Broadcasters and Aereo: sometimes winning means losing

We have a lottery game here in Texas called “All or Nothing.” The point is that if you get ALL the numbers on your ticket, you win, but you also win if there are NONE of the numbers on your ticket. Hence, “all or nothing.”

I think the Supreme Court’s pending decision in the broadcasters versus Aereo case is a similar proposition for the broadcast TV industry, although the other way around. They will lose even if they win.

Historically, when given the opportunity — which this case does — to come down on the side of culture, the high court cannot resist, and culture — whether we like it or not — is moving to a one-to-one model of communications. There are exceptions, certainly, but the use of government resources, like spectrum, to enable old school thinking is up for grabs in the hands of the high court. What most people don’t realize is that one-to-one can mimic one-to-many in certain necessary situations, but one-to-many cannot mimic one-to-one. This is the essence of Jay Rosen’s “Great Horizontal,” and why this case is so fraught with danger for the status quo. You see, it isn’t about my ability to receive; it’s about my ability to send, and that’s why a whole host of laws have to be modified, including the use of the spectrum that’s owned by the people.

TVNewsCheck’s Harry Jessel published a piece last week that examined the question of what happens if the court sides with Aereo. As informative as the essay is, the comments are not only entertaining but also revealing regarding how broadcasters think in terms of defending themselves in the case. Here are six general themes:

  1. Its “unnegotiable” civil defense mission is what will sustain broadcast spectrum. The Telcos even now are working to develop a new system of civil defense warnings and assisting the government in real time and beyond.
  2. The question before the court can’t produce a loss for broadcasters. Since when has the “question before the court” prevented the Supremes from deviating? Sorry, I don’t view this as protection.
  3. Local bandwidth is too small to permit any significant competition to high quality OTA broadcast delivery. This is the same argument used by broadcasters when cable first came on the scene. Quality follows what culture wants.
  4. The most likely outcome would be for Congress to intervene, revising the Copyright Act to bring systems such as Aereo’s within the purview of the transmit clause. The Supreme Court doesn’t need Congress to make law.
  5. There is a finely balanced economic ecosystem going on here in which everyone thrives. But it’s an ecosystem that can be damaged if something disruptive, like a Supreme Court win for Aereo, took place. Nobody cares about our “finely balanced economic ecosystem,” except where it impacts their wallets, and that is a biggie that the court could impact.
  6. If the Supremes give the decision to Aereo, then broadcasters’ spectrum is safe, because Aereo depends on a broadcast signal in order for its antenna farms to work. Well, yes, and that’s a possibility, but Harry’s piece fully explores how that could be a net loss for broadcasters anyway.

If the broadcasters were to win, however, there’s a significant chance, in my view, that the price of winning will be its spectrum, because there is widespread and significant pressure to shift TV stations to cable in the name of spectrum use for the one-to-one world of the Web.

It is the law that gives broadcasters the spectrum. It is the law that says cable companies MUST carry the broadcast signals. It is the law says that broadcasters have a right to compensation for cable carrying their signals. And now broadcasters want the law again to boost their business model. Live by the law, die by the law, for the Supreme Court is the final arbiter of what is or isn’t law, and that’s why this case was such a crap shoot from the beginning.

Broadcasters are already acting as cable companies, and here’s the rub. If broadcast signals become cable channels, then must-carry laws are irrelevant, and retrains fees become renegotiable. Without the weight of law behind the broadcast companies, there’s little doubt in my mind that the networks will by-pass the local money tree in making their programming available via cable. Hence, the losing even if they win.

The problem for the Supremes — and the key reason I think they took this case — is the profound necessity of rewriting what copyright means, absent the immense Congressional lobbying power of the status quo. “Intellectual property” is an oxymoron created by the entertainment industry to give itself the weight of law in conducting its business throughout the world. It works fine in the one-to-many world of mass media, but it makes no sense in the Great Horizontal, and this is the conundrum for the court. Personal use of products must include sharing in a one-to-one universe, and every one of the old industries that thrived in a one-to-many paradigm must face this reality. It will take something like a court ruling to give the people formerly known as the audience (thank you, Jay Rosen) what they deserve.

