Technology360

What's Next for Open Source and Public Media?

I've been consumed with commuting from Idaho to Washington, DC for the past couple of weeks and the run-up to that, so I've been remiss in blogging.  And frankly, I'm even wondering if I can write about radio at all in the next year or so, since some people will try to find meaning and direction for NPR in all that.  So I missed Doc Searls' excellent post in Linux Journal with this title.  At about the time he wrote this, Doc joined Diane Mermigas (below) and Rafat Ali on a panel I moderated at the Public Media 2008 conference in Los Angeles.  Thanks to Todd Mundt, who quotes much of it here, but I'd recommend reading the full text.  Link:  Linux Journal.  Don't miss this one. --Dennis

Public TV Needs Media Need To Join Media Revolution

Diane Mermigas, who participated in a panel I moderated at the Public Media 2008 conference, wrote shortly after that meeting:

Public media has a dilemma. It has been one of the most culturally, intellectually, socially and politically unique entities in the U.S. But it is woefully under-monetized in today’s burgeoning digital world. It doesn’t need to be that way. The powers that be at the Corporation for Public Broadcasting, Public Broadcasting and public media outlets can lead change by embracing it. ...

... Many of public media’s identifying factors make it a perfect fit for digital interactive applications within flexible definitions of what constitutes non-commercial media. Some of the key change agents public media can leverage are:

* The elevation of quality niche content
* Building social and community networks around particular topics, crusades and events
* Capitalizing on the participatory nature of interactive media
* Connecting related content providers, consumers and purveyors of commerce
* Advertising and sponsorship migrate into interactive marketing and transactions
* Relevance and personalization almost always mean local
* Smart mobile devices will dominate and make everything-to-go ...

Link:  On Media in MediaPost.  --Dennis

CBS O&Os Get Broadband

Of CBS's 29 O&O TV stations, Will Richmond writes:

... CBS TV Stations drove 89 million video views from their own sites in '07, an average of around 8 million video views/mo from their own sites, a 71% increase over '06. It's gaining an additional 10 million video views/mo through syndication partners. The primary current contributor to syndication is Yahoo, with whom CBS TV Stations partnered in Oct '06. To put this in context, today's WSJ carried the adjacent graphic of select broadcasters' video views. Putting aside CBS TV Stations' 10 million monthly syndication streams, its '07 monthly average traffic would appear to rank it in the top 5, right around Discovery.com.  ¶  In addition, video clips are a big part of CBS TV Stations' success, as it is posting around 520/day and now offers a searchable library of 350K clips.  ¶  Meanwhile the Yahoo deal has been so successful that CBS TV Stations has clearly gotten syndication religion, with several significant announcements planned for the coming weeks. Leess explained how these syndication deals drive unprecedented consumption from out-of-market viewers while also creating valuable ad inventory. For pre-rolls, CBS is getting between $28-75 CPM, with banners fetching $8-18 CPM. Importantly, CBS TV Stations are aggressively bundling on-air/online/broadband packages, having sworn off broadband as a pure "value-add" some time ago.

Link:  Video Nuze.  --Dennis

Requiem for Old-Time Radio

Jon Fine writes:

... Realities of the music world—the explosion in both expression and availability, first on independent labels and now everywhere, thanks to the Internet—began overtaking commercial radio stations well over 20 years ago. (I feel profoundly sorry for anyone whose musical universe is limited to the shrunken playlists of commercial radio, given the bounty available elsewhere.) There was a complicated blood bond that budding music geeks of the 1970s and '80s formed with radio, which today seems quaint. You loved radio for first opening up a world; you hated it for falling behind what was actually going on. ...

Link:  BusinessWeek.

NY Times: Is PBS Still Necessary?

Charles McGrath writes:

For the eighth straight year the Bush administration has ritually proposed taking a hefty whack out of the federal subsidy for public broadcasting. ...  ¶  Every year, though, it gets a little harder to muster the necessary outrage, and now and then a heretical thought presents itself: What if the glory days of public television — the days of “Monty Python,” “Upstairs Downstairs,” “The French Chef” — are past recapturing? Lately the audience for public TV has been shrinking even faster than the audience for the commercial networks. The average PBS show on prime time now scores about a 1.4 Nielsen rating, or roughly what the wrestling show “Friday Night Smackdown” gets. ...

... Considering how much it costs to create new topnotch programming, the best solution to public television’s woes is the one that will probably never happen: more money, not less. ...

Link: New York Times. 

In comparison to public TV, McGrath makes favorable comments about public radio (I'm affiliated with both).  In fact, public television invests less of its economy in national programming than does public radio, though it's relatively small in both cases.  Viewer-sensitive revenue (memberships and the noncommercial advertising we call underwriting) makes up less of public TV's economy (about 40%) than does listener-sensitive revenue in public radio (about 60%).  So one could make an interesting argument -- not one I'll develop here beyond stating the hypothesis -- that public radio stations are closer to their listeners than public television stations are to their viewers. 

