<span class="caps">TV</span>, meet Gilmore’s Law

TV, meet Gilmore’s Law

April 10, 2013 By Terry Heaton Leave a Comment

The NAB is underway in Las Vegas in the wake of an all-time revenue record for the broadcast industry last year. The networks are about to launch the annual sale of their inventory known as the upfronts, and all is well. Well, not exactly. There’s declining viewership, the not-so-little disruption known as Aereo, the increasingly viable civil defense, weather warning and Amber alert efforts of the Telcos, the love affair that all media companies have with online banner ads, and mostly, the way broadcasters make all of their online strategic decisions as if the Web wasn’t a horizontally-connected network.

If you strip away the HTML that displays what, for example, a local television station offers online — also known as “the content” — what’s left is the network and how that web document fits within the whole. This document must follow certain realities about life in the network that contradict the view associated with simply watching or reading the content, especially in the area of mass media. In certain instances, we have to go many years back and visit the minds of those who created the network, and here’s a noteworthy truth: they had nothing to do with media.

These were engineers of the highest level, including John Gilmore, who, according to Wikipedia, is one of the founders (the fifth employee) of Sun Microsystems, one of the founders of the Electronic Frontier Foundation, the Cypherpunks mailing list, and Cygnus Solutions. He created the alt.* hierarchy in Usenet and is a major contributor to the GNU project. I’ll spare you all the link following by saying that John isn’t likely the kind of guy who’d be running ANY of the companies on display at the NAB this week.

In addition to all his “foundings,” Mr. Gilmore is also the author of the often-cited axiom, Gilmore’s Law:

“The net interprets censorship as damage and routes around it.”

Why is this so important for broadcasters especially? Because the parameter that the FCC uses to issue licenses to broadcast companies is geography, and online, geography represents a form of “damage.” Geography is an artificial inefficiency that even China is beginning to see doesn’t work in terms of guarding certain kinds of information from the eyeballs of its citizens. In other words, when Aereo wins its legal battle with broadcasters (it will), the just-announced News Corps’ response to take its stations off-the-air will backfire, because anything that attempts to give station owners a piece of the pie through Internet streaming will eventually have to bend its knee to Gilmore’s Law.

News Corp. Chief Operating Officer Chase Carey told Fox News Entertainment:

“This is not an ideal path we look to pursue, but we can’t sit idly by and let an entity steal our signal,” Carey said at the annual gathering of broadcasters, called NAB Show, in Las Vegas. “If we can’t do a fair deal, we could take the whole network to a subscription model.”

News Corp plans to use GPS to determine how its stream will be divvied up via geography, but this is entirely to satisfy the revenue wants and needs of local affiliates. That may seem fair to the stations, but consumers will get doubly hosed — by cable companies, whose fees aren’t about to go down, and by Fox (and others later), via its own subscriber fees. Something will have to give, and consumers will demand one OR the other but not both. And Gilmore’s Law says that if it ends up that streaming is preferred, the owners of the content will ultimately win.

Whereas terrestrial broadcasting used to be the most efficient way to distribute video content by dividing the airwaves into geographically-defined markets, that is no longer absolute. What we have here is the railroads, who at one time owned shipping across-the-land, believing they deserve a fee for each jet that races across-the-sky, crossing over their land-based tracks in the process.

There are ways that local media companies can make money and even thrive downstream, but riding the coattails of their network big brothers is going to become a net liability sooner rather than later. The ones who will “win” the most will be those who own the programming that people watch, and this needs to be a part of everybody’s long-term strategic plan.

BONUS LINK: The Verge Nuclear option: would Fox really leave the free airwaves to undercut Aereo?

Filed Under: Broadcasting, Disruptions, Reinventing Local Media

Aereo’s gauntlet has been cast

September 17, 2012 By Terry Heaton 1 Comment

Should broadcasters disrupt their own business model for the sake of building something that fits better with tomorrow and tomorrow’s technology?

An insightful article in yesterday’s New York Times makes the chilling point that the disruptive nature of Aereo, Barry Diller’s broadcast antenna farm for digital users, “might lead to a larger breakdown in the bundling of content over time.” In other words, it’s a threat for broadcasters to take seriously.

And they have. A judge’s refusal to grant an injunction against Aereo this summer is being appealed, and broadcasters are confident they can win on grounds that it’s a copyright violation. Aereo argues that by providing antennas and DVRs to subscribers, they’re doing nothing more than a consumer could do for him or herself.

There are other players in the space, including those blessed by the National Association of Broadcasters, but Aereo gets the publicity, because of the clever way it skirts the status quo.

The real conundrum for broadcasters is this: should we pursue this disruption for ourselves instead of playing defense, defense, defense? The answer is tougher than you think. The Web is not a sustaining innovation for broadcasters anymore than it was for newspapers, as noted by Gordon Borrell two years ago:

Is the Internet a sustaining technology to their radio, yellow pages, TV companies and newspapers, or is it a disruptive technology? The key to how companies think about that is the key to success or failure, and the key to why some companies in the local Internet space are succeeding so well, 10 years later.