The supermarket can’t charge me twice for a meal I share with neighbors, yet this is the absurdity of current copyright inside the network. The network is a cultural shift that’s here to stay, and its advancement is the duty of those in positions to make it so, such as our Supreme Court justices. Neither side in this case gives a ripple chip about consumers, the people, and that’s what the court will be forced to consider.

Folks, there’s much more riding here than the question before the court. In attempting to right what they view as a business wrong, broadcasters have opened Pandora’s box, and the chaos unleashed will likely produce a deleterious result for anything “business as usual.”

BONUS LINK, also via TVNewsCheck: Michael Berg’s legal view of the case (although tilted by an admitted bias towards the NAB).

What is a digital media company’s “inventory?”

Sorry, but I can’t resist.

In a press release this morning from IB (Internet Broadcasting Systems Inc.) announcing a new deal with the Journal Broadcast Group, IB CEO Elmer Baldwin said, among other things:

We’re helping them to discover new ways to monetize their growing digital inventory.”

This statement represents the group delusion under which legacy media companies operate, that an advertising “slot” on a website is inventory to be sold. The problem is that media companies don’t sell “inventory,” per se; they sell audiences, or more specifically, the eyeballs that might view that “inventory.” Many will accuse me of playing semantics, but it’s actually much more basic to business. The price for which this inventory is sold is based on CPM or “cost per thousand.” Thousand what? Thousand pairs of eyeballs. If, for example, the price the advertiser pays is “$10 per thousand,” then the media company gets 10-bucks when a thousand people view that ad as demonstrated by its logs. But the CPM model was created in the mass marketing days and works well when we’re dealing with significant numbers of eyeballs AT THE SAME TIME! It is a terribly inefficient and ineffective formula when applied to what is really a one-to-one environment as opposed to one-to-many.

I have stated ad nauseum that the only winner in these kinds of scenarios is the software serving the ads, because it captures and uses all of the data gathered while serving the ads. Eyeballs in the network increase in value in direct proportion to the data that’s attached to them. And so media companies play this “digital inventory” game as though it was the same game they play with their legacy properties. It’s understandable, of course, but that doesn’t change the reality.

Moreover, what this deal is primarily about is banner advertising. That’s the “inventory” — availabilities or “open slots” for banner ads on a media company website. The format has been dying for years, but if you’re a media company, it’s what you have, and so you make deals like the above and hope for the best. In addition, there’s the assumption that this “inventory” is growing, and that’s an important concept for mass marketers. We’ve never met a number that we didn’t think we could manage our way into making bigger. This is what leads media thinkers to ignore the invasive user experience in favor of tactics that produce more of that “inventory,” tactics like splitting web documents into multiple documents that challenge even the most patient consumer. The user experience MUST be number one, or the eyeballs that we think we can count on will go elsewhere.

The Web is NOT a mass marketing tool, despite what certain “experts” would lead us to believe. It certainly can mimic the properties of mass media, but the truths of everything important to business models lie hidden within the code that makes up the back end of what we offer. Silicon Valley knows this and is happy to play along with the “digital inventory” game, while picking our pockets at every opportunity.

New York Press Club responds to police rule change

The New York Press Club has fired off a letter to police commissioner Raymond Kelly (I thought it was Tom Selleck) demanding an explanation among other things for a rather striking rule change impacting the press. Reporters used to be able to obtain police reports at the precincts they were covering, but they must now go to a central office. Here’s the letter:

December 9, 2013

Commissioner Raymond W. Kelly
New York City Police Department
One Police Plaza
New York, NY 10038

Dear Commissioner Kelly:

On behalf of the New York Press Club, I strongly protest NYPD’s latest decision to cut-off a long-standing source of information, vital to New Yorkers.

