Message from Michael -- FTC Report - June 23, 2010

Message From Michael                                 

                                                                                                                        June 23, 2010                                                                                                                                                                                                                                                                                                                                                                                  

 

    THE FEDERAL TRADE COMMISSION AND JOURNALISM – A SPECIAL REPORT

 

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      FEDERAL FACTOIDS FOMENT FURY:  If the federal government devoted the same percentage of the Gross Domestic Product to press subsidies as it did in the 1840’s, it would have spent $30 Billion last year “to spawn journalism.”  And if the federal government provided the same level of support to the Corporation for Public Broadcasting as the Canadian government provides to the Canadian Broadcasting Corporation, it would have spent $7.5 Billion, roughly 15 times the amount it actually did spend, which was $409 Million in 2009.  Those are two of the factoids cited by the Federal Trade Commission staff in its draft discussion report on the future of journalism.  Those factoids, along with the idea of a possible governmental role in journalism, have generated a fire storm from both the so-called ‘far right’ and the ‘far left.’  The commission staff goes to great pains to explain that the report is only a summary of the various ideas and recommendations it garnered from witnesses and experts, but with a subtitle of “potential policy recommendations to support a reinvention of journalism,” there is a somewhat understandable question mark lingering in many observers’ minds about how far the report goes.  The report notes that “the federal government has supported journalism since its founding” either directly or indirectly.  The federal Post Office Act of 1792, for example, charged newspapers less for mailings.  That subsidy though has dropped over the years, from covering 75% of mailings ($4 Billion) to 25% of mailings ($600 Million).   It should be noted here that the report makes no bones about the fact that it focuses on newspapers in this report because, the authors say, “newspapers provided the largest quantity of original news to consumers over any given period of time.”     

Proof of the power of the new media/ new journalism world is that the FTC spent almost as much time defending the report as merely a starting point for discussion, as they did actually discussing it in their latest and last workshop.  Proof of the paucity of the new media/ new journalism world is that a search of the various media websites and blogs generated a lot of attacks on the draft report but very little actual reporting on the draft report.

Although it isn’t laid out this way, you could divide the report into four major sections:  taxes or fees that could be imposed to support journalistic efforts; taxes or fees that could be reduced to support journalist efforts; governmental initiatives that could be started to support journalistic efforts; governmental initiatives that could be stopped in order to support journalistic efforts.  Then add to those four areas, technological steps that could be taken to make sure the “creative destruction” wrought by new media efforts are more ‘creative’ and less ‘destructive.’

      THE TAXMAN COMETH:  One of the proposals floated is a national fund for local news, using money the Federal Communication Commission already collects from telecom users, television and radio broadcast licenses and which is already being used to underwrite telecom services in rural areas and for wiring schools and libraries.  The money would be administered through a competitive application process to state “local news fund councils.”  Going a step further, the report talks about a “Citizenship Media Fund”, supported by taxes on broadcast spectrum, consumer electronics, a spectrum auction tax, advertising sales taxes and an ISP-cell phone tax.  It was the uproar over taxes that prompted FTC Chairman Jon Leibowitz to declare that any idea of taxes is “a non-starter.”  Alternatively the report talks about “Citizenship News Vouchers”… sort of like the Presidential campaign contribution idea… which “would allow every American tax payer to allocate some amount of government funds to the non-profit media organization of their choice.”  Foundations could ‘seed’ such news ventures and then the ‘citizenship news vouchers’ system would take over.   

Or, going a step further in a different direction, the report raises the idea of providing a tax credit to media businesses “for every journalist they employ.”  In the vein of providing incentives, the report cites suggestions that the Small Business Administration could provide loan support for non-profit news start-ups.  Right now, the SBA focuses on for profit businesses.  And, as noted earlier, there is the issue of increasing postal subsidies.  One of those little loop-holes you never think about, the report calls for the repeal of the 60-year-old law which prohibits the domestic re-broadcast of the government funded ($700 Million) international news services such as Voice of America, Radio Free Europe and Radio Liberty. In the final workshop, J-Lab Executive Director Jan Schaffer notes that her group had 2,700 proposals for the $1 Million in funding it had since 2005.  Meanwhile, the federal government is accepting applications for $50 Million just this year for media programs in the Palestinian territories, Afghanistan and the Congo.