Update 19 February 2008:
Also see the comments appended to this NYT article.  --Dennis

Public Media in a Zero-Distance World

Doc Searls begins a post with this title by linking to Michelle Thorne's post, Public Broadcasters Opt for CC (as in Creative Commons) in iCommons.org, itself a worthy reading excursion.  But he goes on to make this interesting observation:

... We’re one good UI away from the cell phone becoming a radio. (Thanks to the iPhone, it already serves as a TV.) And we’re one smart cell company away from radio- and TV-as-we-know-it from being replaced entirely — or from moving up the next step of the evolutionary ladder.  ¶  Public broadcasters know that. That’s one reason they now call themselves “public media”, a move that separates the category from its transport methods. It’s also why they’re thinking hard and long about the role their online transmissions and archives play in a world without physical borders. ...

Link:  The Doc Searls Weblog. 

I'd add that it's not just cell phones, but other portable devices as well that blur the lines among computers, phones, PDAs, etc.  I just got a Nokia N810, a Linux computer the size of a PDA with a spectacular screen and the first decent speakers I've seen in a portable device.  Oh, and its browser supports Flash.  Oh again, it comes with Skype, so it's a WiFi phone.  My intent was for it to replace my HP PDA and a Sprint smartphone with pretty good media software but pathetic speakers.  It lacks PIM software but the media portion is great.  The development community should have a PIM up and running in no time.  I'm using it mostly for radio, email and RSS.  --Dennis

TV Stations Seek Shows to Put Online

Brian Stelter visited the National Ass'n of Television Program Executives (pronounced "GNAT-pee") conference in Las Vegas and writes:

... As broadcast growth flattens, local stations are increasingly looking to their Web sites for new sources of revenue. Some stations are creating original programming for the Web, but it is far easier for them to purchase the online rights to syndicated shows. This week, for instance, 200 television station Web sites introduced “Big Shot Live,” a national online talent competition promoted through “Entertainment Tonight.” Some stations, under an agreement with Warner Brothers, are now showing the syndicated sitcom “Two and a Half Men” on their Web sites.  ¶  If ventures like these are successful, local affiliates may wind up playing the same role online that they do on television, in which they buy up what is essentially used programming from producers. As Oprah Winfrey and Alex Trebek can attest, syndication is a backbone of local broadcasting: affiliates purchase the local rights to specific shows and sell ads alongside the content. ...

Link:  New York Times.  --Dennis

Program pledging competing with station pledging?

Wired editor-in-chief and author of The Long Tail book and blog, Chris Anderson listens to public radio via podcasting and writes in his blog about responding to an embedded podcast appeal from This American Life to help with its $100k/year streaming bill but not responding to his local station's pledge week.  He does acknowledge that the money local stations aggregate for TAL far exceeds this $100k, without which that show and others like it wouldn't exist in either broadcast or podcast form. 

Also implied in his comments are a contradiction to the old saw in broadcasting that people listen to radio stations but watch public television programs.  There's a lot of truth in that, but public radio (for those not familiar with me, I manage Northwest Public Radio's stations among other things) is an unusually program-oriented medium, so podcasting works well in that context.  But does our listen-to-radio-stations approach to pledging work against that?

Check out Anderson's posting.  Link:  The Long Tail.  Thanks to Tim Eby for the tip.  --Dennis

Goldmine of media econometric charts

Someone whose flickr handle is "have_a_cigar" (Adam Thierer?) has posted a goldmine of media econometric charts.  Here are the titles of some of the charts and direct links.

• Google Valuation vs. Newspaper Industry
• Changing Fortunes? Market Cap, Enterprise Value, & Revenues for Media Operators
• Google Valuation vs. Radio Industry (wow, is this one telling!)
• Internet Advertising Revenue 1997-2007
• Projected U.S. Social Networking Advertising Spending 2006-2011
• U.S. Online & Total Media Advertising 2006-2011
• Average Prices for Selected Technologies 2003-2008
• Household Penetration Rates for Various Technologies 1970-2008
• Number of Years It Took for Major Technologies to Reach 50% of Homes (the longest? telephones @ 71 years; 2nd longest? electricity @ 52 years)
• Year-to-Year Advertising Growth by Sector
• Percentage of Ad Dollars by Media 1980-2007
• The Media Environment Circa 1970
• The Media Environment Circa 2007
• Video Choices Exploding, But Vertical Integration Plummeting
• Cable & Satellite Channel Growth Exploding

Updated 2 February 2008:
Actually, I'm thinking this must be from Adam Thierer because he uses all these charts in four five posts worth reading titled:

• Media Metrics #1: Introduction & Analytical Framework
• Media Metrics #2: Household Access to Media Services & Technologies
• Media Metrics #3: Ad Wars
• Media Metrics #4: Changing Fortunes
• Media Metrics #5: The Competition for Our Ears

All from The Progress & Freedom Foundation blog.  --Dennis

Open is King - The Future of Meida Beyond Control

... is the title of a lecture that Gerd Leonhard gave at the European Centre for the Experience Economy in Amsterdam earlier this month.  Lots of good stuff here.  Link:  Media Futurist [PDF].  --Dennis

Broadcast TV's Demise More Fiction Than Fact

Dan Rayburn, executive VP for StreamingMedia.com, writes:

... I have over 60 season passes in TiVo. Going through all of them yesterday, more than 90% of the shows I watch are not available online anywhere. And the ones that are, like content from CBS and NBC, do not show up right after they are broadcast and typically take days if not longer to appear on the web. And in the case of something like 60 Minutes, one story alone is chopped up into 10 different video segments on their website and encoded at a pretty low bitrate. And sports, well forget that. No NFL games are available on-demand the next day online and while the MLB games are, it requires a subscription.  ¶  The demise of the TV is overrated and many in the industry keep saying the same thing as if they have to say it just to be cool. I keep hearing people in our space says things like "I don't even need a TV anymore, I'll just watch all my video online". ...