The policy change to deny media access to complaint reports at the precinct level is, to us, another example of blatant hostility by NYPD toward locally-based media outlets that disseminate information about neighborhood occurrences to residents of those neighborhoods. We are stumped by the question of why NYPD now requires community reporters to scurry down to the notoriously uncommunicative and uncooperative DCPI office to examine incident reports that originate locally. One inescapable conclusion about the new policy is that NYPD wishes to “edit” or otherwise obfuscate the information in question. At the very least, the policy unnecessarily complicates public access to information and data that should instead be freely available.

This new restriction on openness and accessibility is, in our opinion, another disturbing example of the department’s recent, relentless slide towards non-accountability. We therefore request restoration of the previous, long-standing policy and its expansion to all precincts. We also request, for publication, an explanation of the reasoning behind NYPD’s latest decision to constrict access.

Thank you,

Sincerely,

Larry Seary
President

CC: Mayor Michael Bloomberg, Mayor-elect William de Blasio, William J. Bratton, John McCarthy, Donna Lieberman, Esq.

This is a big deal, folks, and I’m surprised I haven’t seen it elsewhere. It’s a big deal, because it signals a reaction to the concept of “everybody’s a reporter.” It’s the kind of thing we’re going to see repeated as the institutions of Western culture are challenged by weakening silos and authority that’s spread horizontally across a world that used to be entirely top-down. The press has always been defined by its access, but as Mr. Seary notes above, even press club members themselves face a form editing in the oldest information gathering process on the planet — the police beat.

While nothing about this is good for the First Amendment, it does point out the absurdity of trying to govern a horizontal culture with top-down rules.

Stay tuned. This one is going to get interesting.

IAB “Guidelines” Serve, well, the IAB

And behold, NYU professor & guru Clay Shirky pronounced that “Institutions will always try to preserve the problem to which they are the solution.” In that spirit, let us take a brief glimpse at the IAB’s new guidelines for <drumroll>Native Advertising</drumroll>. Native advertising  - a.k.a. “content marketing” — is an advertising disruptor. It is so, because its essential purpose is to, um, replace advertising by delivering content, real content that was paid for by somebody, presumably someone featured in the content. The IAB is the Internet Advertising Bureau, as in its middle name is spelled a-d-v-e-r-t-i-s-i-n-g.” They offer six guidelines, only one of them remotely content-related. The rest are, of course, advertising in a different suit.

The IAB laid out six core interactive ad formats that are currently being used within the native advertising landscape:

  • In-feed units
  • Paid search units
  • Recommendation widgets
  • Promoted listings
  • IAB standard ads with “native” element units
  • Custom

I won’t go into details about these. I simply wish to point out that only “In-feed units” smacks of content, but please, must we call them “units?” To qualify as content marketing, which is what “native advertising is,” it must present content, not an ad. But in order to really produce a useful set of guidelines, the IAB would have to sell against itself, which it’s not about to do. And so we get things like guideline number 5: IAB standard ads with “native” element units. Right. In other words, define it any way you wish, just as long as “IAB standard ads” are included. I just thought I’d point that out.

Should we really fear native advertising? Really?

We're not all dummies that need protectionThe principal reason that innovation in the media space is so problematic today is that we’re in the midst of a cultural change at the same time. It appears that technology is causing the changes, but the reality is that these are due to people using technology, not technology itself. If it was simply technology, whole industries wouldn’t be influenced as they are, because we could adapt to those new technologies. This is the false assumption that drives the status quo in the West.

The brilliant Farhad Manjoo, for example — a technology columnist for the Wall St. Journal and one of the most astute observers of the technology world — got it wrong recently in a piece about native advertising, because he didn’t or couldn’t connect the dots to the cultural shift. He makes a strong argument that native advertising is inherently evil, because eventually, web surfers (a.k.a. “users” a.k.a. “people”) won’t be able to tell the difference between what’s content and what’s advertising.

When ads appear as part of content (as in product placement), they sneak past our defenses; they don’t look like ads, so we aren’t as skeptical of them.

