Beyond TV's 30-Second Commercial

...the whole industry is moving toward a different model where deciding whether something is a hit or not is not just based on how much you charge for 30 seconds of advertising.

Brad Adgate, senior vice president for research at Horizon Media

In Edward Wyatt, "Despite Lower Ratings, Cash Flow Rises for ‘Idol’," New York Times, May 10, 2009

Despite declines in audience ratings over the past few years, the American Idol TV show is still making enormous--and growing--revenues for its owners. But the money is increasingly coming from more than the standard 30 second commercial: "The deals, which include products as disparate as ice cream and trading cards, as well as the more familiar partnerships with iTunes and AT&T, have driven tremendous growth in the profitability of “American Idol,” according to the public financial statements of the parent of 19 Entertainment, the company founded by Simon Fuller, the creator of the show." Fox Television, which broadcasts the show, also makes money by spinning off syndicated versions of it.

The activity is clearly not limited to Idol. Everyone in TV is trying to find "ancillary revenue streams" for their materials as audiences for individual programs decline with channel fragmentation and the amounts networks can charge for commercials consequently decline as well. One gauge sponsors of program deals like to see is audience "engagement" in the material. And Idol certainly still has that: "Last week, viewers cast 64 million votes, the most ever for a nonfinale episode."

How Important Is Distribution Now?

The gatekeepers are dead ... platforms are dead. Content providers are going to fundamentally win.

- Gary Vaynerchuk, founder and host of the video blog Wine Library TV

In Gavin O'Malley, Industry Leaders Discuss TV, Facebook At Social Summit, Online Media Daily, February 11, 2009

Speaking on a panel at an industry meeting called SocComm: The Social Communication Summit, Vaynerchuk argued that distribution was longer a powerful factor in deciding the success of content. He asserted that because of new digital platforms the individual creators of content can distribute material easily by themselves and so do not need intermediaries--or "gatekeepers"--that help them present materials to audiences for a fee. The result, he said, is that The Wall Street Journal and Fox Broadcasting are "fundamentally out of business." By contrast, he feels that Facebook will be the medium through which creators get out their materials to huge numbers of people.

Others at the conference disagreed strongly. Kenny Miller, EVP of MTV Networks Global Digital Media group noted that distributors are still important for funding and marketing; calling attention to a media product in today's world still takes a lot of work. "The idea that every content creator is going to go out there and fund their own show, I think, is unrealistic," he said. Steven Greenberg--who left his post as president of Columbia Records in 2007 to head up a wb-based music label S-Curve Records--made the case for traditional talent management and media models. "Some violinists are really great, but they are horrible entrepreneurs," said Greenberg. What's more, "Columbia and others are still content owners," he said. "There is still room for collaboration."

Amid the roiling changes of the new digital system, it is tempting to believe that production is everything and that distribution has become a cheap commodity in the presence of blogs, RSS feeds and other vehicles. How much importance one places on the impact of this ease of distribution depends to a certain extent on one's point of view. Yochai Benkler, in The Wealth of Networks, would certainly emphasize it. But major media firms are proceeding with the idea that certain distribution routes (including the web) are crucial to master. The most popular sites online are, in fact, owned by major media firms with only a few exceptions (such as Facebook).

What Scholastic's Bratz Ban Indicates Isn't So Clear

When schools send these book club fliers home with children, the message is that 'We think these are fine and are good for your child.'

-Susan Linn, Director of The Campaign for a Commercial-Free Childhood

In Motoko Rich, "Scholastic Cuts ‘Bratz’ Products for Book Clubs and Fairs," New York Times, September 21, 2008

Linn's organization is celebrating--and taking credit for--the decision by Scholastic Inc. to no longer include books based on the Bratz dolls in any of its school book clubs or fairs this year. Scholastic makes about a third of its income from those clubs and fairs. Critics of the Bratz dolls consider them overtly sexualized due to the emphasis on particular aspects of the female anatomy; the critics insist that nothing about them should be placed in the hands of girls. In fact, Scholastic has also stopped offering spinoff products--for example, a Bratz computer game and designer stencil kit, in its book clubs and fairs.

Scholastic's president will not state directly that the Campaign influenced its decision; the company's position is that declining sales of these materials as well as anger around the Bratz combined to lead to that decision. Although some in Linn's organization may take the credit for Scholastic's decision as a win against commercialism in books sold in schools, over the long term the picture is much more complex. Many teachers and librarians believe that items in commercial culture are the only predictable items to attract serious attention toward reading by many young people. They feel that if bringing commercial products into books will encourage reading, then it should be done. Rather than indicating a trend against commercialism and childhood, the Scholastic decision make simply indicate an aversion to mixing sexual depictions and childhood.

