Just as the web-and-mail video rental business model of Netflix spelled doom for Blockbuster’s bricks-and-mortar outlets, it was only a matter of time before Sean Morgan’s introduction of the real-time TV monitoring business Critical Mention forced the once-dominant VMS into extinction.

It took eight years.

The death of Video Monitoring Services of America LP, a firm that once employed more than 1,000 people and generated sales of more than $50 million, was etched on the www.vmsinfo.com web site Friday like a gravestone inscription:

The VMS Board with the input of qualified professionals have elected to close VMS.

Unfortunately almost all VMS personnel have been terminated effective today.

The decision has been made after exhaustively evaluating many different options and with sadness for our loyal staff and customers.

At some point in the very near future a Trustee will be appointed to liquidate VMS. We anticipate the trustee will make future communications with customers.

VMS thanks all customers for their loyal support.

For those of us in the PR services sector, it was apparent VMS would be toast when Critical Mention launched a platform delivering real-time email alerts that not only informed clients when their key words were heard on television, but also allowed subscribers to view the video clips instantly.

While VMS management scrambled to save their burning house, Morgan, the Critical Mention CEO, went on an R&D offensive and offered update after update to his software and an expanded trove of content that today includes every major U.S. over-the-air market, cable and satellite TV programming, as well as many foreign sources, and even web video from online news sites.

There is no shortage of entrepreneurs, like Morgan, who are licking their chops over the prospect of disrupting other legacy players in the billion-dollar PR services sector.

But why haven’t they declared victory?

In upcoming posts, we’ll take a look at the disruptors in four segments of the services market: Distribution, Targeting, Monitoring and SaaS (software as a service).

Next week: Distribution

Services like Marketwire, PRWeb, PitchEngine, GlobeNewswire and Hugin Online have had an impact on the legacy market leaders PR Newswire and Business Wire.  We’ll dig in to see who is growing and why.

(Disclaimer:  The vast majority of my career has been spent in PR services.  My only current role in the distribution arena is as adviser to PitchEngine. The views expressed here are my own.)

Today’s introduction of a new automated evaluation tool by London-based Lewis PR got me thinking:

• Are service providers in the PR space not innovating fast enough?

• Or are PR agencies no longer able to grow simply by selling billable hours?

By bringing LSCORE to market, Lewis joins a growing list of public relations agencies that have developed, branded and launched products that are positioned to fill a void in the market.

A few years ago, Waggener Edstrom strayed into “vendor territory” when it started selling an “Influence Toolkit.”  In the 1980s, Fleishman Hillard took a similar tack with its Wire News Network, ostensibly a miniature newswire that operated as a profit center and made PR Newswire and Business Wire insane.

The mammoth advertising and PR services holding company WPP — owner of Burson-Marsteller, Hill & Knowlton and Ogilvy, among others — has plunked down some serious coin in this arena.  Cymfony, for example, is now under the WPP roof.

Strategically, services like the WaggEd and Lewis offerings seem to make sense as long as the firms did not spend too much developing the technology.  The agencies will likely upsell most of their own clients to the new platforms and non-clients who inquire will share information about their PR goals that make them more likely to become consulting clients.

But outside of those two pools of clients, it’s pretty unlikely competing agencies would recommend LSCORE or Influence Toolkit.  Without sales of their software through third-party agencies, the return on investment is harder to achieve.

That “I’ll-be-damned-if-our-agency-is-going-to-recommend-your-firm’s-software” conundrum is one reason PR services suppliers unaffiliated with agencies should continue to prosper.  After watching the success of Cision in selling hundreds of Radian6 subscriptions to PR clients, Vocus developed its own social media monitoring and analytics service and integrated it into its SaaS platform.  The new social product, according to Vocus CEO Rich Rudman, is selling like hotcakes.

In London, Glide Technologies has leapfrogged both Cision and Vocus with a very sophisticated, next-generation sentiment analysis and media evaluation tool.  Expect further innovation in this arena in the coming months from other suppliers.