Link: The Business Of Online Video.  --Dennis

Media economic woes

Diane Mermigas continues to write sobering posts about the media economy:

In Economic Woes Mean TV Ad Pullback, Media Shift, she writes:

The economic woes driving the stock market to new lows will impede spending by advertisers that are ambivalent about waning consumers and a transforming media market. The big unknown is TV ad dollars–how much will be held back and shifted to alternative media.  ¶  The answer will become evident in the coming months as formidable exceptional factors, from less original network programming and the continuing digital revolution to the paralyzing debt and credit crunch, play themselves out.  ¶  The four-month writers’ strike will wreak more havoc with broadcast television revenues in the first half of 2008 than it appears to have done in the fourth quarter.  Advertisers have been less likely to shift away from the broadcast networks or take a hard line on makegoods when the networks were running off their original series episodes last fall. ...

Link: MediaPost.

Also see Nowhere To Run: Trickle-Down Theory Impacts Advertising:

Amid the chaos and panic created by Wall Street and the Federal Reserve, ad-dependent companies are scrambling to determine just how impaired their financial lifeline will be in a troubled economy. Three words: trickle-down effect.  ¶  The broad-scale tumult is filtering down into the crevices of all media and advertising companies. They are making adjustments in spending as their costs, revenues and credit tighten. They are watching their stocks get hammered, and their ability to leverage assets or do deals is drying up–for now. ...

Link: MediaPost.

And, Strike, Recession: 2009 Media Outlook Is Grim:

Media, tech and Internet companies, and the Wall Street analysts who cover them, are looking beyond the current tumult to the rest of this year and into 2009. Unfortunately, many don’t like what they see.

Link: MediaPost.

Finally (for this post), Bottom-Line: Media Cos. Must Restructure Or Face Consequences:

Media companies are in a valuation nightmare. Their problem: being valued almost exclusively on old models and metrics, while not yet reaping the balance-sheet benefits of an unfolding digital nirvana. Their challenge: to accurately assess their stagnating traditional businesses and rising revenue streams while shaping growth prospects.  ¶  This inevitable valuation quandary is underscored by a spate of grim earnings forecasts for media and entertainment companies from Wall Street analysts, who are also wrestling with the complex assessment challenge. It is an issue for investors and deal-makers trying to project beyond the single-digit, even negative growth expected for more traditional TV, film and print. It is also an issue for labor and management, which are struggling to construct plans for future income.  ¶  Over the past four years, that digital interactivity has exploded on the scene, and the S&P Media Index has underperformed the broader S&P 500 by more than 40% due to continuing structural concerns about future growth, according to Bernstein analyst Michael Nathanson. These include the adverse impact of technology (DVRs, time-shifting devices), the shift of ad dollars to the Web, and the pressing need to completely reinvent traditional media models. The negative impact of slower economic growth on advertising and discretionary media spending is becoming more assured. This lethal combination has pushed earnings multiples for media stocks to historic lows. ...

Link: MediaPost.

But wait, there's more!  This chart from Joe Mandese, Optimism Declines Among Ad Execs, All Media Impacted, Even Online.  Click for larger image.  Link:  MediaPost.  Thanks to Terry Heaton for the tip on this one.    --Dennis

 

Get nostalgic and listen to good old FM radio!

I just bought a Nokia N810 "Internet tablet," a very cool under $500 device that I'm hoping will replace my HP PDA and my Sprint multimedia phone.  The device uses OS2008, an operating system that's essentially Maemo, which in turn is based on the Debian flavor of Linux.  Among the software offered is a software-defined FM radio.  Great, I thought before I learned it works only on the older N800. 

The software offer on the Nokia site carries the headline I used for this post plus this description (ouch!):

Before the internet and the digital revolution, music was analog and most of us listened to FM radio. You might remember fixing the antenna in the most perfect position, and the noise when tuning the channels. If you don't remember or you want re-experience it, download the FM radio application now!

Link:  Nokia. 

For its size (smaller than the HP PDA), the N810 has a great screen and ditto for its stereo speakers -- the first really listenable ones I've seen in a portable device -- and comes with its own "Internet radio" pre-programmed with a bunch of stations.  More and more I think we broadcasters need to figure out how to get on these lists.  The N810 connects to the 'Net by a user-friendly WiFi implementation and also has Bluetooth so you can connect through your phone.  Oh, and it has GPS, too.  --Dennis

Learning from CES and the music industry

Mark Ramsey has two must-read posts.  Here's one on what we should be learning from this year's CES, including:

... The fundamental problem in our industry is, frankly, that we have so little content unique to us and so little content bigger than us.  ¶  If you're all about the music then you're about nothing unique at all. And it has taken the obliteration of radio's monopoly over listeners' ears for this to be made apparent.  ¶  Get this straight: It doesn't matter that you have a tower. It doesn't matter how many HD sub-channels you have. We have been borrowing the attention of millions of listeners all this time and now we must earn it. ...

