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Bill Gates’ “Content is King,” 20 years later

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We’re coming up on the 20th anniversary of Bill Gates’ now-famous manifesto, “Content is King,” in which he made a number of predictions concerning the future of the Internet. Keep in mind that, in January of 1996, the Internet, or World Wide Web, was still an object of curiosity to most people, including even those who designed and operated it. Everybody knew how revolutionary the Internet was, but nobody was quite sure how to use it. Yes, the military already was utilizing it for communications, simulations and so on, but the average American was very much puzzled concerning what it meant for her.

I was one of them. I remember getting my first assignment to write about it. It was from Lewis Perdue, at the old Wine Business Monthly magazine, who told me to check the Internet out, and particularly to find out what I could about wine “chat rooms.”

I had no idea what he was talking about. I didn’t know how to get on the Internet (or if “getting on” was even the proper terminology). It turned out I had to go to the Berkeley library, rent time and use a hideously slow dial-up modem. It took forever to get online, and once I finally did, I hardly knew what to look for. But eventually, I found a few wine chat rooms and dutifully wrote up my article.

Back then, there was little talk of email, and none at all of social media. Winery websites were rare as unicorns (if in fact any even existed), and shopping via the Internet was a mere gleam in Jeff Bezos’s eye. Therefore, when Bill Gates wrote his little article, it caught people like a storm. He already was the most famous person in the world of computers and software (along with Steve Jobs), had been on the cover of TIME magazine in 1984 (when he looked like the nerd, Richard Hendricks, on TV’s “Silicon Valley”), and was understood to be a great prognosticator.

The title of Gates’ paper suggested his point. “Content,” he explained, would be the “long-term winner” in the race to make “real money…on the Internet.” And being a businessman, of course, Gates’ goal was for Microsoft to make real money.

Here are the predictions he made, which I have gleaned from the article. Following each prediction, I offer commentary as to how accurate the prediction was in terms of what has subsequently ensued, and to what degree the prediction has come true.

“Supplying information and entertainment” will be the “exciting things” that will fuel people to turn to the Internet.

PREDICTION ACCURACY: High.

HAS IT COME TRUE? Big “yes.”

The universal ease of “anyone with a PC and a modem” being able to “publish whatever content they can create.”

PREDICTION ACCURACY: High.

HAS IT COME TRUE? Big “yes.”

The ease with which this content can be “distributed worldwide at basically zero marginal cost to the publisher.”

PREDICTION ACCURACY: High.

HAS IT COME TRUE? Big “yes.”

“Intense competition,” some of it successful and some of it a dismal failure, “in all categories of popular content.”

PREDICTION ACCURACY: High.

HAS IT COME TRUE? Big “yes.”

“Printed magazines” can be “served by electronic online editions.”

PREDICTION ACCURACY: Medium-high.

HAS IT COME TRUE? Qualified “yes.” It’s still unclear how online advertising can raise the revenues that print advertising did.

“To be successful online, a magazine…must…have audio, and possibly video,” and not just “take what it has in print and move it” online.

PREDICTION ACCURACY: High.

HAS IT COME TRUE? Qualified “yes.” Too many magazines do exactly that: move what it has in print online. Magazines need to do a much better job of giving consumers a reason “to put up with turning on a computer to read a screen.” And Gates obviously underestimated the importance of video. “Possibly”? No, definitely.

Concerning the “breadth of information on the Internet,” it will be “enormous…”.

PREDICTION ACCURACY: High.

HAS IT COME TRUE? Big “yes,” but Bill Gates conspicuously missed the importance of “SEARCH” in order to find things in this avalanche of information. Perhaps if he had, Microsoft would have invented Google.

Concerning pay for content providers, “The long-term prospects are good, but I expect a lot of disappointment in the short-term as content companies struggle to make money.”

PREDICTION ACCURACY: High.

HAS IT COME TRUE? Big “yes.” Gates got it exactly right: Content companies (bloggers included) still struggle to monetize their efforts. Did Gates envision a solution to this problem? He did:

“In the long run, advertising is promising.” He also foresaw subscriptions as revenue-raisers.

