Music industry is losing the war

Music industry is losing the war
For those of us who follow the trends of the Internet, Frank Ahrens has a nice summary of the music industry’s battle with Web users in The Washington Post. While the industry is fighting to maintain the status quo, Ahrens writes that the Internet is winning. In fact, he declares the battle is over.

The battle over online song trading is over; the Internet has won. The music industry is grudgingly giving up on the idea that it can preserve the tightly controlled business practices that once made record companies and artists flush with cash. Instead, a transformation is underway.
Actually, the battle isn’t over. It’s still being waged on both legal and market fronts, but I agree with Frank that the industry is swimming upsteam in molasses. They may win battles here and there, but the eventual winner will be the Internet. Meanwhile, the UK’s The Register reports that music download companies aren’t making any money from their paid download services and raises some interesting business questions about the services, especially copyrights. Apple’s Steve Jobs, whose iTunes is the industry leader, says he doesn’t make a dime off downloads (it all goes to royalties) and that their business model is instead built on sales of their popular iPods. Other companies don’t have that luxury, so one has to wonder how they’ll survive if the 99-cents they charge goes to the artists and record companies.

When elites don’t get their way

When elites don’t get their way
It’s amazing to me the amount of energy news people expend in trying to justify their place atop societal pedestals, when nobody listens or cares. Witness the case of the Washington Post’s Howard Kurtz (thanks to Jeff Jarvis). Before I get into the specifics, it should be noted that trust of the press is at an all time low, the rise of a new “people’s press” (aka: bloggers) is underway, and we’re well into the cultural shift of Postmodernism, a time in history when people see through bullshit like none before. Kurtz is upset. He smells a rat that more of his buddies weren’t invited along when the President snuck into Baghdad to celebrate Thanksgiving with American troops, so he does what every élite does best — he cries to mommy. His problem is that the press was deceived. He names the President a liar and then calls his friends:

Tom Rosenstiel, director of the Project for Excellence in Journalism, criticized the White House correspondents who made the trip without spilling the secret. “That’s just not kosher,” he said. “Reporters are in the business of telling the truth. They can’t decide it’s okay to lie sometimes because it serves a larger truth or good cause.”
Huh? What? Oh, really? I’ve no wish to argue the politics of the trip or to get involved in a debate with Mr. Kurtz. The only point I think is important, in terms of understanding news in a Postmodern environment, is that the folks who count — that is, the American people — don’t give a hoot about any of this. The old saying is, “If you’re digging a hole, and you get stuck in it, the way out is to first stop digging.” Traditional journalism is a Modernist creation. It was born a century ago in the minds of Walter Lippmann and his social engineering buddies. It is NOT what the First Amendment was written to protect, and at a gut level, everyday people know this. They see through the ruse of objectivity and find a group of people self-absorbed. And the more journalists complain about their elitist calf getting whacked, the more they distance themselves from the people they claim to serve. Will somebody please give Mr. Kurtz a new shovel?

Wall Street analyst sounds the local TV alarm

Wall Street analyst sounds the local TV alarm
The old proverb says, “Wisdom is justified of her children.” It means that you can’t judge wisdom until you see what comes out of it. The same is true for prophecy, which is what people like James Marsh are paid to do. Marsh has an interesting job. He studies the broadcasting industry for Wall Street research firm, SG Cowen, and makes predictions about the future fiscal health of companies he watches. Marsh’s latest prophecy is a dire warning for broadcast companies, as reported by Diane Mermigas in this week’s TV Week.

Television broadcasters, who increasingly find themselves adrift in a multichannel media world, have only themselves to blame and may have only a few years to salvage or leverage their grass-roots franchises.

Unlike the growing number of Wall Street research analysts who have similarly accepted and focused on how rapidly growing digital video recording technology will compromise broadcast revenues and profits, Mr. Marsh has put his money where his mouth is.

Because he expects a balance sheet threat to materialize by 2005, Mr. Marsh has downgraded four broadcast-related companies and lowered financial performance estimates for the seven media concerns he tracks.

Marsh’s biggest concern is the threat of DVRs and their ability to sidestep commercials, something he views as crippling to affiliate groups, because they can’t easily shift the commerical load to product placement. “The broadcasters who do not own the bulk of the programming they air [namely affiliate groups] will be most at risk during this transition period,” he said, and the scariest thing of all is that these companies don’t seem to share Marsh’s concern. When he asked broadcast groups to respond with their thoughts and solutions, nothing came back. He calls it “rearranging the chairs on the deck of the Titanic.” “No one seems to be taking it very seriously,” he said, “but I think behind the scenes they have to be very nervous.“

I would hope they’re nervous. The 2004 Olympics and a Presidential election year will mask the balance sheet problem facing broadcast groups. These folks are normally short-sighted anyway, and it’ll be easy to ignore what’s really happening in the marketplace. Come the 1st quarter of 2005, however, and the situation will be acute. In my judgment, broadcast groups have one year to transform themselves into multimedia production and distribution systems or face crippling losses. Mr. Marsh, I salute you. We’ll find out if your prophecy is wisdom or not, but I think the handwriting on the wall is screaming that you’re spot on.