Link:  hear2.0.

And this is from one about music industry trends:

... the transitional nature of all - ALL - recorded technology that distributes music to consumers. That is, one technology shrinks as another expands, ad infinitum. Radio, too, is a technology, a very well established and popular one. The erosion we're currently seeing in radio usage - especially among the young - is not a hiccup. It is part of a long-term trend we are only beginning to experience. The more we face competitive alternatives which substitute for radio's core benefits, the more this trend will accelerate. ...

Link:  hear2.0. 

Update 10 January 2008:
Mark's writing about lessons for radio.  Marketing guru/writer Seth Godin has also posted about lessons from the music business, but targets all purveyors of digital distribution with his advice, starting with this gem:

The first rule is so important, it’s rule 0:

0. The new thing is never as good as the old thing, at least right now.
Soon, the new thing will be better than the old thing will be. But if you wait until then, it’s going to be too late.  Feel free to wax nostalgic about the old thing, but don’t fool yourself into believing it’s going to be here forever. It won’t.

Link:  Seth Godin's Blog.  Thanks to Paul Maloney for the tip in Kurt Hanson's Radio and Internet Newsletter.  --Dennis

A Broadcaster's Christmas Carol

I've linked to it before, but Terry Heaton has "reprinted" his Christmas 2004 essay, a take-off on the Charles Dickens classic.  A sample:

... Ebenezer was a second generation Broadcaster, having built his empire from a small A.M. radio station his father owned in the 50s. With a penchant for squeezing every last penny from a dollar, Ebenezer Broadcaster had a reputation as a hostile and difficult employer. He boasted that many celebrities had come through his television stations on their way up the ladder, but the truth is he never paid anybody enough money to want to stick around. ...

Link:  Terry Heaton's PoMo Blog. If you're in broadcasting, don't miss it.  --Dennis

TV's Revenue Woes Reach Tipping Point

Diane Mermigas writes:

... Until now, flat-to-rising household TV usage was no real threat to earnings. “However, recent data points on TV viewing and HUT are more disturbing,” [Bear Stearns analyst Spencer] Wang said. In calendar 2007, HUT is down 1.2% from 2006 for the first time–without a change in the Nielsen measurement sample. TV’s core selling demographic (adults ages 18 to 49) has seen HUTs drop 2.5% from a year ago, even when adjusting for the new live, same-day and DVR ratings, that collectively underestimate the erosion. “We find it more than coincidental that declining TV usage is occurring in tandem with broadband Internet penetration reaching mass market levels” of more than half of U.S. homes, he said. ...

Link:  MediaPost.  --Dennis

Implications of the Writers' strike

Diane Mermigas has written three recent columns for MediaPost that are must-read analyses of the impact of the Writers' strike on television's economy:

TV Nets Stuck: Strike Ends With New Metrics, 12 December 2007

Strike Will Transfer Ad Power To Web, TV To Revamp, 18 December 2007

For TV, Crisis Is Catalyst For Change, 21 December 2007

Umair Haque looks at it in terms of how this relates to emerging business models for content:

... While writers and networks have been crippling each other with a simplistic - and totally obsolete - game of mutually assured destruction, Google is slowly but surely reinventing a better way for content to create value: one which doesn't need exactly the rigid contractual lockstep writers and networks are squabbling over.  ¶  See the point? Google is solving exactly the problem that core-focused players are paralyzed by; that's suddenly brought the existing value chain to a crashing, creaking halt. ...

Link:  Bubblegeneration.

Finally, read Paul Bond's article, [Bear Sterns] Report weighs ripple effect of writers strike on Street.  Link:  Hollywood Reporter.  --Dennis

Lots of Little Screens: TV Is Changing Shape

Denise Caruso writes:

Inexpensive broadband access has done far more for online video than enable the success of services like YouTube and iTunes. By unchaining video watchers from their TV sets, it has opened the floodgates to a generation of TV producers for whom the Internet is their native medium.  ¶  And as they shift their focus away from TV to grab us on one of the many other screens in our lives — our computers, cellphones and iPods — the command-and-control economic model of traditional television is being quickly superseded by the market chaos of a freewheeling and open digital network. ...