PREDICTION ACCURACY: Moderate.

HAS IT COME TRUE? No. Gates wrote (1996) “today the amount of subscription revenue or advertising revenue realized on the Internet is near zero.” Now (2015), it still is pitiful, and most content providers can’t hope to make a living through either subscriptions or advertising. So, while Gates understood that “paying for content doesn’t work very well,” he was overly optimistic that the problem would be solved. His statement that “This technology will liberate publishers to charge small amounts of money” has failed to materialize. Unless you’re Parker or Jancis or somebody like that, almost no wine blogs make money.

Finally–gotta say it–Bill Gates missed social media. If he’d stumbled onto that, Microsoft could have invented Facebook.

Still, this little 1996 paper has turned out to be one of the most important and visionary analyses ever written concerning the Internet.


Are red wines more “serious” than white wines?

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“To be recognized by journalists, to be famous, you have to produce red.” That’s from Aurélie Bertin Taillaud, the proprietor of a winery in Provence, Chateau St. Roseline, who was quoted in Benjamin Lewin’s new book, Wines of France, which I am enjoying as much as I did his previous books.

The quote arose during Lewin’s consideration of the wines of Provence, which is so famous for rosé. Apparently, producers there wish to be taken more seriously—Oz Clark once wrote that Provence “is better known for its nudist beaches and arts festivals than for its wines,” and if I were a winemaker and people were saying that sort of thing about my region, I’d be offended too. As a result, says Lewin, “Some [Provencal] producers are trying to move towards production of reds to make more impact.”

Impact. To be famous. To be recognized by journalists. Are we talking about wine, or about celebrity? A young starry-eyed actor arrives in Hollywood, broke but ambitious, and dreams of being famous, to have impact, to be recognized by journalists. That is the goal of Fame. Is wine any different?

Well, not really. For almost all of recorded Western history, some wines have been very famous, and the rich and powerful—themselves famous—coveted them. Julius Caesar desired his Falernian wine, which Wine Spectator once called “the cult wine” of its time. And yes, Falernian wine was red.

Two issues present themselves, more or less in this order: Why do so many think a wine needs to be red in order “to be famous,” and what is the role of “journalists” in creating this impact? With regard to the former question, I really don’t know the answer. We humans do tend to classify some things as “more serious” than others. For instance, we regard paintings, of the kind that hang in museums, as more serious than, say, comic book drawings (although I know people who would disagree with that statement). To play the old word association game, I bet if you said to the next ten people you run into, “Picture a glass of wine in your head,” and then asked them what color the wine was, it would be red. Strange, isn’t it? And yet, there it is: “To be recognized by journalists, to be famous, you have to produce red.”

And what of journalists? Winemakers always have aspired to fame because the more famous their wine is, the more money they can charge for it. It was no different in Falernian’s time than it is today. The Bordelais excelled at this sort of P.R. 400 years ago. There were no journalists back then, but there were gatekeepers whose recommendations could make or break a wine’s reputation; and what is a modern wine journalist, if not a gatekeeper?

Nor is there anything particularly gauche about a winemaker who desires “to be recognized by journalists.” It sounds tacky, but it really isn’t, although in practice the pursuit of publicity can be tasteless if done with too much naked ambition.

It’s odd, though, that red wine should define “serious” wine since we know that there are lots of extremely serious white wines, including stickies. So, as I often do when I’m puzzled about something, I turned to my Facebook friends and asked them, “Is red wine more serious than white wine?” And as is always the case, they provided the most amazing insights. Here are a couple of them.

Just horribly engrained bullshit.

A great German Riesling or aged (non premoxed) white Burg can be just as serious as any red wine.

While I love both, I think it takes a whole lot more skill to make a complex, compelling & complete white wine than it does to make a red. [Note: This was from a winemaker.]