Hulu's Successful Distribution Model

"We're very similar to Starbucks in that we're an impulse business. They put (coffee) everywhere and make it easier to consume, and we try to do the same with content.

-Jason Kilar, CEO of Hulu

In Gavin O'Malley, "Hulu's Obsession With 'Every Little Pixel' Pays Off," Online Media Daily, September 19, 2008

Co-owned by NBC Universal and News Corporation, Hulu is an advertising-supported service that streams "premium content"--that is, professional programs from cable and broadcast television networks. The six month old firm has substantial competition; Joost (with CBS as a major investor) and Fancast (owned by Comcast) are two examples. Yet, according to Gavin O'Malley, "while Fancast launched two months before Hulu officially debuted, Hulu recorded vastly more video streams--119 million--than Fansite's 2.2 millions streams in July." Kilar would like to believe that the reason is the video distributor's punctiliousness. "We obsess over every little pixel," he said. "I can give you a hundred examples of that." At least as important, though, is Hulu's cutting-edge appoach to distribution. Understanding that people might choose to view TV shows on a whim, Hulu has chosen to place itself in front of as many people as possible instead of having them come to Hulu. To do that, it negotiated distribution deals with top website portals, including Yahoo, MSN, MySpace, and even competitor Fancast. The result is the more people are exposed to Hulu's products than if it rlied (like Fancast) only on its own website. This strategy of distributing video content on the web via many exhibitors has in the past few years become the preferred mode for companies trying to reach large audiences.

Is the Google News Glitch a Mark of Mistakes to Come?

Anytime anyone spreads false information about a public company over a communication medium like the internet, its message boards, chat rooms or otherwise, that will raise questions as to whether someone is committing securities fraud.

- John Reed Stark, head of the US Security and Exchange Commission's office of internet enforcement

In Joanna Chung and Justin Bear, "SEC Probes United's Sudden Slump," Financial Times, September 12, 2008

The web's power over people's understanding of reality became quite vivid on news on September 8, 2008, when United Airlines stock lost more than 75% of its value because a 2002 article about its bankruptsy filing that had been published that year the South Florida Sun-Sentinel (owned by the Tribune Company) mistakenly appeared on Google News. The appearance led readers on the site to believe it was happening that day, and they responded by selling the stock. A few days later, US security regulators opened an informal investigation of how that happened.

It seems that the glitch began when on early Sunday morning a single visitor to the Sentinel website viewed the 2002 story reporting on United's bankruptcy filing. That visit was enough to have the old article land on the Sun-Sentinel's most-viewed list at that hour. "Google said its web-trawling program spotted the link and indexed it as a new story when it could not find a 2002 dateline. Tribune has said it would have been obvious to a reader that the article was six years old."

Each company, in other words, says that the mistake was the other's fault. United, in the meantime, is considering filing a lawsuit against both. The lurking question: Will--or when will--this sort of agenda-setting mistake happen again on Google News or elsewhere on the web, and with what consequences?

Where Will the RIAA Go After Five Years of Lawsuits?

If the goal is to reduce file sharing, it's a failure.

- Fred von Lohmann, a staff attorney with the Electronic Frontier Foundation

In David Kravetz, "File Sharing Lawsuits at a Crossroads, After 5 Years of RIAA Litigation," Wired, September 4, 2008

Lohmann's comments refer to the lawsuit approach pursued by the Recording Industry Association of America (RIAA) against consumers who share copyrighted music with others online. David Kravetz notes that September 8, 2008 marks five years since the RIAA's first lawsuit. He presents an overview of the controversies swirling around the more than 30,000 lawsuits that RIAA instituted during the past half decade. The RIAA says it is continuing its lawsuits to emphasize to individuals that downloading copyrighted content is, in fact, illegal, and to scare people from doing it. Opponents claim that the RIAA's tactics have terrorized people into paying up rather than fighting in the courts, that the company it is using to ferret out wrongdoers is not doing it legally, and that the way the RIAA is trying to prove illegal sharing may also not stand up to court scrutiny.

Kravetz notes that "despite the crackdown, billions of copies of copyrighted songs are now changing hands each year on file sharing services." And he adds that "critics of the RIAA say it's time for the music industry to stop attacking fans, and start looking for alternatives."

Bloggers and the Palin Nomination

The Palin story played right to the strengths of the blogs.

