Message from Michael - Journalism and Broadband - November 30, 2009

Message From Michael                                 

                                                                                                                        November 30, 2009                                                                                                                                                                                                                                                                                                                                                                       

      MAKING A LIVING OFF THE EVENING NEWS

      THE BROADBAND BATTLE

      THE BROADBAND FACTS

      COCKTAIL CHATTER  -- COWS AND CHICKENS

 

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      MAKING A LIVING OFF THE EVENING NEWS:  Or can you?  The Federal Trade Commission wants to know.  And so does the Federal Communication Commission.  And so does the Organization for Economic Cooperation and Development.  Now, the first two I mentioned in a previous Message, but the last one is news to me, and just goes to show you how widespread the concern is.   The Paris-based organization has also launched a study on the “future of news” but with a distinctly international approach.  While the FTC hearing has such luminaries as Ariana Huffington and Rupert Murdoch, the OECD kick-off hearing had the Executive Editor of Agence France Presse and a researcher from INSEAD, the International School of Business.  That’s not to disparage the FTC group.  Far from it.  About the only person missing from the FTC workshop is Don Henley, but everybody would agree with his admonition that the news is in need of something they can use and it isn’t dirty laundry.  The FTC workshop runs tomorrow and Wednesday and includes remarks from leading luminaries along with presentations by various scholars along with panels on the state of journalism today and tomorrow, emerging business models for journalism and online advertising and consumer demand trends.  Meanwhile, the Knight Commission on the Information Needs of Communities which also was cited in the previous Message echoes some of those same concerns, but also has an upbeat theme, saying – “there need be no second-class citizens in the democratic communities of the digital age.”  While acknowledging that the present economic downturn is “like an earthquake shaking the global economy,” the commission also says the technology “is a journalistic and political opportunity… to create a more transparent and connected democracy.” 

As a footnote, the FTC hearing will be webcast from the ftc.gov website, and there will be regular Twitter updates and RSS feeds if you want to follow the workshop online.  Or, you can wait till I do a summary in my next Message.    

      THE BROADBAND BATTLE:  As noted in the last Message, the idea of using part of the television digital spectrum as a way to provide broadband access is one of the proposals being considered by the Federal Communications Commission as a way to provide greater broadband Internet access.  As Harry A. Jessel notes in his very popular TVNewsCheck website, the cash-for-spectrum deal “has stirred up broadcasters as little else has over the past several years.” Now the various sides have started lobbing hand grenades in each other’s foxholes using industry newsletters.  Gary Shapiro, the president of the Consumer Electronics Association, says in a letter to the editor at TVNewsCheck that the country ‘desperately needs’ broadband spectrum and that broadcasters make little use of the spectrum they have, especially over the air.  Gordon Smith, the newly installed president of the National Association of Broadcasters, says, also in a letter to the editor at TVNewsCheck, that there are ‘tremendous synergies’ in the use of broadband and broadcast ‘for the enrichment of the consumer.’  Somewhat humorously, both men initially offer a conciliatory stance, before attacking the other.  The FCC is expected to provide some tentative solutions by December 16, with a final report to be presented to Congress February 17 of next year.  To paraphrase the words of the legendary American revolutionary war hero, John Paul Jones, they have not yet begun to fight.