As Borrell noted, you can tell what companies believe by how they’re behaving, and a Johnny-one-note of defense says much. There are many who would like to see the Web function as a giant cable TV system, but that position looks a lot like wishful thinking, regardless of how much money is poured into it. The Web is a 3-way communications medium, not one-way, and pulling broadcast signals into the mix doesn’t change that.

We’ve all heard the stories about how Blockbuster “should” have been Netflix, Kodak “should” have owned digital photography, and railroads “should” have been airlines. Here we have a case where the broadcast TV industry has an opportunity to cannibalize itself and create an advantage in the world of digital, unbundled TV, instead of sitting back and watching somebody else do it instead and at our expense.

The problem is that that would take thinking like the tech industry and not the media industry, and I’m afraid that’s just too much for us to handle right now. We have little energy for it, because managing threatened bottom lines is a full-time job all by itself.

Is this is a case of fighting to win the battle while losing the overall war? Only the cold reality of future history can answer that.

Filed Under: Broadcasting Tagged With: Aereo, Blockbuster, Borrell, Diller, disruptions, Kodak, Netflix, railroads

More fun with headlines

September 14, 2012 By Terry Heaton 2 Comments

It’s time to play “Fun with Headlines.”

The Television Bureau of Advertising (TVB) held its “Forward” conference this week, so there have been a few headlines this week about the future and especially the future of TV. These form a fascinating, albeit confusing, narrative.

MediaDailyNews offers TVB President Defends TV ‘Value Proposition’.

To hear TVB President Steve Lanzano tell it, Henry Blodget isn’t any better at writing about the media than he was researching stocks for Wall Street. In his opening remarks kicking off the TVB’s Forward Conference Wednesday morning, Lanzano challenged a recent story by Blodget, the disgraced research analyst-turned blogger who declared that the TV industry was headed toward collapse.

Lanzano asserted that Blodget “didn’t let the facts get in the way of” his reporting.

“Our value proposition has never been better,” declared Lanzano, citing various third-party sources to make his case.

If you’re interested, here’s a link to the Blodget piece that Lanzano referenced. Here’s a link to my response.

Diana Marszalek at TVNewsCheck delivered Ryviker: Local broadcast TV is here to stay

Despite an unstable economy and increased competition, traditional television is apparently holding its own in getting its share of advertising dollars.

“The investment community thinks broadcast TV is going away, but we are not seeing that,” says Marci Ryvicker, who covers media for Wells Fargo Securities.

“You still have growth in the industry and that’s a really important concept.”

From Mobile Marketer, we were given Tablet users’ TV consumption is heavy across mobile, traditional outlets: report

Tablet users who stream television programming on their devices watch more regular TV, not less, according to a new report from The Diffusion Group.

Marketers are concerned that as consumers spend more time consuming TV content via tablets, this will cannibalize high-value prime-time TV viewership, thereby diluting the impact of their ads. However, the research suggests this should not be a concern, with 39 percent of 18–49 year olds reporting that their tablet viewing has lead to an increase in regular TV viewing.

TVNewsCheck also published its annual consensus spot TV forecast, and saw positive signs in the auto industry. 2013 Spot TV: Total Down 7.8%, Core Up 4%

According to broadcasters, reps and analysts surveyed by TVNewsCheck, the revenue driver at TV stations next year will be automotive, which our survey participants say will be up around 8%.

Finally, another headline from TVNewsCheck’s Diana Marszalek, Don’t Take The Auto Recovery For Granted

Despite pretty rosy predictions for car-related TV ad sales in 2013, an auto industry analyst says the business is not rebounding like it should.

“The truth is that auto sales … are actually worse than they would have been in a typical bad recession,” says Itay Michaeli, Citi Investment Research’s VP of U.S. autos.

So you see, it’s easy to grab a couple of headlines to make the case that everything’s fine (*waves fingers* “These are not the droids you’re looking for.”). I recommend caution, however. For one thing, Henry Blodget isn’t nearly as incompetent as the TVB would have you believe, and the auto industry is already adjusting marketing due to decreased sales.

Until next time…

Filed Under: Broadcasting Tagged With: automotive, tv future

MDTV is here

August 4, 2012 By Terry Heaton 6 Comments

I’ve spent considerable time talking with people and writing here about the potential of MDTV to be a game-changer for broadcasters in the digital world. The idea is to put digital over-the-air signals onto your smart phone or tablet by putting a special chip in the device. Well, according to Dallas-based MetroPCS, the Samsung Galaxy S® Lightray™ 4G carries the chip and comes with the preloaded Dyle™ mobile TV app. Welcome to the world of digital television in your hand.