Link:  New York Times.  --Dennis

Leichtman study: persons aware of DTV transition still in minority

Leichtman Research Group has completed a new report, HDTV 2007: Consumer Awareness, Interest and Ownership, based on a survey of 1,300 U.S. households.  The following findings are from their press release:

• 37% strongly agree that they understand how the digital transition will affect their household
• 35% strongly agree that they care about how the digital transition will affect their household
• LRG estimates that there are about 35 million television sets in households that currently do not subscribe to a multi-channel video provider (and a similar number of over-the-air only television sets in multi-channel video households).  Among the group of non-subscribers to a multi-channel video service – who will be most impacted by the digital transition – overall, 19% are both aware of the digital transition and strongly agree that they understand how the digital transition will affect their household
• 56% of those in households with an annual income of over $75,000 say that they have heard of the digital transition – compared to 36% of those in households with an annual income under $75,000

The 43% of adults it identifies who have heard of the 2/19/2009 transition is up from one-third of adults a year ago.  But one has to wonder how many of these people think that, like the title of Leichtman's report, the digital transition means HDTV rather than how they receive their signals.  --Dennis

Play to Win: TV Nets Test New Compensation Models

Diane Mermigas writes:

The development and trial of new business models that utilize digital interactivity to generate revenues is becoming sport at many media and entertainment companies. And everyone is playing to win. Even as television network and film studio executives wrestle with striking writers over payment for scripted material used in streaming, downloaded and other new media video, they are testing promising compensation models. ...

... Common to new business models is concern about their mechanics, measurement and methods. They include such sticky issues as configuring payments based on advertising revenues, user impressions and fees. Although many media companies contend it is too soon to know what most new media businesses will be worth, more metrics become available every day. Just this week, the media buying agency Starcom estimated that the four broadcast television networks will realize $120 million in ad revenues from their nascent online video ventures in 2007. Their corporate parents, including Walt Disney and News Corp., have acknowledged that each will make more than $1 billion in revenues from a variety of new digital ventures this year. ...

Link:  MediaPost. --Dennis

Is Terrestrial Radio Destined to Die?

... asks Celeste Headlee for National Public Radio's Day to Day program.  Here's the set-up:

The Federal Communications Commission is expected to decide next week whether satellite radio companies Sirius and X-M can merge. Satellite radio has roughly 20 million listeners, but new technologies are posing a challenge to market shares.  ¶  Celeste Headlee reports on the development of portable Internet radio. Then NPR's Alex Cohen gets a primer from Wilson Rothman, an editor at Gizmodo.com on the difference between leading radio technologies and Madeleine Brand talks with Mark Ramsey, president of Mercury Radio Research, about why the emergence of new technologies won't spell the end for terrestrial radio.

And you can listen to the audio at this NPR link (0:12:24).  The interview with Ramsey is particularly good.  Thanks to Roger Johnson for the heads up.  --Dennis

Myth, Media and Meta podcast

As I noted in the previous post below, audio files and presentation decks from the 2007 Iowa DTV Symposium have now been posted online.  This includes my own presentation from Oct. 2nd (and intimidating it was to be presenting the same afternoon as John C. Dvorak and Mark Schubin) titled Myth, Media and Meta: Three Information Epochs and What They Mean for Broadcasting.  Here is the agenda description:

Humans have always created information faster than we create humans. And, consequently, humans are in a constant struggle to extract value from the "noise" of too much information in their environment. The title refers to epochs that are characterized by the techniques we've used. "Myth" being story-telling, poetry, music, etc. "Media" dates from Gutenberg and encompasses traditional broadcasting. "Meta" is the digital age, characterized by use of metadata, compression, "pull" distribution, and distribution systems that can learn user preferences. Broadcasters use all these techniques and social systems may enable them to be successful in "many-to-many" distribution in the future.

Links:  MP3, PPT or for Flash version of the deck click here and scroll down in the Content Track to 4:30 on Tuesday.  Also, I've placed both the MP3 and PPT links permanently in the Files section to the left.

For a written version, see these four posts from early June.  Reboot Redux: Myth, Media and Meta; Part 1, Part 2, Part 3, Part 4.   --Dennis

BBC, ITV and Channel 4 form on-demand service

BBC News reports:

The BBC, ITV and Channel 4 are to launch a joint on-demand service, which will bring together thousands of hours of television programmes in one place.  ¶  The service is set to go live in 2008 and will offer viewers access to current shows and archive material. ...

... The three broadcasters currently offer their own separate on-demand services.  ¶   The BBC's iPlayer and ITV's catch-up service will continue to exist along the new online "aggregator", which will provide a complement to the established providers.  ¶  However, Channel 4's 4oD will no longer be a standalone service once it is incorporated within the project.  ¶  Programming from all three broadcasters will be available for free download, streaming, rental and purchase via the internet, with expansion on to other platforms planned. ...

Link:  BBC.  U.S. public broadcasters are about to be lapped again.

Updated 29 November 2007:
Also see Ryan Jarrett, Finally some sense - BBC, ITV and Channel 4 catch-up services to unite.  Link:  last100.  --Dennis

The end of advertising as we know it

The IBM Institute for Business Value is out with a study with this title authored by Saul Berman, Bill Battino, Louisa Shipnuck and Andreas Neus.  The intro says:

Imagine an advertising world where… spending on interactive, one-to-one advertising formats surpasses traditional, one-to-many advertising vehicles, and a significant share of ad space is sold through auctions and exchanges. Advertisers know who viewed and acted on an ad, and pay based on real impact rather than estimated “impressions.” Consumers self-select which ads they watch and share preferred ads with peers. User-generated advertising is as prevalent (and appealing) as agency-created spots.  ¶  Based on IBM global surveys of more than 2,400 consumers and 80 advertising experts, we see four change drivers shifting control within the industry. ...