[And yet this, from another winemaker]: At the risk of not being politically correct, hell yes. It takes more work in the vineyard to make sure the skins have the right flavors, leafing, shoot thinning, etc. You can’t crop reds the same as whites. You ferment with the skins, punch down or pump over, worry about the seeds and extraction. And end up with a wine that generally will age longer, possibly require long term cellaring, and require more effort in general to care for and serve appropriately.

Their structure is more complex, beginning with the tannins, off to the pigmentation and dyes, how they’re fermented, aged in oak (not much white is, not as much as the reds), stay in barrel aging longer.

The aging factor accounts for most of it, I think. Some red wines are rather ponderous so some probably stems from that. Bit of snobbery, too, I think.

Tannins and oak add complexity and secondary characteristics. Higher fruit concentration and alc add to the equation, but the components necessary that allow a wine to age and evolve are what make them ‘serious’.

Had a guy at one of my tastings say, “Enough with this wimpy white wine stuff” to which I responded, “I don’t know sir, pretty sure my Muscadet can kick your Merlot’s ass.”

And from the great Jeff Stai: “…where wines will not be judged by their contact with the skin, but by the complexity of their character…”


Pinot Gris gains at Chardonnay’s expense

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We all know that Chardonnay is the leading wine grape in California, in terms of both acreage and sales, right? So tell me, did planted acreage go up or down last year?

Answer: Down. After hitting an all-time high of 94,854 acres in 2013, acreage dropped to 94,279 in 2014, a reduction of 575 acres. That’s not very much, but it’s a reduction nonetheless, and calls for further analysis. So let’s turn to individual coastal counties—Chardonnay’s premium home—for a closer look.

The two counties with the highest concentrations of Chardonnay grapes, Monterey and Sonomoa, together accounted for about half of the total loss: 226 acres between the two of them. Throw in Mendocino, Napa and Santa Barbara—all down—and it adds up to almost the entire statewide loss. So why are these prime coastal counties retreating from Chardonnay?

Well, grape growers are in the unique position of having to understand where the market is going five, ten years down the road. Growers don’t like surprises: they were caught with their pants down when Moscato unaccountably exploded, and they had to rush to catch up. (In 2007, there were only 101 acres planted statewide of the leading forms of Moscato: Moscato Gaillo, Muscat Blanc, Muscat of Alexandria and Muscat Orange. By 2014, there were 8,414 acres, an increase of more than 8,000 percent.) Many must be the conversations around growers’ tables concerning what consumers will be drinking in the year 2020; we have to conclude, given the reduction of coastal Chardonnay, however slight, that the conclusion is that people will be drinking less Chardonnay.

And more of…what? Well, presuming that they will still want white wine, what could it be? Statewide planted acreage of Sauvignon Blanc also was down this year from last year, suggesting growers don’t particularly believe in its future. Pinot Gris, on the other hand, was up—way up in acreage, 9.1% last year, and a whopping 80% more than in 2006. If Pinot Gris was on the futures market, someone would have made a bundle had they bet on it nine years ago.

Pinot Gris now is the third most widely-planted major white wine variety in California, behind only Chardonnay and Sauvignon Blanc (not counting the inferior French Columbard, a staple of jug wines), and is only 1,701 acres behind Sauv Blanc; at the current rate, Pinot Gris will actually surpass Sauvignon Blanc in a few years. Of its statewide total of 15,009 acres, 1,930 acres, or about 7.8%, are non-bearing—that is, they’ve been planted but are too young to bear fruit. That represents a hopeful belief on growers’ part.

But wait, there’s more. Where are these growers planting all that Pinot Gris? On the coast, where it makes the best wine? Nope. In the interior valleys, Sacramento and San Joaquin, which account for 1,866 acres of those 1,930 acres of non-bearing grapes. I believe that we’re going to be seeing an increasing amount of inexpensive California-appellation Pinot Gris and Pinot Grigio on store shelves and in family-style restaurants in the coming years.