      THE BROADBAND FACTS:  Just by way of perspective, a survey by Pew Research Center’s Internet and American Life Project shows that two-thirds (63%) of Americans now have broadband Internet access.  That survey in April of this year is a significant increase from the half (55%) of Americans who had broadband access a year earlier.  The greatest growth came in groups which have had low broadband usage.  Broadband usage among senior citizens grew from 19% last year to 30% in the latest survey.  Among low income groups, usage grew from a quarter (25%) last year to a third (35%) this year, for those with incomes below $20,000 a year.  Much of the national debate about broadband access focuses on rural areas.  But even here, according to the Pew study, broadband usage has increased from just over a third (38%) last year to just under half (46%) this year.  BUT (there’s always a but), the definition of what constitutes Broadband varies from as little as 256Kbts to as much as 50 Mbts, with the U.S. being criticized for using the lower speed in its definition.  Given that, the U.S. still has the highest number of broadband subscribers (77.4M), followed by Japan (30M), Germany (22.5M), France (17.7M) and the U.K. (17.2M), according to figures compiled by the Organization for Economic Cooperative and Development.  BUT (there we go again), the U.S. ranks 15^th, according to the data from the same group, in terms of per capita broadband penetration (per 100 inhabitants) with a quarter (25.8 per 100) having broadband access.  The top country for broadband penetration is Denmark (37.2), followed by the Netherlands, Norway, Switzerland and Iceland.  Notice something similar in these countries?  They’re all small, which is one of the criticisms U.S. Internet experts make about the OECD comparisons with the larger-land-mass U.S.  Of course, it has to be said Canada comes in 10^th (with 29 users).  Now, the smart ones amongst you, are saying – hey, how do you reconcile the OECD numbers with the Pew numbers?  Well, I’m not sure I can except to note that one of the arguments is the difference in the size of the households between the U.S. and many other countries.

Footnote:  It should be noted that an FCC-commissioned study by Harvard University’s Berkman Center for Internet and Society argues that other countries have better broadband capabilities because of their ‘open access’ rules which require provides to lease their networks to rivals at government-regulated rates.  It should also be noted that the FCC estimates that it would cost anywhere from $20 Billion to $350 Billion to upgrade the broadband speed nationwide, according to an article in the Wall Street Journal.  To get broadband speed in the 5Mbts range would cost $20 Billion, but $50 Billion to get to 20Mbts and $350 Billion to get to 100Mbts rate.        

      COCKTAIL CHATTER:  Those cows in the Chik Fil A commercials apparently don’t need to tell people to Eat Mor Chikin.  They already are.  According to an article in The New Yorker, Americans eat 36 Million cows and 115 Million pigs each year, but a whopping 9 Billion chickens and turkeys.  In the same article writer Elizabeth Kolbert says 46 Million American families own at least one dog; 38 Million keep cats and 13 Million have freshwater aquariums with more than 170 Million fish.  That racks up $40 Billion in bills. Writer Kolbert notes these facts in a review of Jonathan Safran Foer’s book “Eating Animals” which looks at the dichotomy in how Americans view animals.

      FOOTNOTE:  In keeping with the holiday spirit, let me take a page from Miracle on 34^th Street and like the Macy’s Santa Claus, send you to the Gimbel’s of newsletters and blogs.  Lawyer David Oxenford has a terrific blog site, broadcastlawblog.com which is a must-subscribe for anybody trying to keep current with the legal and governmental vicissitudes surrounding broadcast media machinations.  Actually there are several “gimbels” which are used in my message and I will share them with you at various points.   

      SUBSCRIPTIONS:  If you wish to stop receiving this newsletter, e-mail Michael@MediaConsultant.tv with the word “unsubscribe-MM” in the subject line. Also, back issues of MfM are available at the website, media-consultant.blogspot.com.  You can reach me directly at Michael@MediaConsultant.tv.

 

Message from Michael - Politics and Media - November 16, 2009

 

Message From Michael                                 

                                                                                                                        November 16, 2009                                                                                                                                                                                                                                                                                                                                                            

      POLITICS MAKES FOR STRANGE BEDFELLOWS

      TURN YOUR RADIO ON

      THE BILLION DOLLAR BROADBAND BONANZA

      RIGHT HAND AND LEFT HAND

      TALES FROM THE CRYPT

 

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      POLITICS MAKES FOR STRANGE BEDFELLOWS:   And none so strange as the media, as evidenced by a number of efforts by the federal government.  The one generating the most heat, if not the most light, is the Performance Rights Act which would impose a ‘performer’ fee on local radio in addition to the royalties paid songwriters and publishers.  While radio stations are fighting against that, many are fighting FOR another requirement – that would require cell phones to be able to receive FM signals.  Evidence of the growing power of mobile.  Even more evidence of that growing power is the fact that the Federal Communications Commission is looking at buying back some of the broadcast TV spectrum that the commission just auctioned off, for the digital transition.  Meanwhile, as noted in a previous Message, the Federal Trade Commission will be holding a two-day workshop to study the future of journalism.  Not to be outdone, the Federal Communication Commission has tapped the founder of BeliefNet to lead a study into the future of media.  On top of which legislation has been introduced to allow newspapers to operate under the non-profit 501(c) (3) provision of the tax code.  Considering the present economic climate, the original source for the quote in the headline might be more applicable.  The quote from Shakespeare’s the Tempest said it was “misery” that made for strange bedfellows.    

