Decoding the American media nightmare

For a start-up, timing can be crucial. For Antony McGregor Dey, the horrors besetting the American print publishing industry couldn't have come at a better time.

McGregor Dey's company, QMCODES, has developed technology that makes print advertising interactive. For the traditional US media industry, which is beset by falling advertising revenue thanks to the global financial crisis and the defection of audiences to online media, any opportunity to offer a new advertising product to brands is likely to be welcomed.

The QMCODES system relies on advertisers placing so-called quick response codes (QR codes — a type of black and white barcode made up of small squares) on print pages, outdoor advertisements or on product packaging.

QR codes can be scanned using the camera on a smartphone, and act like a URL that directs the phone's web browser to a specific page, or invites the consumer to download content. QMCODES' technology can also launch content from an SMS number should the phone not be equipped with a QR code reader.

McGregor Dey was a participant in a joint AIMIA and Austrade digital industry trade mission to New York City in March this year, and since then has been criss-crossing the US following up numerous leads from companies in the magazine, newspaper, music, film and book publishing industries.

One of those meetings was with the book publisher HarperCollins, with whom QMCODES has now entered a paid trial that will see QR codes printed on books. QMCODES can then link these codes to additional online content. One trial involves author Lauren Conrad and her book LA Candy.

"It's taking that print platform and making it interactive using our tags and analytics," McGregor Dey says. "One of HarperCollins strategies is to create a brand around the author — not just the book itself. So they are trying to show fans that authors have additional content such as podcasts and vodcasts."

QMCODES has also conducted a trial campaign with the music company Geffen Interscope A&R for a concert by the band Yeah Yeah Yeahs, where fans could use a QR code to download an exclusive remix of one of its songs. That trial has now been extended to the band's entire tour, and Geffen will run a similar campaign for TV On The Radio's tour.

For the record company, it is another chance to interact with the band's audience and establish a line of communication for further promotions. Warner Music has subsequently shown interest in a similar trial for several of its artists, and QMCODES has also received strong interest from other US publishers and entertainment companies.

McGregor Dey is now in the market for US$1.5 million in funding to continue chasing opportunities in Australia, the US and elsewhere, to top up the $100,000 it received from Australian investors earlier this year and $150,000 from Film Victoria in 2008.

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QMCODES is far from alone in the QR codes market in the US, but has several advantages, including successful campaigns in Australia with some smaller magazine publishers and the filmed entertainment company Village Roadshow. It also has advanced analytics capability that can track consumer behaviour by factors such as their location or the device they are using to access content. McGregor Dey says no other platform can deliver the breadth of content that his can, including audio and video.

The key element for success will be McGregor Dey and his team's ability to move quickly to capitalise on the opportunities that are available to them. They are also relying on the propagation of internet-capable smartphones — which is now past 50 per cent in Australia, but sits at just 30 per cent in the US. Without these, the content attached to a QR code cannot be delivered.

The traditional American media industry is in deep trouble, and knows it. The recording industry has already been decimated by illegal downloads, and is now forced to sell music at lower margins on other people's terms, such as through iTunes or as an add-on subscription service for mobile phone purchasers.

Newspapers across the US are struggling, with many either closing entirely or moving to online models, and many well-known magazines are faring no better. Devices such as Amazon's Kindle are threatening to reshape book publishing.

Anything that can bring them a new revenue stream is going to have appeal. For McGregor Dey, their challenge has delivered a golden opportunity.

bootstrappr opinion: BOOM