And why not? Since the Great Recession Americans have been more budget-minded than in many years. Even here in booming San Francisco, where the streets sometimes seem like they’re paved in gold, the San Francisco Chronicle reported yesterday on a “post-recession chill on holiday sales”; retailers “hope they can grow sales…in the low single-digits,” if, in fact, they can grow sales at all. The article quoted a retail expert: “There will be no surprise boost in spending [this holiday season]. Retailers are just grabbing market share at the expense of someone else.”

Simply put, consumers just don’t have as much money as they used to, a situation that may turn out to be the new normal for years to come. So, with Chardonnay averaging $860.00 per ton of grapes in California, and Pinot Gris averaging $580.30, it’s obvious wineries can sell a bottle of Pinot Gris a lot more cheaply than a bottle of Chardonnay. And that, in the new economy, makes all the difference.


Why is the red blend category so popular?

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As Wines & Vines just reported (“Surging sales for red blend wines”), “[R]ed blends are growing more and more popular with consumers,” with the category, as measured by IRI, up 14% year-over-year. Red blends also accounted for the third-largest share of all DTC shipments over the past 12 months, behind only Cabernet Sauvignon and Pinot Noir.

That’s pretty stunning. Red blends have become the new Moscato, although just what fueled this phenomenon isn’t as explainable as it was in the case of Moscato, which benefited from a hip-hop halo.

What, then, is behind the popularity? Well, the brands driving the explosion, according to the Wines & Vines article—Apothic, Ménage a Trois, Cupcake and 14 Hands (and I might add Murphy-Goode’s Homefront Red)—all are inexpensive, averaging $10-$12, or even less, at retail. So that’s one reason: That’s right there in the sweet spot for an impulse purchase at the market, or for a restaurant for its by-the-glass program.

But there are plenty of other wines in that price point on the supermarket shelves, so why red blends? I have a couple theories. One is just the novelty factor, as it was for Moscato. Another is that, being proprietary wines instead of varietals, producers can come up with these user-friendly names that are quirky and easy to remember, and that have a certain feel-good quality that appeals to people who might otherwise be intimidated by wine. Graphic designers can have fun with the labels. Fun name + cute label + the right price = customer appeal and loyalty.

And the wines aren’t bad. I’ve tasted most of them, and they’re perfectly adequate for everyday occasions. But there is one thing about the IRI data, as reported in Wines & Vines, that’s problematic: the “red blend” category includes “Meritage wines”…”Rhone-style wines”…and “Italian-style blends…”. As Wines & Vines reports, IRI’s red blends/Meritage category is a broad one that includes both dry and sweet red table wines as well as more traditional Bordeaux-style red blends often called Meritage.”

As we all know, “Meritage” wines are Bordeaux blends in which no one variety exceeds the TTB’s 75% threshold for varietal labeling. I don’t know why or how “Meritage” wines have much in common with a typical red blend (Apothic, for example, is Zinfandel, Syrah, Merlot and Cabernet Sauvignon). Nor is it clear just how many Meritage wines were part of IRI’s data: at an average bottle price of $8.64, it wouldn’t seem that Meritage was a big part, but we just don’t know. Adding to the confusion, as Wines & Vines notes, is that the red blend category “includes both dry and sweet red table wines,” but we also don’t know precisely what those terms refer to. The article says the “hot brands…typically contain 1% or more residual sugar,” which is perceptibly sweet.

Well, we’re deep into the tall weeds of consumer analysis now, but perhaps the takeaway is that the red blend phenomenon isn’t as phenomenal as would appear at first blush (no pun intended). My hunch is that these red blend buyers are beginning wine drinkers, or just those who enjoy a little red wine and don’t want to give it any more thought than they give to their daily bread or milk. These consumers always have preferred sweeter wines: We in the trade make much of dry, varietal wines, but we tend to forget that there are millions of consumers out there who just want something simple to understand and pleasant to drink, that’s soft, fruity and a little sweet. That being the case, I think that red blends are here to stay, unlike Moscato. They’re also a great way for wineries to dispose of excess grapes and/or wine. And despite their inexpensive price, they’re really profitable. Which brings up a final point: White blends. Bordeaux notwithstanding, Chateauneuf-du-Pape is the idée originale of the red blend; there is a white Chateauneuf, but not much. In California, a few people have been making white blends for years, some of them, like Conundrum, successful brands, but something about white wine varieties seems to resist blending. Perhaps the innate character of the varieties is hopelessly obscured when mixed together. Anyhow, it’s a little weird that red blends are doing so well while nobody’s talking about white blends.