      TURN YOUR RADIO ON:  Singers from Roy Acuff to Randy Travis, Merle Haggard to Wanda Jackson and the Statler Brothers have sung this old Gospel favorite which urges you to “get in touch with God” by just listening to “the music in the air.”  But it was an Oklahoma born shape note gospel music composer that you probably never heard of, named Albert E. Brumley who actually wrote the song.  And it is Brumley who is supposed to get paid when the song is played on radio, not the singers.  But some federal legislators working with the Recording Industry Association of American (RIAA) want to change that.  They want to charge a performance royalty fee on terrestrial radio, similar to what is charged satellite radio and which would go to the artists.  But that is the question.  Who does get the money?  The National Association of Broadcasters and others say it will go to the recording companies, many of which are located overseas.   Joining in the fight are college radio stations from Harvard and Rice to Kansas and Virginia Tech who say the fees will make their operations cost prohibitive.   Former client and KFVS/ Cape Girardeau General Manager Mike Smythe has become the hero of the radio world with his editorial arguing that free over-the-air radio provides not only music but support of local events such as the United Way.  Opponents argue that artists get the publicity in exchange for their music being played.  Not good enough, says an array of musicians ranging from Alanis Morissette to Barry Manilow, Chaka Kahn to Dionne Warwick listed by musicfirstcoalition.org website – one of several that have popped up to fight for (and against) the measure.  They argue that it is a matter of “fair play for air play” and that it is corporate radio that has gotten a free ride.  As it now stands, the Performance Rights Act has 46 sponsors in the House and 6 sponsors in the Senate, according to the Library of Congress’s Thomas website, while the Local Radio Freedom Act has 251 sponsors in the House and 26 sponsors in the Senate.
 

      THE BILLION DOLLAR BROADBAND BONANZA:  Here are some numbers for you -- $7.2 Billion…. $12 Billion…$62 Billion.  The first number represents the amount the Obama Administration has set aside out of the $782 Billion stimulus package, to ‘stimulate’ broadband Internet development.  The second figure is how much a report by the Consumer Electronics Association estimates the television spectrum available for broadband use is valued, based on broadcast use.  The third figure represents how much the CEA estimates the spectrum would actually be worth if it were made available for mobile broadband use.  The National Association of Broadcasters and a group known as the Association for Maximum Service Television say those numbers don’t accurately reflect broadcasters’ use or value.  That may be understandable when you look at the actual report (which took forever for me to find and which I still haven’t fully digested.)  The report was based on figures calculated from ten broadcast groups.  Excluded from the study were ABC, CBS, NBC, Fox along with Gannett, Cox, Scripps, Meredith, Tribune and Media General because they had too much “non-broadcast business” as well as Ion Media, Raycom Media, Trinity Broadcasting and Local TV Holdings because they are privately held and their financial data is not revealed.  However, it is interesting to note that in his blog about the broadcast spectrum buy-back idea, Blair Levin, the Executive Director of the Omnibus Broadband Initiative, says the conversation originated from some broadcasters who “recognized they had more spectrum than they needed to deliver an economically efficient bitstream.”  As noted in a previous Message, much of the conversation originates from the fact that mobile broadband use is growing exponentially and there are legitimate fears that America will run out of spectrum.  One last number:  The CEA report says the “consumer surplus” – defined as the value derived by consumers from a good or service beyond what they actually pay for it – which would be derived from the buy-back is between $500 Million and $1.2 Billion.

SIDENOTE:  Almost needless to say, this is only a prelude discussion of the broadband initiative.  There will be more in future Messages.  Also, more mature (that sounds so much better than ‘older’) Message readers will remember a quote that comes to mind after going through these numbers.  Former Senator Everett Dirksen is credited with saying during a federal budget hearing, “A Billion here, a Billion there, pretty soon, you’re talking real money.”