On the Web, smaller may be better

On the Web, smaller may be better
Any media company that runs a news Website should pay attention to this article in the online Editor&Publisher. Using a new measurement method from Belden Associates, Lee Enterprises has boosted its online retail sales significantly this year by identifying and marketing to a small but loyal group of Website users.

Belden, based on tests at nine Lee sites and ongoing tests at two other newspaper chains, estimates online papers reach a small but loyal core of users — between 5% to 20% of the papers’ entire adult market. Those findings are similar to recent data from Reston, Va.-based online audience measurement company comScore Media Metrix.

(Greg) Harmon (director of interactive services at Belden) admits Belden’s numbers are likely to disappoint some online managers who are used to seeing visitor numbers, although suspect, in the hundreds of thousands. But the smaller audiences have quality, he said. “These Web sites have fabulous local audiences and [newspapers] are not selling them,” he said.

A spokesperson for Lee Enterprises notes that being able to tell advertisers their sites reach a small but loyal audience is better than saying the audience is huge but doesn’t deliver sales for advertisers. Amen to that! The Internet is not a top-down, mass audience delivery system, and businesses who counted on that during the bubble days of the late 20th century wound up in bankruptcy when the illusion crashed and burned. The Web is about relationships, which is what this story is really saying. Delivering results to advertisers is still our mission. It just requires a different mindset.

Only in computing does smaller mean more power

Only in computing does smaller mean more power
This paragraph caught my attention in a Reuters story about Intel’s new next-generation test chip:

The transistors on the Static Random Access Memory (SRAM) test chips are so small that 10 million of them would fit in one square millimeter, roughly the size of the top of a ball point pen, according to the Santa Clara, California-based company.
Stop and think about that for a moment. It boggles the Modernist mind. The article points out that the smaller the circuitry the more transistors can be packed into a chip for more functionality and better performance. These new chips will enable Intel to double the number of transistors it can put on a single chip from today’s chips. This kind of development is terribly exciting to Postmoderns, who view with anticipation the experiences that lie ahead in the world of technology. For those of us in the communications industry, the future is truly limited only by our imagination.

Social networking: the new online classifieds

Social networking: the new online classifieds
I’ve written previously about the significance of Tribe.net and There, the social networking giants of the Web, as the Postmodern equivalent of neighborhoods. Social networks are more than online communities, for they organize relationships into tribes, groups of people built on commonality of interest. The concept of tribes is a Postmodern hallmark, because life to Pomos is built around experiences and especially those that can be shared. Mark Pincus, the founder of Tribe.net, is a smart guy who understands that the new culture distrusts the institutions of Modernism, so he’s built basic buying and selling into the tribe structure of his network, and that has gotten the attention of a couple of big boys. Newspaper giants, Knight Ridder and Washington Post Co., have joined venture capital firm, Mayfield, in investing $6.3 million in Tribe.net, because they see the handwriting on the wall and want a piece of Tribe’s unique online classifieds. An article in MediaPost’s MediaNewsDaily notes that the deal is built on the newspapers’ traditional dependence on the classified advertising market, and that Tribe.net is creating a new niche.

Tribe.net posts classified listings for its members, who may sign up to the networking community free of charge, which in turn generates qualified leads for jobs, apartments, cars, used merchandise, and recommendations. Tribe plans to create revenue by selling paid listings and targeted advertising.

Hilary Schneider, CEO of Knight Ridder Digital, says her belief in the online classifieds industry is underscored by KRD’s investment in Tribe.net. “We have years of real-world experience on the front lines of the classifieds business,” she says, adding that the combination of Tribe’s targeted reach and Knight Ridder’s local market presence experience should reap rewards for both sides.

Local market, user-created content and communities translate into a lower cost of doing business, says Ralph Terkowitz, chief technology officer of the Washington Post Company, which he notes is appealing to advertisers and publishers alike.

While I can certainly understand the newspaper investment in Tribe.net, I think it would be smarter for media outlets to build their own social networking platforms rather than jump on one that already exists. As cool as Tribe.net is, it can’t bring real people together as easily as a local version could. Why shouldn’t a newspaper or a TV station be the one to bring this to their community?