, production and testing procedures. Map out every internal process that is involved and then attack questionable areas. Constantly account for every handset, centralize testing, implement new policies, build an IMEI / GPS transmission app that will send a variety of data (via SMS so that the sender’s number is recorded as well) and require testers to run it daily, and so on. Do what you have to do.

The sad fact of the matter is that if Nokia does succeed in tightening up its ship and stopping all leaks, there would probably be a substantial slide in its already dwindling market share here in the US. Blogs would have to wait for official announcements and that is hardly appealing. Then what, a few days of coverage? A week? Maybe a bit more time on the smaller Nokia / Symbian-centric blogs that speak almost exclusively to Nokia die-hards anyway? Talk about a catch 22…

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  • Nice post; can't say that I disagree with what you say either.
  • Thanks ARJW, much appreciated. It's a touchy subject, no doubt. While I can most certainly empathize with Nokia and others affected, I still think Nokia higher-ups need to sit down and access the problem a bit better. Although this post was triggered by Nokia Conversations, it's really a response to what I've heard from many a Nokian for quite some time. Of course I'm not privy to most of what goes on there but I have yet to see them move in the right direction in this regard, among others.
  • Agree with you mate. Great post. The fact of the matter is, Nokia needs exposure for the US market. Simply put their PR and Ads won't cut it. Apple have that base covered. If the E71 is going to launch at the same time and in opposition to the iPhone, there is only one clear winner - iPhone. Nokia fans and techy bloggers will disagree but they aren't the largest consumers nor are they in the majority, your average Joe is going to buy an iPhone. In the US the iPhone may be more expensive and less appealing than the EU counterparts, but the fact here is (UK) it's more appealing and cheaper on the whole and as such a better proposition than the E71 or E66, which so far has no real price, operator or any other retail details for it.
  • nice one! it's been a while since i've read a post this long from start to end!
  • Ha - thanks Mark :)
  • nokiaconversations
    Hey, interesting perspective.

    Just a few clarifications: I think you've simpified this a bit too much.

    Leaks also start outside the company, too. We deal with distributors and operators who have access to devices and marketing info. I know a few leaks where a distributor posted images of un-launched products. That was not our mistake, but theirs.

    Also, if leaks were such a good thing, then why don't all companies do it. One reason is that manipulating the market with un-launched products can bring regulatory agencies knocking. The best way to generate buzz is to market and deliver good products. A lack of leaks has nothing to do with the state of Nokia in the US (heh, don't get me started there).

    And as for hurting others, there are folks who make ad revenue for genuine articles of launched products. If a product is leaked, there is less traffic, since readers already know the product. Or folks who banked on the new device being announced after a certain time, get caught with extra inventory and lose money. It's basic product management that all manufacturers deal with.

    Yeah, we know what to do internally. And, as I said, I do not think malice is mostly the cause.

    But I wanted to generate a discussion and was glad I did. One direction I'd like to push the company towards is involving more folks in testing and giving feedback before a device is set. I see this as the real back story (undercurrent, whatever) to all the comments we received.

    But, thanks for the comment.

    (feel free to send a trackback, too)

    - Charlie
  • Thanks for the reply Charlie - I did send a trackback, or so I thought, but apparently it didn't work.

    Distributor leaks definitely fall outside of this post, very true. These types of leaks might not be Nokia's mistake per se, but how are they dealt with? Are examples made of the culprits? Are they prosecuted fully? Is their distributor agreement terminated? I would imagine that the type of small shop that would do such a thing intentionally is not of much value to Nokia.

    As for manufacturers intentionally leaking information, believe it or not it happens all the time. Market manipulation is a serious matter but tracing the source of a leak is extremely difficult at best and it happens rarely in terms of serious leaks. I'm not suggesting that leaks are always a good thing - this is definitely not the case. Sometimes they are good however. Example of a good leak: A company with a tremendous product line but near-zero marketing presence in the US has a proto handset leaked in a video on a very popular US blog. Ok, this example might be a bit close to home but that post is STILL getting linked to this day. Traffic to it is still quite high. Try to dig up a "release announcement" post or a video of an announced / released handset that is still getting new links a month later and you'll be digging forever.

    And despite that fact that this video is a month old and it shows nearly everything there is to show on the device, blogs that received test units corresponding with the official announcement are still covering the devices and making videos, etc. Said posts and videos are still being viewed by readers and watchers. While this new wave of coverage will hardly have the longevity that the leak had, this would be the case regardless. In short, it's a win / win.

    I agree that malice is not the issue, but Nokia is a very trusting company from what I understand. This is a very good thing in my eyes; it might just have to be reeled in a bit. It sounds like Nokia is taking measures so that's well and good. Just remember - particularly in the US - that eliminating leaks will also eliminate a good deal of buzz. Symbian / Nokia fanboy blogs hardly reach the market that Nokia needs to reach. PR and marketing could potentially compensate for this somewhat but Nokia's approaches in the US have hardly been a success to date. This is a much more important issue in my eyes. Just last night I forwarded a lead to [unnamed] that would result in a tremendous amount of free exposure for Nokia amongst hundreds of thousands of US businessmen and women. One would think that I would have had a positive response and a 'thank you' in my inbox first thing this morning, but alas...

    Lastly, with regards to including more people in early testing and feedback, there are plenty of pros and cons with this scenario. You'll likely get nothing but positive feedback on the idea from bloggers, basically because it's every blogger's dream. I'm sure Nokia would handle such a program quite well but even still, remember what they say about too many cooks. Conversely, implementing such a program "for show" and not valuing the feedback obtained could have a negative impact as well. It's a tricky endeavor.

    Thanks again Charlie.
  • ROME
    Wow... seems to me like that was a round-about way of saying that you heard some Nokia exec say the Blackberry bold is way cooler than the E71!!!
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