FOOTNOTE:  As a sometime consultant myself, I can possibly get away with noting this.  The “Senior Policy Advisor” to the Obama “broadband team”, Carol Mattey, joins the FCC group after four years with the consulting firm of Deloitte Touche.  Actually she is ‘re-joining’ the FCC because before she became a consultant, she was a deputy bureau chief for the FCC for 10 years.  Also, part of the controversy surrounding the broadband stimulus grants is that the FCC is asking for ‘volunteers’ to review the applications.  But, just as interesting (to me, at least) is that after that review, the applications will be reviewed by agency staff AND the consulting firm of Booz Allen Hamilton.  And as long as I’m being semi-snippy, the Omnibus Broadband Initiative has both an executive director, noted above, and a general manager, to say nothing of the general counsels, associate general counsels and policy advisors.

      RIGHT HAND AND LEFT HAND:  As noted above, and in previous Messages, the FTC and the FCC are both launching investigations into the news media business.  The FTC workshop is titled “From Town Criers to Bloggers:  How Will Journalism Survive the Internet Age.”  Cute, hey?  The workshops on December 1 and 2 will “bring competition, consumer protection and First Amendment perspectives to bear on the financial, technological and other challenges facing the news industry.”  The FCC’s ‘agency-wide initiative’  is designed “to assess the state of media in these challenging economic times and make recommendations designed to ensure a vibrant media landscape.” Finally, I would be remiss in not noting the Knight Commission report “Informing Communities:  Sustaining Democracy in the Digital Age”  which notes in a very similar vein to what the FCC and FTC say, that “the current financial challenges facing private news media could pose a crisis for democracy.”  Again, probably needless to say, there is a lot more to these reports that we will be exploring in a near-future Message.   

      TALES FROM THE CRYPT:  Remember that old television series.  Well, the 21^st Century version has a digital twist to it.  A website called The Digital Beyond has been created to deal with the digital assets of people who die.  An article in The New York Times, for example, talked about a film producer from Michigan and an accountant from England who ‘married’ online and ‘bought’ a home on an island where they ‘lived’ for three years.  When the man died, the island home was dissolved by the Second Life folks leaving the woman with nothing to show for their three years together.  As the website put it, not so facetiously, it’s a matter of “till deletion do you part.” 

Before you dismiss all this, keep in mind that, according to analytical firm Inside Virtual Goods, the virtual goods market is expected to pass $1 Billion this year in the U.S. and five to six times that amount worldwide.  And if that isn’t enough to make you think twice about it, think about your email accounts, blog sites, websites and passwords.  How about all your social networking contacts and links on Facebook, LinkedIn, YouTube, MySpace?  What happens to them when you die?  The creators of the website, John Romano and Evan Carrol, two Internet professionals from Raleigh, North Carolina, put it in real basic terms when they titled their SXSW Interactive Festival presentation – Who Will Check my Email after I die?

Not only that, the website creators as well as the reporter in the New York Times article make a very interesting point about preservation of the past.  We have all manner of archaeological and sociological efforts to discover our history.  Well, the history of the future is being created in the digital world of today.

      SUBSCRIPTIONS:  If you wish to stop receiving this newsletter, e-mail Michael@MediaConsultant.tv with the word “unsubscribe-MM” in the subject line. Also, back issues of MfM are available at the website, media-consultant.blogspot.com.  You can reach me directly at Michael@MediaConsultant.tv.

 

 

 

 

Message from Michael - Net Neutrality - November 2, 2009

Message From Michael                                 

                                                                                                                        November 2, 2009                                                                                                                                                                                                                                                                                                                                                             

      THE PROCLAMATION OF NEUTRALITY

      SOMEWHERE OVER THE RAINBOW

      THEY SAY IT’S YOUR BIRTHDAY:

      COCKTAIL CHATTER – BLOGGING FOR DOLLARS AND LENO LOSING DOLLARS

 