- Tom Rosenstiel, executive director of the Project for Excellence in Journalism

In William Triplett, "Bloggers Investigate Sarah Palin; TV News Struggles to Catch Up With the Internet," Variety, September 2, 2008

When John McCain announced that Alaska governor Sarah Palin would be his running mate, many non-Alaskans didn't know much, if anything, about her. To many bloggers, the need for that knowledge was a call to arms. Rosenstiel says that "the best bloggers" knew that they could retrieve information about Palin's background through online research "without the need for classic reporting." He notes that the mainstream media had their hands full trying to deal with the implications of Obama's acceptance speech in Denver and the impact of hurricaine Gustav on the Gulf Coast and the Republican convention. The downsizing of journalism staffs added to the difficulty that traditional journalists had in responding quickly to the new name.

Not everyone agrees that bloggers have been so helpful. "Much of what I read on the blogs was hugely derivative of Anchorage Daily News coverage of Sarah Palin's political career, so unless you can cite a specific blog scoop, I've yet to be impressed by what they've turned up," says Jack Schafer of Slate. "On the downside, I think bloggers were far too eager to spread rumors about Trig Palin being Bristol Palin's son without even bothering to examine the child's birth certificate for proof."

Nevertheless, mainstream journalists have increasing been checking the blogosphere for updates. "When you see cable news analysts on TVs getting ready to talk, what are they doing? Looking on the Web," says one academic analyst. One Republican congressman noted that the bloggers' immediate investigative chatter "is a sign of things to come with conventions as we know them."

The Tyranny of Prime Time

Forcing all the "big" events to a time-shifted-to-prime-time model isn't holding the entire audience, and any U.S. network planning to buy Olympic rights will be confronted with more and more audience bleed as viewers find ways to see events as they happen.

Cyndy Aleo-Carreira, writer for The Industry Standard

In Cyndy Aleo-Carreira, "Users run circles around NBC's Great Olympics Firewall ," The Industry Standard, August 11, 2008

NBC-Universal estimates that during the first four days of the Olympic games 157 million Americans, or more than half the U.S. population, viewed some part of the Olympics on NBC properties (for example, the NBC-TV, USA, MSNBC, and Oxygen TV networks and their online counterparts). Nevertheless, as Aleo Carreira suggests, some US viewers are annoyed because NBC-U has held back broadcasting certain games live or right after they happen because the network wants to reserve them to attract a potentially huge (and therefore lucrative) prime time audience.

Because of NBC's fierce protection of its rights, getting videos of certain Olympic events right after the happen is not easy on the US internet. "A quick search of YouTube shows that Google has pulled down copyright-infringing clips of the opening ceremony from NBC, but coverage from Chinese network CCTV is easy to find. As for the events themselves, NBC and BBC Olympic videos seem to appear and disappear frequently, so it's clear YouTube is having trouble keeping up with the uploads." All these cat-and-mouse games are offending many viewers, says Aleo-Carreira. She suggests that audience pressures should lead future firms that control Olympic exhibition not to be wedded to the concept of prime time.

Research Group: News Firms Need to Counter Young-Adult "News Fatigue"

[P] eople were conditioned to respond to headlines and updates as presenting whole news stories, when in reality they do not. We observed consumers click and re-click news updates and headlines and continue to do so, seemingly regardless of the outcome.

- Context-Based Research Group

In Associated Press and Context-Based Research Group, "A New Model for News Studying the Deep Structure of Young-Adult News Consumption," Associated Press, June 2008.

The Context-Based Research Group, an applied-anthopology company, interviewed and observed 18 young adults in the US, UK, and India regarding their news habits. One conclusion was that these people continually confront news while they are multitasking--accessing email while watching television and talking with friends, for example. Yet rather than digging deeply into stories as they click or watch, they seem to be seeing the same stories only at the surface levels. The young adults developed what the researchers call news fatigue. "Many consumers in the study were so overwhelmed and inundated by news that they just did not know what to do. Participants with news fatigue would try to ascertain whole news stories, but they regularly and repeatedly were left unsatisfied. . . . The more overwhelmed or unsatisfied they were, the
less effort they were willing to put in."

The researchers noted that programs such as The Daily Show and Howard Stern Show helped to put more structure and depth on news for the Americans in the sample than they would normally get. To the anthropologists, this and other findings suggest that young adults do want news with some depth. The researchers suggest that news firms such as the Associated Press need to create appealing content that presents not just facts and updates to a story, but also the story behind the story (the back story) and the implications (future story). Moreover, the news organizations need to "deliver it across all the channels these consumers use." But the researchers see the challenge: "[E]ven if you create news people can use, how do you reach consumers who spurn established packaging and consume information in haphazard, nonlinear fashion?"