      PARASITIC AGGREGATORS:  That is one of the descriptions used in the report for the news aggregators who rely on material provided by various news organizations.  The report raises the question of how to protect the Intellectual Property rights of the originating news organizations.  The report goes into great length to discuss variations of the “hot news” concept.  Copyright laws protect how facts are articulated but not the facts themselves.  Because of that, some groups take material created by others and re-write or re-work it for their own use, thus avoiding copyright infringements.  But the originating news organization made a substantial investment to get that news to begin with.  The ‘hot news’ concept provides copyright protections for such reports so as to protect the original investment.  The problem, according to the FTC report, are the so-called “second round of content creators” who may take an original story and add to it through additional reporting.  Regardless, the FTC report raises the idea of a federal ‘hot news’ law.  The report also raises the idea of a content licensing fee.  They say either there could be an industry-wide licensing arrangement or the aggregating group or ISP’s would pay a fee for every account they have.  The report does note that newspapers can code their content to stop search engines from copying it.  And, of course, the report talks about erecting pay walls.          

      WE WANT YOU AS A NEW RECRUIT:  One of the more unusual ‘recommendations’ of the many unusual recommendations is the idea of creating a ‘journalism division’ of the U.S.’s AmeriCorps which is a federally-funded program recruiting volunteers to help with public service projects around the country.  In a similar vein, the report cited the idea of providing grants to universities to do investigative journalism with the note that “if the nation’s 200,000 journalism and mass communication students spent 10% of their time doing actual journalism, that would more than make up for all the traditional media jobs that have been lost over the past 10 years.”

      THE THREE-LEGGED RACE:  One of the dominant themes of the report (or so it seems to me) is some variation of the idea of a public-private partnership involving media businesses, the Corporation for Public Broadcasting and non-profits or NGO-type organizations.  The report notes several calls for additional funding for CPB for local news projects.  J-Lab’s Schaffer even goes so far as to suggest re-casting and re-naming the CPB the Corporation for Public Media, and having it collaborate with local news sites through content sharing and other arrangements but with more accountability to insure ‘civic participation.’   The report looks at the idea of ‘blending’ for-profit businesses with some defined form of social purposes.  It looks at the idea of the Internal Revenue Service granting 501 (c) (3), tax exempt, status for some form of news reporting.  Alternatively it looks at three different forms of incorporation.  In Maryland they have created a “for benefit corporation” in which the corporation has a public or social purposes.  In California, it is called a “flexible purpose corporation” but the parameters are similar.  In Vermont, they have created L3C corporations, which are defined as low-profit limited liability corporations.

      LAST BUT NOT LEAST:  The report looks at the technology of the Internet that would make information gathering from public sources easier and more manageable.  For example, it cites the “semantic web” technologies that make info readable by machines, the use of XBRL which is extensible business reporting language, metadata tags that would improve accessibility, and the need for a commonly agreed upon taxonomy for the world wide web and Internet use by governments as well as businesses.

      DISCLAIMER:  As usual, I have to put in a disclaimer that this is a 15-hundred word summary of a 50-plus page report.  And I have to add a compliment to the FTC staffers who put this together.  It is an interesting and comprehensive overview of the various alternatives.  You can find the full report by going to the FTC site and searching for journalism, or go to this link -- http://www.ftc.gov/opp/workshops/news/jun15/docs/new-staff-discussion.pdf .            

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Message from Michael - June 15, 2010

Message From Michael                                 

                                                                                                                        June 15, 2010                                                                                                                                                                                                                                                                                                                                                                      

      ILLEGITIMI NON CARBORUNDUM

      IGNORANCE IS BLISS

      YOU TALK TOO MUCH

      YOU WORRY ME TO DEATH

      CHICKEN LITTLE MAY HAVE BEEN RIGHT

 