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      THE PROCLAMATION OF NEUTRALITY:  More than 200 years later, the U.S. is again embroiled in controversy over what constitutes neutrality.  In 1793, first president George Washington, with the somewhat mixed support of the Cabinet, issued a proclamation of neutrality in the war between Britain and France.  In 2009, Federal Communications Chairman Julius Genachowski, with the somewhat mixed support of the Commission, issued a sort of proclamation of neutrality between the Internet Service Providers (ISP’s such as AT&T, Comcast and Verizon) and Internet Application companies (Google, Facebook, and Twitter).  In both cases, politicians on both sides of the aisle agreed with the underlying concept.  In Washington’s day, it was the belief that the U.S. did not need to become embroiled in a European war; today it is the belief that government should not become embroiled in a ‘free and open Internet.’  But in both cases there is disagreement about what constitutes the ‘facts.’  In Washington’s time there was a war of words, pitting Secretary of State Thomas Jefferson and James Madison against Secretary of the Treasury James Hamilton.  Today it’s Republican Senator John McCain (and others) who introduced the Internet Freedom Act against Democratic Representative Edward Markey (and others) who introduced the Internet Freedom Preservation Act.  In both cases there were/are questions about whether Washington or Genachowski have the authority to issue such a decree.  It was nearly a year later before Congress passed the Neutrality Act of 1794.  It may be equally long before the neutrality rules are passed.  Public comments on the FCC rule continue through January with counter responses allowed till March.  Finally, interestingly (at least to me), nowhere in either document – Washington’s or Genachowski’s – is the word neutrality or neutral used.  Okay, enough with the history lesson.  Here’s the issue:

In 2005 the FCC adopted four ‘rules’ that consumers can access lawful  Internet content of their choice (using) applications and services of their choice (subject to the needs of law enforcement), connecting with legal devices of their choice (because) they are entitled to competition among network, service and content providers.   To that the FCC has added two new principles – forbidding providers from favoring or ‘disfavoring’ any other services or content and requiring providers to disclose their network management policies before the customer signs up.  The two words you will hear when you hear about the new principles are – non-discrimination and transparency.  Now the agency wants to codify those rules. Sounds simple enough, right?  Especially when you consider it’s a government agency using the language.  But of course that’s not the way it works in politics, and especially politics mixed in with technology.  The key issues (as I understand it, from my various readings) are the interpretation of the phrase “reasonable network management” and the definition of ‘managed’ or ‘specialized’ services.  What is reasonable network management?  What is a managed or specialized service?  There is some indication that the FCC includes voice and subscription video services, ‘certain businesses provided to enterprise customers,’ telemedicine and eLearning in those specialized services.  Opponents say the net neutrality rules will throttle innovation and investment; proponents say if the net neutrality rules are not adopted, what will be throttled is the free flow of information and ideas on the Internet.  Oh, another thing, the FCC wants to apply the rules to the growing mobile wireless broadband.

As a FOOTNOTE, a study recently released by Canadian broadband network company Sandvine says one percent of subscribers account for 25% of total Internet traffic.  The report says the ‘typical’ heavy Internet user can be responsible for 200 times the total bytes of an average subscriber.  Another report by the Pew Internet and American Life project says the percentage of people using Twitter and other social networking sites used to share updates about themselves has nearly doubled in six months from 11% in April to 19% in the report just released.  Bottomline:  As noted in previous messages, the amount of bandwidth being consumed is growing exponentially and the prime culprit – video demand.  Now, what do you do about it?

