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.

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