We will keep an eye on LSCORE to see how extensively it is marketed outside of core Lewis clients like Lexmark, Mozilla and Pret a Manger.  In the meantime, we’ll watch competing firms like Weber Shandwick — which for years has been quietly supplying clients with monitoring and measurement through an extranet dubbed WeberWorks — to see if they jump on the selling-software-to-non-clients bandwagon.

Chief financial officers have dealt with auditors since the days of the abacus. Smart chief technology officers bring in friendly hackers to test the ability of firewalls to withstand cyber attacks. Facilities managers conduct evacuation drills.

However, aside from airlines and a few industries susceptible to high-profile incidents, it is rare to see mandated, periodic reviews of a company’s crisis communications plan.

Update with care

For organizations that have a mandatory annual review of their crisis communications plan, the task may be relegated to a junior staffer who lacks the skill or authority to make major changes. This is a mistake.

A rubber-stamp process that simply updates staff phone trees and media lists is dangerous because many of a company’s newest communications channels and techniques to reach stakeholders could be missing from a legacy crisis plan.

Many PR professionals used 2009 to experiment with social media, speaking with influential audiences directly rather than through one-way messaging with the help of mainstream media gatekeepers. The numbers told the story: As Facebook surged past 350 million unique users, a record number of daily newspapers folded in 2009, plagued by a deepening recession and debt.

As organizations of all sizes began building social media communities, their dalliance was often short-lived and lacked scale. Other organizations have proven that they are worthwhile enough to earmark significant marketing dollars.

Any 2010 crisis communications planning needs to consider an organization’s new social channels — whether on internal networks like Jive Software andYammer or externally via platforms such as YouTube, Twitter and Facebook.

Learn from others’ crises

Following the devastating January earthquake in Haiti, communicators who used social media channels not only reached customers and brand loyalists, but also reached influential mainstream media. For instance, when American Express waived fees for merchants accepting earthquake-assistance donations, the company found that their tweets quickly made their way in news coverage.

Pleas for doctors and nurses to help in Haiti also spawned rumors that American Airlines and JetBlue Airways were flying medical personnel to the ravaged nation. Within minutes, the @jetBlue Twitter feed, which has attracted an astonishing 1.5 million followers, dispelled the misinformation and directed would-be volunteers to an organization that validates credentials of nurses and doctors willing to help.

Of course, the nature of social media is that everyone is a publisher. Because consumers can generate content that is sometimes incorrect — or, worse yet, deliberately disparaging — organizations that embrace social media must be extra vigilant.

If left unchecked, third-party postings and comments on the wall of a brand’s Facebook fan page can spread rapidly and become amplified by a social media influencer or a mainstream outlet. The damage can be immediate and profound.

Use your own channels

Brands that are proficient in distributing their own content — from simple tweets to polished thought-leadership white papers, webinars and videos — should ensure that their fans and followers know about critical news as it happens. Waiting hours or days to comment leaves room for rumor mongering and speculating.

As we’ve learned from mature social media programs, like the one run by Ford Motor Company’s Scott Monty, the crowd generally accepts that instant answers are not always available during a crisis. Monty and his staff have earned respect from fans and followers by promptly replying, even if the Ford response is something as innocuous as, “I just read your tweet and am looking into the situation.”

For fans, just knowing that someone is on duty and moderating the channel may be enough to calm the frayed nerves of an angry consumer.

But being awake and in touch via social media channels is not enough to keep a corporate reputation intact while under siege. It’s one thing to promise a reply and something quite different if no one in senior management is willing to go on the record in social media, just like in mainstream print and broadcast. An organization’s social media team should have access to senior communications executives to address the issues of those making noise online. Common sense should dictate whether to do this outreach publicly or privately.

Tone down commercial content

On Sept. 11, 2001, my office window in New York overlooked the flashy billboards in Times Square. The brands advertising their wares in lights just two miles north of the World Trade Center should have been unplugged immediately. In reality, it took a day or two for most of the signs to go dark or for advertisers to replace them with appropriate messages of sorrow, charity or patriotism.