I suspect this will be especially useful for consumers during sporting events and breaking news, and since it uses the digital broadcast signals of the TV stations in town, there’s no bandwidth charge. It’s totally free. As I’ve written before, I’d like to see stations with network affiliations come up with a package that includes broadcasting popular cable shows along with their own. Each station, after all, has more than one digital signal.

It may already be too late, but a healthy MDTV market will make it harder for the FCC to take any action that weakens broadcasting position regarding the bandwidth it is “given” by Washington. It’s going to be an interesting area to watch over the next couple of years.

LINK: Look Ma, TV! First broadcast TV phone appears on MetroPCS

Filed Under: Broadcasting, Mobile

“Come on in,” said the spider to the fly

June 14, 2012 By Terry Heaton 3 Comments

Media companies have no choice but to leap into the queue for Twitter’s new “expanded tweets” application, but I want to add my voice to those who suggest that this might be ultimately a well-placed shot in the foot for content originators. Sure, we may be able to better attract eyeballs to our content to encourage those click-throughs, but it’s also arming Twitter with a clever way to build its own media empire at our expense.

Of greatest concern to me is the definition of the term “media company,” for that applies to everyone today, including the people formerly known as the advertisers. Twitter and all of social media provides a way for the people with the money to by-pass traditional filters, such as legacy media companies. Don’t ever forget this when reading the new media tea leaves.

Mathew Ingram of GigaOm has nailed another issue for local media companies that use new media opportunities to extend their brands: that they’re being drawn into a clever trap that they seemingly can’t avoid.

…there comes a point where a partner can start to look like a competitor if you tilt your head the right way, and I would argue that Twitter is nearing that point. Facebook is also a partner for media companies who use it to host their comments, or have brand pages there, or rely on the social network to promote their work through “frictionless sharing” apps. But at times it can seem as much like competition — particularly for users’ attention — as it does a partner.

That’s part of what I think blogging pioneer Dave Winer means when he warns that media companies should not see Twitter as their friend. To the extent that Twitter is offering news consumers of all kinds access to the information they want — regardless of whether that information consists of “user-generated content” or links to other media outlets — it is a competitor. And to the extent that it can offer better curation or aggregation or filtering or targeting of that content, it will win.

At some point, we simply have to realize that the Web isn’t about mass media and that there are a staggering number of mostly Silicon Valley web entities out there that hope we never figure it out.

Filed Under: Advertising, Broadcasting, Culture, Disruptions, Reinventing Local Media, Twitter

User annoyance followup

May 30, 2012 By Terry Heaton 3 Comments

My old boss and retired Huntsville, Alabama broadcast legend M.D. Smith IV has long been a fan of my essays, and he wrote this week to share his experiences as an annoyed media customer. Mind you, this man ran a family-owned TV station in Huntsville his entire life and sold it in 1999. He knew the good days of local television, never the corporate-owned model of today. I think you’ll find his thoughts about The User Annoyance Issue both insightful and entertaining:

I just can’t watch a movie anymore on TMC, TNT, or any of the cable channels (or network for that matter).

I just have to record it on my DVR and watch it later, or even wait 30 minutes to start watching the recording so I can skip the commercials. It used to be four :30 sec commercials, then five, then six. Now, who can count? I was in the business and it was our bread and butter. Sometimes I breathed a “sigh” while waiting to get back to the interrupted movie. Today, I just can not bear it.

I understand that viewing levels are down and advertisers pay less per spot. So what I see is MORE spots. I guess some are :15s, but no one is timing them. What we know is one subject ends and another starts and my mind is keeping track until about seven or eight, maybe nine or ten. Yes, some are “promos” for upcoming shows, but they are commercials to the bulk of the TV audience.

It used to be that way in the early radio days. You started playing all the hit music with limited interruptions and when you became Number One, you loaded up the log with spots and eventually ran much of the audience off who just wanted to hear the music. Then you did research, found out commercials were killing ratings, so you bit the bullet, cut spots and hoped to get the audience back running lots of ads and billboard telling them you played 10 songs in a row. (Then you hit them with a “Stop Set” of commercials and they tuned away again.)

Many times I have clicked on a link and the video started with a 30-second commercial. About HALF of the time, I decided before the commercial was over, that I didn’t care about that link all that much, and just closed the screen, deleted the email about that link and went on. If it was something I was very interested to see, I would wait. At least the countdown helps letting me see by the time I am pissed, that only 14 seconds remain and it keeps on clicking. Sometimes I mute the sound until content comes up.

And yes, splitting pages is an annoyance, which we ALL realize is not needed. Web pages can be as long as they need to be. But yes, with more and different ads all over the page, AND more page “clicks” for a given web site is a commercial ploy. It joins the clusters of commercials every 6 minutes on TNT to get you to watch 4 minutes of commercials. I am going to time some with a stop watch, but I know I have checked sometimes and the movie only goes 6 to maybe 7 minutes before another break occurs. A two hour movie lasts over three hours on TNT, or longer.