Link:  IBM (full report, executive summary PDFs).

In Digital Future: Ideas Wanted, Diane Mermigas provides a detailed analysis of the report.  Link:  MediaPost.  --Dennis

Web Video: Move Over, Amateurs

Catherine Holahan writes:

... One after another, online video sites that have long showcased such fare as skateboarding dogs and beer-drenched parties are scaling back their focus on user-generated clips, often in favor of professionally produced programming. "People would rather watch content that has production value than watch their neighbors in the garage," says Matt Sanchez, co-founder and chief executive of VideoEgg, a company that provides Web video tools, ads, and advertising features for online video providers and Web application developers.  ¶  On Nov. 13 social networking site Bebo said it would open its pages to top media companies in hopes of luring and engaging viewers. "As more and more interesting content from major media brands becomes available, [online viewers] are going to share that more and more because those are the brands they identify with," says Bebo President Joanna Shields. ...

Link:  BusinessWeek.  --Dennis

How traditional media companies approach new media

Natalie Fonseca writes of Quincy Smith's presentation (he's president of CBS Interactive) at NewTeeVee Live:

... So what has Big Media learned?  ¶  More than 80% of the volume in video today is clips, not full-length episodes. Even in Asia where broadband penetration and speeds outpace the U.S., the trend is still toward viewing clips. In CBS’ case, 80% of visitors to its Web site do watch full episodes, but the focus is on bringing in new customers by getting CBS content out to the masses where ever they are on the Net. Which is why CBS has over 285 partners helping to syndicate its content online. ...

Link:  last100.  --Dennis

Artists: Radio surely can afford royalty

Brooks Boliek writes:

Proponents of a new royalty for music that is broadcast over-the-air contend that a government study bolsters their argument that the radio industry can afford to pay.  ¶  The artist-industry alliance known as the MusicFirst coalition points to an FCC study that examined radio market concentration and said it shows that broadcasters have been jacking up their rates.  ¶  Annual growth of radio advertising rates since 1996 was about 10%, while the CPI has averaged a 3% increase per year over that span, FCC senior economist George Williams found in his study that examined the market through March 2007. ...

Link:  Hollywood Reporter.

Updated 12 November 2007:
Also see Andrew Glass, Singers: Stations should pay (them) to play:

Lyle Lovett wants to get paid for music he made famous with his bluesy twang. Sen. Patrick Leahy (D-Vt.) is giving him a stage to make it happen. Leahy is scheduled to hold a hearing Tuesday to review a nearly century-old law saying radio stations don’t have to give the four-time Grammy winner a dime when they play music he performed that was written by someone else. ...

Link:  Politico.  --Dennis

TV - Moving to online

Rob Paterson makes the case that the television economy is about to hit an iceberg:

... The Iceberg is the weight of money that is leaving conventional media and going to the web. My forecast is that 2008 will be the year - 2008 will be the year where the web/digital will become where the ad money will go - the work for all providers of all types of content then will be to reset their universe.  ¶  Today most people in TV and radio see the web as a growing and important channel. In 2008, the smart people will see the web as the primary channel and that their old channel is now the supporting channel. Of course most will not see this and they will be lucky to find a life boat. ...

Link:  FASTForward Blog.

Update 31 October 2007:
In his post, Rob mentions Hulu, the NBC + News Corp joint venture.  Liz Gannes has an overview of it in Hulu Debuts to Meet Foes and Find Friends.  Link:  NewTeeVee.  --Dennis

BBC Moves Toward Digital TV in a Challenging Period

Eric Pfanner has an interesting article on issues that the BBC is facing in the New York Times.

Updated 30 October 2007:
But on the other hand, it's expanding its international operations.  See Chris Williams, BBC readies global web and TV expansion.  Link:  The Register.   --Dennis

The Broadcast Triple Play

Michael Harris, Chief Analyst for Cable Digital News, writes for those in the cable industry who don't like the FCC's recent ruling on digital must carry:

... Once again proving that the broadcast industry has the FCC in its back pocket, the commission ruled that cable operators will need to carry local broadcast TV signals in both analog and digital formats starting in 2009.  ¶  Adding insult to injury, MSOs must carry broadcasters' high-definition signals, too. In other words, cable operators are required to transmit the same TV programming in three formats. Now, that's a triple play!  And a tremendous waste of privately owned cable spectrum. ...

Link:  Light Reading. 

His colleague, Jeff Baumgartner in DTV's Broader Logic, is a little more sanguine:

Although there are some differences of opinion about how well cable's lobbying arms fared in the whole dual-must carry ruling from the Federal Communications Commission (FCC) , I think they did a commendable job obtaining a compromise on a couple of important points, particularly after the pounding much of the industry took from the feds before and after the July 2007 ban on integrated security set-tops. (See Verizon & Others Get Their  Waivers and FCC Denies Comcast Again .) ...