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      ILLEGITIMI NON CARBORUNDUM:  That’s more or less what the rest of the world had to say when it came to the Internet.  Because basically to get from Point A to Point B on the Internet, you needed to know Latin.  Okay, not really, but sort of.  All domain names are Latin – meaning basically English or European.  So, for example, the citizen journalism site OhMyNews (which recently celebrated its 10^th Birthday) has a dot-com extension, even though the site itself is in Korean.  (There is an excellent English version.)  The group that oversees all domain names, ICANN, (Internet Corporation for Assigned Names and Numbers), has approved the first set of Internationalized Domain names (IDN), which means that soon we will see domain names in Arabic, Russian, Chinese and Indian languages.  Think that’s not such a big deal?  Well, the folks at ICANN say it is the “biggest technical change” to the Internet since its birth 40 years ago.  Why?  Think of this.  In India, for example, only ten percent of that country’s Billion-plus population speaks English – one of the reasons given for the low Internet penetration there.  The addition of IDN has just added nearly a Billion more potential users in India alone.  Add in all the Arabic, Mandarin, Hindi, Russian non-English users and… you get the picture.  Now, for perspective, there is some concern that the IDN’s, because of translation issues, will add even more confusion to the online world and make scams and phishing expeditions even more possible.  And, just because I wonder about such things, the ICANN policy board is made up of 18 members, 11 of whom are from the U-S-A.  BTW, if you go to the ICANN website, it is available in six languages; five others, including Italian and Portuguese, are on the language bar but for some reason are grayed out and not accessible.

      IGNORANCE IS BLISS.  The vast majority of Americans (91%) are satisfied with their broadband speed and a significant majority (71%) believe that they are getting the broadband speed their provider is promising either “always” or “most of the time,” according to a survey by the Federal Communication Commission.   Now, those figures would be interesting enough on their own, but what makes them particularly interesting is another figure from the survey – 80% don’t even know what their broadband speed is.  (Ergo – my headline.)  The survey is part of the federal government’s effort to develop a national Broadband plan.  So, what next?  Well, for starters, the FCC is offering consumers a way to test their Internet speed from their website http://www.broadband.gov.  But to do so, you must fill out a form, explaining whether you are accessing from your home or business, what size is the business and what is the actual specific street address.  Harmless enough, as the CommLawBlog from the telecommunications law firm of Fletcher, Heald and Hildreth notes.  Except that when you read the fine print, the firm says, there are eight instances in which the FCC can disclose the information you provide – none of which require a warrant or subpoena but which cover a very broad legal ground.  And, of course, as most message readers know, there are a dozen or more ways to test your Internet speed.  None of which requires any disclosure of information.  But it gets better.   Despite the recent controversy about privacy, the FCC is looking for 10,000 volunteers willing to put a box in their home so the federal government can monitor “every bit and byte of their home Web use,” as MIT’s Technology Review puts it, with the additional commentary about what an “audacious” request that is.  And it keeps getting better.  The box?  It’s called “Sam Knows Whitebox.”  As the CommLawBlog author notes, “we couldn’t make this stuff up.”  BTW, if you’re interested, the FCC volunteer-seeking website is https://www.testmyisp.com.

SIDENOTE – PERSPECTIVE:  Some facts and figures to put this in perspective.  Two-thirds of the U.S. homes (63.5%) have Broadband, according to Nielsen’s latest three-screen report.  That’s up 24% from a year ago (60.7%), and is nearly double the DVR penetration (36.6%).  And while still considerably ahead of HDTV penetration (52.7%), HDTV growth is much faster – a nearly 189% increase since last year.  America ranks 28^th in Broadband speed worldwide, according to broadband research firm Ookla’s NetIndex.com website.  The average speed of 10.02 Mbps though is well ahead of the average worldwide speed of 7.68.  But it is a third that of world leader South Korea (33.76 Mbps) and half that of Japan (20.44 Mbps) and Sweden (20.17 Mbps).  Of course, it should be noted, as broadband providers in the U.S. are quick to point out, most of the countries with higher speeds are much smaller.  Equally large Russia, for example is ranked 27^th (at 10.14 Mbps) just barely ahead of the U.S.  Massive China ranks 72^nd (3.54 Mbps) and not-quite-so-massive India ranks 127^th (1.38 Mbps).

Okay, I know I bombard people with too many numbers some times in the message, but one more set of figures to add perspective.  According to the Akamai State of the Internet report, the U.S. ranks 22^nd in average “connection speed” with a lowly 3.8 Mbps.  South Korea is still tops but with a much lower 11.7 Mbps average speed, and the average connection speed worldwide is only 1.7 Mbps, according to Akamai, which of course is only testing its Internet connections.  On another measurement scale, the U.S. ranks much higher with more unique IP addresses than any place in the world (125 Million).