The online-ad marketplace is ferociously competitive, and given the wild scramble for ad dollars among Google, Facebook, and Twitter, not to mention smaller media sites, advertisers are in a position to keep asking sites for more. If they begin to notice that ads marked “sponsored” aren’t doing as well as they used to, they’ll demand fainter disclosure, and they’ll get it.

Note that Twitter calls its ads “promoted” messages, which is hardly clear. BuzzFeed calls advertisers “featured partners,” which sounds more like an award than a paid relationship.

I can’t solve this problem. I think native ads are sure to get blurrier about their provenance. It’s too late to stop that now. But I sure hope advertisers, publishers and ad networks will be extra careful about how these ads are implemented.

This reasoning sounds familiar, and, well, reasonable. It’s logical. It makes sense. But hidden within its thinking is a leftover remnant from an archaic cultural bias — that “the masses” are incapable of self care, including the ability to avoid hucksters and con artists without help from those with superior minds and positions. This view is straight out of the dominant social construct of the industrial age and before, colonialism (I reference it as “modernism” in my work). Wikipedia defines it thusly:

Colonialism is the establishment, exploitation, maintenance, acquisition and expansion of colonies in one territory by people from another territory. It is a set of unequal relationships between the colonial power and the colony and between the colonists and the indigenous population.

Colonialism is a hierarchical culture wherein the haves justify their position via the false claim that the have-nots actually need them, and this is what’s absolutely gutted by the horizontal activity of the network and the immediate access to knowledge via a touch. So Manjoo sees danger, because the poor masses are too ignorant not to be taken in, and therefore, require a system — naturally run by the elites — to protect them. The whole idea of objectivity, where journalists swear some internally-governed oath to “be” unbiased in their reporting, is, in fact, a farce, created by the social engineering geniuses of the Creel Committee to provide a sterile environment in which to sell advertising, including their own views of society.

This is a central theme of two of my books, Reinventing Local Media, Ideas for Thriving in a Postmodern World volumes I & II. I just slipped in a native ad, right? Who cares?

And don’t you think we all know or suspect the truth about which I wrote earlier this year, that We’re All Shilling For Something? When the camera zooms in on the Chevrolet logo on the grill of Hawaii 5–0’s hot Camero, do you honestly believe that it isn’t seen for exactly what it is? Again, who cares (except that it makes for crappy TV)? And in the same show, when scenic shots reveal Diamond Head in all its glory, is that not to compensate Hawaii for the state’s help in filming the program? Who cares? When Buzzfeed mixes a “featured partner” in with its list content, why does Farhad Manjoo care? Nobody cares, and where’s the evidence that caring matters one whit anyway? Again, arguments suggesting that this is a serious problem don’t hold water, if advancing the horizontal culture is the aim.

We could go on and on, and the question “who cares?” would remain. It’s time we began giving credit to the masses for lessons learned and lessons passed along. The gossip magazines at the grocery store checkout tease us and titillate us. Do they honestly believe we don’t know it? The underestimation of everyday people is the greatest sin of contemporary hierarchies, and it will not be tolerated for long.

The reason this is so important for all of us is that this colonialist cultural view will never produce new forms of value, which can then be exploited for the bottom lines of media and beyond. It has its established values (cash) and must, by its nature, reject attempts to alter its basic tenets. Doc Searls’ Project VRM is not of the status quo, and therefore its core competency and value propositions are completely different. It turns advertising upside-down by bringing ad messages from consumers into an arena within which there is bidding for commerce. This fits the post-colonial culture, because its energy is disbursed sideways, not top-down.

The 21st Century will be known as the century when major laws and rulings will more clearly define the disruptive nature of knowledge and information in the hands of the masses. Right now, we’re just guessing, but I’ll take even a guess over insistence that everything’s fine.

We must not and cannot look at 21st Century doings through 20th Century eyes. The world has changed and everything in it. And it’s only just begun.