Just as airlines have long enforced a policy to immediately pull their ads from TV and print after any major crash involving a passenger plane, brands using new media must have a kill switch built into their crisis plans.

It was hurtful to see animated beer ads on Broadway on Sept. 12, 2001. As crisis communications plans are created and updated, it’s critical to remember the many consumer touch points between a brand and its publics: the Web site, ad campaigns, events and pre-scheduled company announcements unrelated to the crisis.

Stay aware, active

While I don’t know of a magical solution that lets a company’s entire marketing program instantly switch off, there are powerful tools to prevent gaffes within the most widely used social networks. Among the features that apply to crisis situations:

• Moderation consoles that capture posts and comments, matching them against “black lists” of words and phrases that an organization may not want on its Facebook wall. These tools also display comments made to pages that are only weeks or months old, eliminating the possibility of disparaging content being buried deep within a fan page. An “escalation” feature allows questions posed by fans to be e-mailed to experts for faster responses.

• Page management tools to schedule the publication of content in advance. Some crisis scenarios can be anticipated, so approved responses can be loaded into the tool for faster responses. These tools also let administrators suspend campaigns without the intervention of third-party vendors.

• Self-service application dashboards allow organizations to publish customized content quickly for their Facebook page. Using these tools, a company, agency or nonprofit could quickly move from a sales-oriented page to one that distributes information about an incident or engages fans to support benevolent nonprofits.

Many of today’s consumers gather information in real time. This can lead to big rewards for organizations that learn to behave like media companies, attracting an audience and then earning trust by communicating continuously through the good times as well as the bad.

(I wrote this piece for PRSA’s monthly newspaper, “Tactics.“  It was published in the April edition.)

There’s something special about a guy who isn’t a rock star yet has three times the Twitter followers of Bob Dylan.  He’s not a deep-pocketed electronics retailer, yet his social media presence dwarfs Best Buy.

Jeremiah Owyang is an influencer in Web strategy, a futurist, a gadfly and — most important of all — someone who listens, studies, engages and shares.  A partner in the newly formed consulting firm Altimeter Group, Owyang earned his nearly 60,000 followers the hard way.

Since I dived into the social web after leaving PR Newswire, I found that Owyang’s Forrester research reports provided a well-grounded reality check that validated fundamental shifts in consumer behavior, marketing methodologies and the demand for new PR and marcom tools.  He’s routinely quoted by CMOs during conferences and, unlike many celebrities, @jowyang almost always tweets back immediately.

During my recent visit to Altimeter Group’s new headquarters in San Mateo, California, Owyang showed no signs of being jet-lagged, despite returning less than a day earlier from one of his frequent overseas speeches.  He also demonstrated keen knowledge of an increasingly confusing vendor community supplying social media monitoring, analysis and curation tools.

To illustrate why the public relations industry should familiarize itself with social customer relationship management systems, Owyang shared an anecdote about how appliance maker Whirlpool  failed to appease a disgruntled customer, and the damage it caused due to that customer’s ability to influence millions through social media.

“Customers do not care what department you’re in,” said Owyang, predicting that some forward-thinking companies will take on the challenge of building smart systems that inform Support, PR, Marketing, Product Development and offer a single view of the customer no matter where they touch the company.

I am aware of one large food manufacturer whose PR department is heading into the new year with amped up monitoring capabilities and a plan to pipe real-time data into their customer service call centers.  If the readers of PounceNow are aware of organizations where PR is embracing the challenge, please comment on this post.

The media execs attending lunch at the Paley Center for Media Tuesday seemed relieved that they could take a break from watching their P&L’s get jackhammered by scrappy new entrants with tiny cost structures.

Not that the topic of conversation at this week’s schmoozefest, “The Great Digital Debate: Free vs. Paid Content,” was much of a diversion.

The biggest guffaws came when media futurist Shelly Palmer likened the media industry’s focus on free-versus-paid content to worrying about what song the band was playing aboard the Titanic.

The CEO of National Public Radio, Vivian Schiller, sounded a shrill warning for news organizations who might be tempted to begin charging for their content on the Internet.