FOOTNOTE:  A group of powerful tech and media companies have formed a coalition they call the Broadband Internet Technical Advisory Group.  And when we say powerful… well, here are some of the members:  Google, Microsoft, Cisco, Comcast, TimeWarner, Intel, EchoStar and Verizon.  The stated purpose is to develop broadband management techniques and deal with technical issues that “can affect Internet users’ experience.”  Not to be outdone, the FCC has created its own select group of invitation-only broadband engineers to a brainstorming session later this month on how to use broadcast spectrum for broadband service.        

      YOU TALK TOO MUCH.  At least that’s what AT&T has said to some users, instituting a tiered payment system for iPhone users based on how much data they think they will use.  This is somewhat similar to the plan AT&T and Comcast both have toyed with, to cap bandwidth users.  But so far, no howls of indignation about the IPhone plan.  Even Consumer Reports gave the plan its blessing (sort of), noting that only four percent of IPhone users consumer more than a gigabyte of data month.  But, observers note that as the data-chomping iPad begins eating up more bandwidth, the tune may change.  And that’s only the start of it.  Internet equipment and backbone supplier Cisco says Internet traffic will quadruple by the year 2014.  The company projects traffic of 64 Exabytes of data per month by then, most of it (91%, to be exact) video.  But better than the data and numbers supplied by the company are the factoids – and you know, how I love factoids.  The company says that by 2014 it would take more than two years to watch all the video crossing the Global IP network… in just in one second.  To watch ALL the video crossing IP networks that year would take 72 Million years.  Internet provider Akamai has its own version of web traffic monitoring on its State of the Internet website which, when I checked it, showed that there were 346,000 people listening to music at that very minute worldwide, another 3,352,000 people worldwide shopping (or at least visiting retail sites); and news sites (as defined by Akamai) were averaging more than 5,712,000 visitors a minute worldwide. 

      YOU WORRY ME TO DEATH.  That’s the next line in the Clarence Carter song (did anybody catch it?).  And the growth in the Internet has many people worried because, for one thing, along with that increased usage comes an increase in “attack traffic”, according to Akamai’s State of the Internet report for the fourth quarter of 2009 (the latest I could find.)  As in previous reports, Russia remains the “top attack traffic source” accounting for more than one in ten (13%) attacks worldwide.  The U.S. made it back to second place, ahead of China and Brazil.  But what was particularly interesting was the increase in unique IP addresses connecting to Akamai’s network – 4.7% from the third quarter of 2009 to fourth quarter 2009, 16% from the same period in 2008, but up 54% from two years before.  Interesting because it corresponds to a report from global marketing research firm IDC which warns of a coming logjam because of a lack of a lack of IP addresses.  The firm says there are already more than 10 BILLION “non-PC” devices connected to the Internet right now, and that number is expected to double to 20 Billion by 2014.  The key point being ‘non-pc’, as in not your computer, but the decoder at your station, the printer at your newspaper, the audio board at your radio station. As Marketing Vox put it, the shortage of IP addresses is this decade’s version of the Millennium Bug.  The solution is for businesses to switch from Internet Protocol Version 4 (Ipv4) to Ipv6, but while the behemoths of the business (Google, YouTube, etc) are aware of this, many content providers are not.

      CHICKEN LITTLE MAY HAVE BEEN RIGHT.  The sky is falling.   It’s official.  The Pentagon says so.  The problem is that there is so much space junk (old rockets, abandoned satellites and missile shrapnel) and so many satellites that there is a logjam in space.  In an article in The Washington Post, Indian rocket scientist Bharath Gopalaswamy estimates there are 370,000 ‘pieces of junk’ in low orbit, flying around with 1,100 satellites.  The recent report of a drifting satellite threatening other satellites is peanuts compared to an incident three years ago.  According to the Pentagon report, a Chinese missile test destroyed a satellite in 2007, leaving 150,000 pieces of junk behind.  The Washington Post article puts the “space-services” market at $250 Billion, between financial communication, GPS, and international phones.

      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.