Ignoring the obvious

 

Look what I found, a very old old press release…

Electricity hailed as ‘great new innovation’ for Whaling Industry

Artist's rendering of a blue whaleThursday, September 19, 1872 — AP, Boston, MA. Whale Oil Industry executives heard rave reviews from industry experts on the use of electricity on board whaling vessels as a way to greatly reduce costs, increase efficiencies, and even potentially revolutionize the industry. According to George Z. Melville, Worldwide Industry of Whale Oil (WIOWO) executive vice president of business development, electricity is the greatest innovation since steam power, and it will restore profits hurt by naysayers screaming about both the price of whale oil and the notion that the oceans are actually running low on whales.

Electricity,” said Mr. Melville, “reduces costs for us at a time when we’re under attack on two fronts. It provides modernized instrumentation, which will speed location and depth of our prey, and even light our ships cheaper than it does using our own product. There is, frankly, so much potential here that we think we’re ushering in an entire new era in not only the capture of whales but also in the processing of blubber.” The manufacture of Whale Oil is the 5th largest industry in the U.S. and is known for its ability to generate bright and long lasting illumination throughout the world.

Investors who spoke on the condition that they not be identified told us that, at the current rate of growth, the industry was on its way to becoming the top U.S. export, in addition to topping all growth industries in the generation of our entire economy. There were plenty of smiles in Boston at the WIOWO annual conference held at the famous Parker House hotel, and much of it was over the new technology.

The first order of business is to acquire and maintain Hippolyte Pixii dynamos aboard ships, although speakers at the conference demonstrated a new technology called polyphase alternators that will supply currents of multiple differing phases. Lord Kelvin, Sebastian Ferranti, and British electrician J.E.H. Gordon all spoke of what will be known as “alternating current,” a stunning innovation that will bring even greater savings and solutions for the industry. There was even one session during which speakers debated the possible use of electronic weaponry that would exceed the power and capabilities of grenade or explosive harpoonery. This controversial concept was debated in the hallways and outside the corridors of the conference, where attendees gathered to discuss what they’d learned.

Norwegian Svend Foyn, who invented the explosive harpoon, which was prominently staged on the showroom floor, politely dismissed the rave reviews of electricity and noted that his newest invention, an explosive harpoon that injected air into the whale carcass to keep it from sinking, was vastly more significant than anything that was potentially years downstream. “I don’t doubt that these fine people are onto something,” Foyn told the Associated Press, “but I do not believe this is something we must fully jump into right now.”

What we need now,” he continued, “is more whales.”

Melville declined to discuss alarms from certain naysayers who insist that what was discussed today could actually be a threat to the whale oil industry itself. Finian Gable, the noted Irish electrician, warned one panel that “the shipboard efficiencies of which you speak today could impact all of Boston tomorrow. What will you do then?”

Herr JarvisNever one to mince words, German iconoclast philosopher Gottfried Jarvis, on a panel about cleaner burning oil, warned that “an attitude of arrogance” surrounded the industry, and that it was ripe for what he called “Unterbrechung (disruption)!”

(Translated by AP) “Who knows what will happen if we rid the oceans of these magnificent beasts? The industry is run by idiots, who can’t see that their own actions are bringing about their own ficken demise. What’s the benefit, tell me, of being the last whale oil company? None, and until these ficken morons realize that electricity is the future and not their precious whale oil, we’re going to continue having useless discussions like these.”

Meanwhile, industry watchers noted that 1872 was on path to be the most profitable year in the history of the whale oil industry and that it had yet to even reach its peak. Industry watchers that spoke with the Associated Press in general regarded the advancement as a boon to whaling and that it will lift the industry to record profits in the near future.

Only time will tell.

FOOTNOTE: This is what comes to mind when I read the agendas for annual conferences of the newspaper and television industries today. The Network is a total disruption to the core businesses of mass media, and until that is discussed openly, such events will be dismissive and foolish like what is described in the above. That we’ve found ways to bundle new innovations to our core competency helps us about as much today as those good old boy whalers delighted in how much electricity could help their model in this fictionalized account. It’s insanity for them; it’s likewise insanity for us today.

The problem is I made made up the Whale Oil Conference (and please spare me the history lessons about how I got it wrong and just enjoy it for the parody it is).

What we know today about media disruption today is quite real.