Link:  Light Reading.  --Dennis

Local Media Slowly Learn To Harvest Digital Gold

Diane Mermigas writes:

... Broadcasters must better position themselves strategically to secure their share of online ad dollars and consumers from such unlikely competitors as Craigslist to Google. Online will represent 10% of local television advertising dollars by 2010–or twice what it is today, according to Gordon Borrell, CEO of Borrell Associates, a media research and consulting firm. In 2007, online sales are expected to be as much as 10.7% of gross revenues at the Washington Post Co.’s newspapers, 6% of gross revenues from combined newspaper and television efforts at Gannett, and only 2.4% of gross revenues at Hearst-Argyle television, Borrell reports. Of the $7.5 billion in overall annual domestic local online ad spending, newspapers grab 36%–while TV stations only garner 7.7%, Borrell reports. Clearly, local television is losing online ad dollars to pure-play Internet players such as Google and Yahoo, which collectively siphon 33.2% of total U.S. local online advertising. ...

Link:  MediaPost.  --Dennis

Mechanism design theory and media's future

Diane Mermigas writes:

... At its core, mechanism design theory encourages systematic thinking about how a new playing field and new rules of play can be modified to improve outcomes. In the nearly 50 years since it was developed, the theory has been broadly applied to business matters as far-ranging as valuing software patents, matching donated kidneys to recipients, calculating taxes, and setting up complex auctions. Application of the theory to the Federal Communications Commission’s sale of radio spectrum assured the government the funds it sought, while assuring public and small business access. It has also been applied to the regulation of subscription television and the bundling and pricing of channels.  ¶  The initial objectives, per the economists, included the ability “to easily compare different models for selling goods” and provide enough economic incentives to ensure a win-win for all. Much of what the economists devised is relevant to media conundrums. Those include the redefining and re-pricing of advertising; content and services from static to interactive digital platforms; and recalculating the value of advertiser connections from mass eyeballs to individually targeted consumers with whom they can transact online. The social networking, blogging and instant messaging are a means to a commercial end for those hoping to profit from the Internet. ...

Link:  MediaPost. 

Also see this article on mechanism design in Wikipedia.  --Dennis

Diane Mermigas now at MediaPost

One of the most astute observers of today's electronic media is Diane Mermigas, the former columnist at The Hollywood Reporter.  However, I lost track of her when she left there, so thanks to Terry Heaton (himself also an astute observer) who noted in his blog that she's writing now for MediaPost.  Her column also has an RSS feed.  --Dennis

Behind Those Video-on-Demand Deals

Ronald Grover writes:

... The dawning of a new era of TV? Not quite. Study the details provided by the networks carefully, and you'll notice that none are taking too big a risk. The deals include just a smattering of shows -- generally about four or five from each network -- and in some cases, the online services are designed not to ruffle too many members of the ecosystem on which networks live and prosper.  ¶    The truth is, going down this road is upsetting to many in TV Land. ABC affiliates are already irate about Disney's decision to allow Apple's iTunes service to have some of Disney's bigger TV hits, such as Lost and Desperate Housewives.  But does anyone really think folks watching TV programs on those tiny iPod screens poses a real danger to at-home, nightly TV viewing? ..

Link:  BusinessWeek.  Good analysis.  --Dennis

Radiohead and why P2P can be a hard habit to break

"Free as in free beer" is such a powerful impulse among us that even when something is offered free for voluntary payment, most people opt for not paying.  Gee, where have I learned that in my public broadcasting career?  The band, Radiohead, is the latest business to discover this as Nate Anderson writes:

Radiohead's innovative digital distribution arrangement for their new album, In Rainbows, lets people pay whatever they want for the music, including nothing at all. Despite that, BitTorrent swapping of the album has been on the level of other major releases. Are people really so cheap that they won't even register with the band in order to snag a free download? The answer appears to be yes. ...

... Once the album became available for download, though, it spilled immediately onto P2P networks, primarily BitTorrent. ...

Link:  Ars Technica. 

Of course, as Radiohead is discovering, that's not to say that the collective economic impact of those who choose to pay isn't a sufficiently compelling business model.  Umair Haque calls this open pricing and points to this post in Valleywag (Radiohead estimates doom record labels):

... What nobody knew was whether fans would pay for a Radiohead album if they didn't have to. Certainly, the record labels had to be hoping they wouldn't. Too bad for the fat cats, because reports are that the average price paid for "In Rainbows" fell between $5 and $8. A low estimate of Radiohead's take in two days is $6 million. Sounds like bands with a following now have permission to skip labels.

Read Haque's analysis in Bubblegeneration, Research Note: Open Pricing and Revolutionizing Value Creation:

... open pricing is the most revolutionary innovation to hit the economy for a long time; how it will absolutely eviscerate massconomy business models; etc.

Also see his Research Note: Death of an Industry and Research Note: Why Radiohead Will Revolutionize Music, also in Bubblegeneration.

  --Dennis (the Dennis who frequently fast-forwards his DVR through commercials to avoid "paying" for what he's watching, but who does contribute to public broadcasting).