       SOMEWHERE OVER THE RAINBOW:  Lies a spectrum of colors well beyond Sir Isaac Newton’s seven colors of red, orange, yellow, green, blue, indigo and violet.  And the federal government, aka the FCC, wants them.  The new chief of the FCC’s broadband division, Blair Levin, reportedly met with some broadcasters to discuss the idea of paying broadcasters cash for their spectrum as a way of adverting what FCC chief Genachowski calls the ‘looming spectrum crisis’ which he says threatens the future of mobile in America.  However, to paraphrase the broadcasters quoted in a TVNewsCheck and continue the song analogy, the dreams that you dream of are becoming nightmares for broadcasters who question why they have to give up their spectrum, especially after spending Millions on digital conversion.  Meanwhile, the future of mobile broadband may be written in the tiny community of Claudville, Virginia (population 913) where a high-speed wireless network has been built using the ‘white spaces’ or unused portions of TV spectrum.  Starting last month the tiny town known more for its Civil War re-enactments and a goldfish farm is the test site for the ‘white space network.’  The FCC last November okayed the use of the spectrum between 512 megahertz and 698 megahertz, originally allotted to analog TV channels 21 to 51.  The advantage is not just that it’s wireless but that it can cover the same area as ‘traditional’ Wi-Fi using only one tenth the number of ‘nodes’ because of the strength of the signal.  With the switch from analog to digital, this area of spectrum is becoming more available.  (If I’ve lost you at this point, I apologize.  I’m not sure I fully understand it either, if that makes you feel better.)  The service is being put together by a small company, Spectrum Bridge, located in another small town – Lake Mary, Florida, which is about 18 miles north of Orlando.  Meanwhile, giant spectrum company ClearWire has announced that it is now in 56 cities, using the even more powerful Wi-Max band of spectrum for wireless transmission.           

      THEY SAY IT’S YOUR BIRTHDAY:  And the Internet sure has shown us a good time in the 40 years since its birth.  On October 29, 1969, the Internet was born with, what PC World noted, was appropriately a crash.  On that day, a professor at UCLA’s School of Engineering sent a message to a compatriot at Stanford Research Institute.  It was two letters – L-O.  It was supposed to be LOGIN, but the computer crashed with the G.  Even so, as National Public Radio cutely put it, it was a “lo and behold” moment.  Just as appropriately, the 40^th anniversary is marked with a decision by ICANN (Internet Corporation for Assigned Names and Numbers), to allow ‘non-Latin’ languages to have domain extensions.  That means Russian, Chinese, Korean and Arabic, just for starters.  And the reason why it’s appropriate?  Here’s why.  In a search by yours truly of the three major Internet search engines (Google, Yahoo, Bing), for ‘internet 40^th anniversary’, several of the top stories on the front page were from non-American, foreign sources.  For example:  On Google, it was a story by Chinese news agency Xinhua on website Chinaview.cn;  On Yahoo, it was CIOL.com which is the website for Cybermedia India Online Limited as well as SIFY, which is “India’s leading integrated information communications technology” firm; On Bing, it was Yienjee.com which is an Asian journal created by a ‘blogger’ in Kuala Lumpur, and CCTV.com which is the website of Central China Television.  Now, admittedly, several of the search results were ‘appropriate’ (to use that word again), with UCLA’s Engineer School leading the pack, but the number of foreign sites says something.  – You decide what.  

      COCKTAIL CHATTER:  The minority of  bloggers who make money blogging (only about a quarter) makes an average of $42,548.  Three quarters of bloggers (72%) are ‘hobbyists’ who don’t make money, according to Technorati’s annual state of the blogosphere.  An article in Business Week citing figures from Nielsen and Amazon says nearly three quarters (70%) of Americans consult product ratings or reviews before making a purchase; four out of five (84%) say they’re more likely to read reviews before making a purchase than they were a year ago.  A 30-second spot in the 10 p.m. Jay Leno Show costs between $48,000 and $65,000, according to Advertising Age.  Last season, a 30-second spot in programs in that same time slot on NBC cost between $78,000 and $146,000.  Or put another way, the cheaper-to-produce Leno show is getting between $30,000 and $81,000 less per spot.  Several station executives say they have been affected by the drop in ratings.  Website TampaBay.com reports that Leno’s ratings drop may be responsible (at least in part) for long time number one WFLA-TV in Tampa/ St. Petersburg losing its top position.  It’s now number two after WTSP-TV.  Finally, kids aged 2 to 5 spend more than a full day each week watching television – 32 hours a week; their older brothers and sisters aged 6 to 11 spend slightly less – 28 hours, according to Nielsen.    

      SUBSCRIPTIONS:  If you wish to stop receiving this newsletter, e-mail Michael@MediaConsultant.tv with the word “unsubscribe-MM” in the subject line. Also, back issues of MfM are available at the website, media-consultant.blogspot.com.  You can reach me directly at Michael@MediaConsultant.tv.