Is inexpensive wine better than expensive wine because more people buy it?

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I blogged the other day about price points in California Chardonnay, and how the best scores that inexpensive ones seem to be able to get is in the mid-80s, maybe the high 80s and, very occasionally, a 90 pointer. Then one of my readers sent in the following comment.

Just something to think about. If the biggest selling Chardonnay brands are rated in the 80’s and low volume $75 Chardonnay is rated in the 90’s maybe the critics are out of touch with what wine really should taste like. Maybe the biggest sellers deserve a higher score, they are after all 90+ point wines in the minds of those huge number of buyers.

This is a clever argument; one might even call it sophistic. It’s basically a version of “the customer is always right” or—in another era—“Forty million Frenchmen can’t be wrong.” It suggests that the fact that so many consumers love inexpensive Chardonnay means that inexpensive Chard is actually better than expensive Chard, or at least deserves a higher score.

Well, the obvious thing for me—a former wine critic—to say is, Nonsense. The millions of Americans who enjoy these inexpensive Chardonnays don’t have the experience we critics do. They [the consumers] don’t understand fine wine; they drink inexpensive stuff; like somebody dressing in clothes from Target, they think it’s high-end. (No disrespect to Target!) But as soon as I write those words I realize how wrong they are. It’s not that consumers prefer inexpensive wines to expensive ones, it’s that they can’t afford expensive wines, at least on an everyday basis. So it’s a little cray-cray to say “the biggest sellers deserve a higher score.” In fact, based on my experience, when I offer a “regular” consumer a high-quality expensive Chardonnay (or Cab, or Pinot, whatever), they invariably appreciate its Wow! factor, and understand that it’s better than their $10 bottle.

But before I entirely dismiss the reader’s comment, he did make a point worth considering, and that was “maybe the critics are out of touch with what wine really should taste like.” Well, what should wine “really taste like”? Darned if I know! I suppose there are critics out there who “know” what St. Joseph or Barolo or Napa Valley Cabernet “should taste like,” but what does that mean when people are breaking the rules all over the place? And why should anyone care if a critic says something doesn’t taste the way it should (or the way he thinks it should) if in fact it’s delicious? What this all comes down to is, Do we judge wines by popularity, or by critical consensus? I would think the latter, especially as the price ascends. But if you’ve been reading what I’ve been writing here for the last seven years, you know that there’s no such thing as “critical consensus,” so we’re really in the dark. If I were to write a third wine book (and I won’t), it would be on this precise topic: varietal character, typicity and quality.

Why, exactly, is one wine 87 and another 97? You readers—consumers—deserve an explanation. Is it enough to trust the critic? In what other areas of your life do you turn over your decision-making to third parties? Your 401(k) advisor? ROTFLOL.

What does this all mean? I have a feeling wine criticism and reviewing is changing in profound ways, but I can’t quite put my finger on it. “Through a glass darkly” and all that. It’s related to demographic changes in America, mostly among Millennials and the generation coming up behind them, who seem to be increasingly fractionalized, tribalized, peer-group-ized, and impervious to authority. I wish I had a crystal ball.


Alcohol level: In a historic shift, they may be going down

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Throughout most of wine history—certainly from the Middle Ages in Europe forward to our own times—the challenge to vintners in most regions and years was to increase wine’s alcoholic strength, and thus its body.

We had, for instance, Burgundians and the Bordelais blending into their own stuff, not just wines from the more southern regions of France (where warmer temperatures let the grapes get riper) but even from Northern Africa, particularly, following the phylloxera disaster, from Algeria, in order to—as the Globe and Mail says“surreptitiously…pump up anemic bottles of Bordeaux and Burgundy.” Bordeaux was called “claret” [“clear red” — my interpretation] by the Brits for a good reason: it often was “a dark rosé” rather than a true red wine.