Myth, Media, Meta: Three Information Epochs and What They Mean For Broadcasting

I was happy (though I had to follow two of my tech heroes, John C. Dvorak and Mark Schubin) to give a presentation again this year as part of the Iowa DTV Symposium, a national event held annually in Des Moines and organized by Dan Miller's great staff at Iowa Public Television.  My topic was the title of this post and attempts to use information theory to find a middle ground between legacy media and new media, the former group too often suffering from hubris and the latter often characterized by naïvté.  I made a preliminary series of four posts on this topic back in early June (here's part I and you can get to the other three from it).  My wife the professor and I are writing a book expanding on the topic.  Stay tuned.

I think they'll be posting audio to their web site, but for now, you can look at my PowerPoint deck which I've posted in the Files area on the left of this blog's main page.  Here's the direct link.  --Dennis

Accenture: ... How New Content and Technology are Redefining the Future of Media

Accenture has published a new paper by Jamyn Edis and Alexis Rose that's worth reading.  The executive summary:

Accenture’s Global Content Study 2007 surveyed more than 100 leaders and decision-makers in the media and entertainment sectors, including television, film, music, radio, video games, publishing,
interactive entertainment and advertising. The study solicited opinions from executives around the globe — across North America, Europe and Asia-Pacific — to gauge their views of where the greatest opportunities and challenges will come over the next five years. Key findings include:

• 62% of executives look to “new platforms” as being the most important key to growth, followed by 31% “new content” and 7% “geographic expansion” as the key growth lever.
• Of these new platforms, online and mobile dominated; a combined 43% viewed online as most important (of which 17% represented a distribution of content through online portals or entertainment/information sites, and a further 13% through social networking sites and 13% through eCommerce sites), while mobile drew 17% of responses.
• 53% of executives surveyed indicated that “short form content” offered the largest opportunity for “new content,” with “long form” or “full length” video content (greater than 60 minutes) garnering 11% of responses. In addition, “video gaming” was viewed as a key growth area, according to 13% of executives.
• Asked what they believed was a top threat to the business, over half of the executives (57%) identified “consumer-based competition” or “user-generated” content; 46% of respondents viewed “piracy or IP theft” as a top three issue.
• However, despite the perceived threat, 68% of respondents believe that they will be able to harness user-generated content to create revenue within one to three years.
• Nearly 80% of those surveyed believed that there was no bubble in the Web 2.0 space, with 70% of respondents also observing that social media was a natural, “evolutionary” progression for media (versus 25% calling social media “revolutionary” and 5% calling it “a fad”.) As a reflection of this upbeat perception, over 90% of the executives said that their companies would become involved in social media over the next 12 months.
• Half of executives indicated that advertising could grow to become the most prevalent business model in the industry within five years, with digital advertising driving growth.
• Content remains king (according to 37% of respondents), although the crown is under attack by technology companies (26%) and telecommunications players (9%).
• Critically important is the need for digital readiness and a future technology road map. Only by transforming their organization and capabilities can media and entertainment expect to maximize the opportunity that digital offers. This includes increasing reach (through multi-platform distribution), engagement (through social media and interactivity) and monetization (through digital advertising). ...

Link:  Accenture [PDF].

Thanks for the tip to Terry Heaton.  His comments on the report are at Accenture: Biggest Media Threat Is Consumer-Generated.  Link:  Terry Heaton's PoMo Blog.

Accenture's Gavin Mann has an overview of the report here.  --Dennis

Creating Spectrum Within Spectrum

Terry Heaton has posted another in his terrific series of essays.  He sets it up:

As media companies struggle with disruptive innovations eating away at the foundation of their business model, they’re throwing everything but the kitchen sink at trying to sustain the unsustainable. One solution would be to transfer the world or worlds in which they now compete to the Web as a whole, instead of trying to compete for attention in a world of unlimited reach and range.  ¶  I flew over Philadelphia on Tuesday, a city — like others — that has all of its sports arenas in the same location. Each shares the parking space, and freeway access can sustain the traffic required for such big crowds, all of which makes it very convenient for sports fans. There are many examples of this in “real” life, so why can’t we see that this might also be smart online?  ¶  Why? Because it would mean competitors cooperating to create the location.  ¶  Ain’t gonna happen? Never say never.

And, within the essay:

... What makes the Web so different is that it is an entirely open network, although the deep pockets of the status quo are lobbying everyone with breath to change that by creating tiers of service. The argument in Congress is that we're running out of bandwidth, which means a TON of money to beef up the Internet, and the people spending that money should be entitled to profit from the build-out. While that's certainly true, the reality is that this disguises what is essentially an attempt by the incumbents to restore some form of command and control mechanism (tiered pricing) to the open network. This means that those with money will be the only ones able to advance the spectrum, and this is exactly the old profit model wearing new clothes. But I digress.  ¶  On the Web, all of these individual companies are merely pixels on the overall page, blips in a spectrum of equal blips. There's no doubt that mass marketing muscle in the worlds within which the incumbents currently play gives them an advantage over the other blips, but it doesn't influence the essential infrastructure. This is why innovations from other blips can explode across the entire Web and why we're seeing new models being developed everywhere. ...

Link:  Terry Heaton's PoMo Blog.  --Dennis

Can Internet Video Deliver A Nielsen Ratings Point?

Allan Leinwand writes:

... The Internet needs to deliver to the entertainment industry a metric of success that translates into revenues and mindshare –- in other words, a rise in one