While acknowledging the difference between NPR’s charter, which prohibits charging for content, and commercial journalism, Schiller said pay walls demonstrated “elitistm” and threatened to alienate the very audiences with which media organizations should be engaging.

Steve Brill, the founder of American Lawyer and CourtTV, now runs Journalism Online. He dismissed criticism of his latest company’s business goal — to provide publishers with mechanisms through which they can charge for content.

Brill asserted that no news organizations have been able to survive on advertising alone, saying that publishers have always had to balance circulation revenue with advertising and other factors to arrive at the right mix.  One example he gave was the free magazines provided to passengers on the Delta Shuttle, on which hundreds of thousands of well-heeled business passenger have flown for years.  While readership could easily be puffed up through such giveaway programs, there was a price to pay on the subscription side of the business.

Commodity content — weather, lottery numbers and roughly 90% of the material most news organizations present on their web sites — would not be good candidates for subscriptions, cautioned Brill.  The other 10% could command a fee, and Brill claimed to have received 1,200 inquiries from “affiliates” eager to begin charging.

A video of the entire discussion was added today to the Paley Center website.

The whole concept of a sabbatical is foreign to those of us who haven’t worked in academia. For someone who bought his first police scanner at age 14 and who has measured time in news cycles ever since, taking a pause to refresh was heresy.

Yet I found myself on “garden leave” – the term the British use to describe the time a departing executive is dormant before getting back to work –for much of 2009. The irony is that the only thing resembling a garden at our New York condo is a window box. Despite the lack of a plot to plant, I can honestly say the last few months have been exhilarating.

While I thought my work-life balance was in check before, now I actually know my daughters’ shoe sizes and the menu at the soup kitchen where my wife, Maureen, cooks gourmet meals three days a week. I also experienced the joy of mentoring two recent City University graduates, and helping low-income women gain self-sufficiency through a highly effective program called First Step.

On the networking front, I have been awed by all the brilliant entrepreneurs who are introducing fascinating and disruptive ways to do tasks that have long confounded marketing and PR pros. In private equity and venture capital, I have new respect for the discipline and guts it takes to find, fund and execute. And on the customer desktop, I share your pain that it’s possible to order a pizza through your Tivo but automating a MarCom department remains but a dream.

Today, as I prepare to begin a new chapter as a board member and vice chairman of dna13, I want to thank the many friends, peers and complete strangers who embodied the very spirit of social networking by brainstorming, opening their Rolodexes and challenging my preconceived notions about how PR, media, marketing and sales are intersecting, and the role that technology will play in that convergence.

Most people have never heard of dna13. Compared to an entrenched giant like PR Newswire, this Ottawa-based software company is very, very small. Yet dna13 is a wonderful example of how someone who’s an expert in his job – dna13 founder Chris Johnson worked in corporate communications for Bell Canada – can bring a fresh solution to market and watch it grow.

What does dna13 do? In short, users of dna13 software can listen to what is being said about their company across all channels — print, major market TV, online and social media. When the SM (social media) or MSM (mainstream media) hits the fan, the dna13 platform has cool permissioning features so subscribers can securely align team members to plan the synchronized delivery of messages. (Note: those who love managing their 500+ Google Alerts, emailing multiple “track changes” documents to their CEO, or plugging their good, bad and neutral hits into a spreadsheet should not look at dna13.)

dna13 is moving from entrepreneurial to growth phase. Because it’s set up in the Software-as-a-Service model, product development is nimble. I have never seen a better technology organization – moving from white board to production in days and weeks rather than months and years.

My new colleagues include seasoned sales, marketing and product people, super-capable COO Kevin O’Neil, as well as board support from software veteran Howard Gwin (PeopleSoft, IBM, Pivotal), Tom Birch of Propulsion Ventures, Inc. and Pierre-Andre Meunier of Celtic House Venture Partners.

To all those who invited me into their homes, offices, industry events and social networks during my transition, please know that I’m happy to repay the favor. Just say the word.