Why “surreptitiously”? Because tinkering with wine has always been a no-no, and the notion of terroir, however it was thought of a thousand years ago, always has been integral to man’s appreciation of wine. I don’t know who first uttered the cliché, “Wine is made in the vineyard,” but something similar seems to have been understood, at least tacitly, long ago.

Well, the French don’t have to pump up their wines anymore, especially with global warming. Now, for the first time in human history, the problem is exactly the opposite: How to lower the alcohol in wine. As this scholarly article from South Africa confirms, the issue isn’t just limited to here in California (where some groups, such as In Pursuit of Balance, have made it controversial). The article, from the trade journal WineLand, assesses that, “Over the last few years, pressure is internationally applied to produce wines with lower alcohol,” stimulated in part by a U.K. study that found that “28% of the respondents were concerned about the alcohol content of the wines they buy.” The writer made the further distinction—vital, from a production point of view—that, while consumers want to drink lower alcohol wines, they want them made “without the addition of water or using alcohol reduction technology.”

Now, it is patently difficult to make low alcohol wines—let’s say, the “12.5 to 13.5% [that] have…become popular,” according to the WineLand article—in wine regions, like California, that are sunny and warm. You can do it—but then you run into the problem, as Esther Mobley, the wine columnist for the San Francisco Chronicle, wrote about last Sunday, of green, pyraziney wines. And whatever else consumers want, they don’t want to drink wine that smells and tastes like cat pee, asparagus, boiled broccoli, green bell peppers or any other of those veggie traits.

What then are these warm areas to do? The WineLand article suggests “certain policy decisions” that have to be made, beginning with a shift away from varieties, like Chardonnay, “which require high alcohol concentration,” to be “replaced by cultivars like Riesling and Malvasia Bianca.”

Beyond that, the article recommended fairly standard viticultural and enological practices, among them terminating the fermentation process “to leave sufficient residual sugar for better balance in the wine with a lower alcohol content.”

These would be pretty drastic steps for a winery to take, especially in America, where Chardonnay is and long has been the top-selling variety. Americans have voted with their dollars that they are not willing to substitute Riesling, much less Malvasia, for Chardonnay. They also don’t want (for the most part) residual sugar in their white wines, at least, any more R.S. than they’re already getting. As for reds, what varieties would compensate for Cabernet Sauvignon, the other top seller? We all know Cabernet needs a certain degree of ripeness to succeed—especially if the winemaker vows not to use intrusive alcohol reduction methods, such as the spinning cone. It’s all well and good to celebrate, say, Corison, but let’s face it, Cabernet Sauvignon from Napa, Sonoma, Paso Robles or most other places is not going to be achieved lower than 14.5%–and in general, if that’s the number on the label, you can assume it’s higher. (I always make that assumption.) So I’m not sure how helpful it is for arguments like this to be put forward. It puts winemakers in an insanely impossible situation: literally between a rock and a hard place.

My hunch is that this “pressure internationally applied to produce wines with lower alcohol” is a temporary phenomenon. Consumers are rightfully concerned about the amount of alcohol they put into their bodies, but they also want (or say they want) fruity wines. And fruitiness comes, in California, at a cost. So, as sometimes happens when you poll consumers (or voters), you get mixed, contradictory and conflicting messages. Politicians can split the difference using rhetoric: winemakers, who must actually make wine and not just talk about it, can’t. Their wine either will be ripe, or it won’t: one taste (or sniff) will tell all.

I do think the moment of pushing the high alcohol envelope has been reached. Winemakers have gotten the message: This high and no higher. I also think vintners should be thinking of ways to get lower alcohol while still preserving ripeness. But I don’t think Malvasia or Riesling (or Beaujolais) are wave-of-the-future wines in America, good as they can be. The taste of consumers goes in cycles. Wineries that pander to the cycles usually don’t survive. Wineries that stay the course, do.


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