Message From Michael -- August 13, 2007

THE SEISMIC SHIFT IN THE MEDIA LANDSCAPE

NEWSPAPERS GETTING INTO THE ACT

NETWORKS GETTING INTO THE ACT

BROADBAND BALONEY

COCKTAIL CHATTER



THE SEISMIC SHIFT IN THE MEDIA LANDSCAPE: In four years time, Internet advertising will replace newspapers as the largest ad medium. Consumers are moving away from advertising-supported media to consumer-supported platforms. Spending on non-traditional media advertising such as blogs, podcasts and RSS is growing faster than any other media category. These are just some of the startling statistics and statements from the annual communications forecast study by media investment firm Veronis Suhler Stevenson. You may have read or heard about some the facts and factoids from other publications. For example, that media usage per person actually declined for the first time in ten years. But the big story isn’t so much the figures as it is the underlying theme of the report. For example, the drop in usage is explained by the simple fact that people are switching to digital alternatives for news, information and entertainment and these require less time investment than their traditional media counterparts. Or that while consumer media usage may have dropped, media usage by ‘institutional end-users’ (aka – business and government) actually grew.

Okay, we can’t go on without some facts and figures. First off, the firm says the average media usage per person last year was 3,530 hours – a drop of 0.5% from the year before. Of those hours spent with media, most of it (1,899 hours) was spent with ad-supported media, defined as broadcast television and magazines, while the rest (1,631 hours) was spent with consumer-supported media, defined as web and videogames. BUT… the time spent with ad-supported media was actually down 6.3% from five years ago while the time spent with consumer-supported media was up 19.8% from five years ago. Communications spending in the U.S. will top $1 Trillion for the first time next year, with such spending expected to reach $1.222 Trillion three years later in 2011.

Disclaimer: I don’t pretend to fully understand all the in’s and out’s of the study which covers 19 segments and more than 100 sub-segments of the U.S. media industry. (For example, I’m not sure I fully understand ‘branded entertainment.’) Plus, I can’t afford to pay the $2,495 for the full report. So, most of my information comes from a variety of sources. But, getting back to the point of overall theme, the clear message is the switch from old, analog media to new, digital media, in all its forms, is changing the media landscape dramatically and dynamically. As VSS Executive Vice President and Managing Director James Rutherford says, “time and place shifting (will) accelerate while consumers and businesses utilitize more digital media alternatives, strengthening the new media pull model at the expense of the traditional media push model.”

NEWSPAPERS GETTING INTO THE ACT: More evidence that newspapers may be leading broadcasters in Internet warfare is a study by The Bivings Report that says 92 of America’s top 100 newspapers now offer video on their websites. This is a huge jump from the year before when just 61 offered video. Even more interesting, while 26 of those newspapers use the Associated Press video streams, 13 of them offered video content from local news outlets while 39 newspapers offered original video content. The other 13 newspapers offered a conbination of video content options. In addition to the video, the report says 95 of the newspapers offered at least one reporter blog – up from 80 the year before. A third allow readers to comment on articles – up from 19 the year before. And nearly all of the newspaper websites (96) now use RSS technology.

Related Note: Internet giant, search engine and news aggregator Google is offering people or organizations mentioned in news stories the opportunity to submit their own comments which will run – unedited – alongside the Googe news links to those stories. There is no explanation yet how the Google editors will vet the comments to make sure they come from the claimed source. Regardless, many are upset, not just because of journalistic questions, but the feature will mean that Google will be offering its own version of original content.

NETWORKS GETTING INTO THE ACT: The private equity firm, Providence Equity Partners, has invested $100 Million for a 10% stake in the joint venture by NBC Universal and the News Corporation to bring their television shows and movies on the Internet. Now, I’m pretty good at Math, but it doesn’t take a mathematician to figure out that means the joint venture is valued at $1 Billion. And as an article in the New York Times points out, that’s even though the joint venture has no website, doesn’t even have a name, has no defined mission statement and is hoping to persuade skeptical observers that these two real-world rivals can cooperate online.

BROADBAND BALONEY: That was the headline on a Wall Street Journal commentary by Federal Communications Commissioner Robert M. McDowell on the recent analysis of broadband adoption rates around the world. As reported in last week’s MfM, the Organization for Economic Cooperation and Development says the U.S. has dropped from 4th place to 15th place in the past five years. However, McDowell argues the OECD analysis is flawed because it is based on a pure per capita basis which doesn’t take into account several other factors, including household size (in the U.S., there are more people in each household) or the size of the country. The household penetration in the U.S. is 42% compared to 23% in the European Union. And McDowell argues that 13 of the 14 countries listed as ahead of the U.S. are significantly smaller than the U.S. Only Canada was similar in size. He also makes the point that the OECD data doesn’t take into account all the myriad ways Americans get high speed access to the Internet.

OR IS IT? A separate analysis of broadband adoption rates by UK-based broadband communications services company Point Topic actually has the U.S. even lower at 25th place in the world with a HOUSEHOLD broadband adoption of just over half. The #1 country in the world is South Korea where nine out of ten households (89%) have a broadband connection. McDowell’s argument about the size of the country does appear to be a factor in most instances. The #2 country in terms of broadband penetration is the tiny country of Monaco (82.92%), followed by Hong Kong (79.78%), Iceland (75.51%), Singapore (69.59%). But ahead of the U.S. are also Canada (63.02%), the UK (52.25%) and Australia (only slightly ahead of the U.S. at 50.18%).

SIDENOTE #1: Dr. Alan Albarran, of the University of North Texas, who pointed out the article to me after last week’s MfM, says he has been in 17 of the European countries and the Internet speed varies widely. The Scandinavian countries have high speed connections but others like Spain and Portugal are at a virtual crawl with Germany and the U.K. in the middle. (I have been trying to nail down exactly what the facts are, in a comparison of Broadband speed and adoption rates. Maybe some of my overseas MfM readers can help sort this out.)

SIDENOTE #2: One in five broadband homes will have the technology to watch Internet-based video on their TV sets by the end of this year, according to an analysis by Emerging Media Dynamics. And in ten years time, by 2017, more than 72 Million homes (representing two-thirds of the broadband marketplace) will have PC/TV devices.

FOOTNOTE: The most fascinating part of Commissioner McDowell’s article – to me, at least – was his statement (un-sourced, I’m afraid) that “YouTube alone uses as much bandwidth today as the entire Internet did in 2000.” Is that a WOW statement, or what?

COCKTAIL CHATTER: Keep an eye out for the latest Smirnoff “Tea Partay” video. We told you in a previous MfM about the original video which does a parody of hip hop and rap with some New England preppy types. Now they’re putting out a new version. And as long as I’m plugging things, take a look at Gloob.tv. It is a video aggregation service, picking out the ‘best’ videos in different categories, from sports to movies, music, games and TV. The group Public Knowledge is questioning a statement by AT&T that it mistakenly deleted lyrics critical of President George W. Bush from a Pearl Jam performance of “Another Brick in the Wall.” Dana Boyd, A researcher and “social network expert” at the University of California-Berkeley, has created a firestorm of controversy after writing an essay dubbing MySpace as a working class site dominated by “kids whose parents didn’t go to college, who are expected to get a job when they finish high school” and Facebook as a ‘suburbia’ site for “goodie two shoes, jocks, athletes and other ‘good’ kids.” You have a little more than two weeks to enter a contest sponsored by a Dutch ecology group, along with the Dutch national lottery, to dream up a greenhouse-gas-reducing product or service. The winner gets 500,000 Euro dollars. The deadline for the PICNIC Green Challenge is August 30th.