Here, say the anthropologists, is where the news professionals must enter the discussion: "Anthropologists cannot answer that more difficult question for the news industry, but the value
proposition is clear for both producers and consumers: Young people are tired of the same old news and want something better. They just need some help."

Debating the AP's Role in the Digital Age

I talked to a reporter this week about the embattled Associated Press and said three times that I didn’t want it to die. I might take that back.

-Jeff Jarvis, Journalism professor and BuzzMachine blogger

In Jeff Jarvis, "FU AP," BuzzMachine, June 12, 2006

In a bad economy and losing print readership and advertisers to the web, many revenue-challenged newspapers are unhappy about spending large amounts of money for membership in the Associated Press, the legendary non-profit news gathering and distribution service. Some, like a group of Ohio papers, are starting regional consortia to share news and sports. In this difficult environment, AP executives have become exasperated that blogger websites are excerpting its stories without payments. The company has gone after websites it believes are violating the Digital Millenium Copyright Act (DMCA) by reproducing portions of its stories that go beyond "fair use." Most recently, the AP filed a DMCA take-down notice against The Drudge Retort blog on the belief that Retort's use of AP material doesn't fit the definition of fair use.

Jeff Jarvis argues that "the AP is flouting fair use and fair comment. It is ignoring the essential structure of the link architecture of the web. It is declaring war on blogs and commenters." Moreover, argues Jarvis (as he has for a while), the Associated Press has been no real friend of original journalism from even its member news organizations. Its own stories often rewrite pieces by member newspapers without giving credit to the source of the journalism and without linking to the original source. The real problem, Jarvis states, is that "the AP is hurting original reporting by not crediting and linking to the journalism at its source. We should be operating under an ethic of the link to original reporting; this is an ethic that the AP systematically violates."

Clearly, this is a major issue in journalism that started before the web but has been foregrounded because the impact of the economy, the move to the internet, and the possibilities of the hyperlink. All have put local newspapers and their journalists under a lot of pressure. Jarvis is trying to find ways to use the hyperlink to help local and regional news survive.

Rethinking the Concept of TV Ratings

It takes us beyond sampling to census.

-Janice Finkel-Greene, director of futures and technology, Interpublic Group's Initiative

In Steve McClellan, MSOs Look to Capitalize on STB Data, AdWeek, May 19, 2008

A profound shift is taking place in the way advertisers think about television, and in the way cable and satellite provides are thinking about their relationships with advertisers. The trend is toward finding a way to use database information about households, and even information in households, to send different commercials to the different households. The implications for the standard Nielsen ratings service is huge. Instead of relying on Nielsen's approach of sampling thousands (soon, tens of thousands) of people to produce projected numbers, the holy grail has become getting a "census" of viewing by auditing the set-top box of cable and satellite subscribers. There are still many challenges, including getting information many different cable firms and getting around Federal regulations that prohibit cable firms from releasing viewing data of customers to marketers. Yet the rush is on, with major firms such as Nielsen, a cable consortium called Canoe Ventures, and major advertising-industry figures such as David Verklin and Alec Gerstner involved. Nielsen sees its activities as part of its attempts to connect information on all media use and buying habits. Canoe is the cable industry’s attempt to control its own destiny in the face of increased competition from the RBOCs and Google. It will take a while, but these new initiatives will push TV in fundamentally new directions.

Has Synergy Seen Its Heyday?

Enough of this integrated-conglomerate pretension.

-Barry Diller, Chairman of InterActive Corporation (IAC)

In Diane Mermigas, "Even for Diller, Vision Does not Equate Value," Mediapost's Media Daily News, March 15, 2008.

IAC is a collection of interactive businesses such as Home Shopping Network (HSN), Ticketmaster, Lending Tree, City Search and College Humor that Diller had been collecting for thirteen years on the IAC banner. Like other new-media executives, Diller often suggested that bringing these companies together would allow them to interact with each other in ways that would yield synergies--benefits from the interconnections that would transcend what they could do alone. Now, with the value of his company sinking on Wall Street, Diller says that salvation lies in breaking the firm into five publicly traded pieces: HSN, Ticketmaster, Interval travel, Lending Tree, and IAC (assets such as City Search and College Humor). The question of whether unrelated media activities are synergistically useful to a firm, or whether the firm should spin them off and concentrate on core competencies, are issues that several media conglomerate, including Time Warner, now face.

The Search for New Audience Metrics

It's clear that the days of buying TV just on GRPs is already past for advertisers like Toyota and others. So the big question is, what else do you measure? That thing is what we call engagement.

-Robert Barocci, president of the Advertising Research Foundation

At a time when audience members are increasingly using niche media, advertising practitioners are concluding that the size of a medium's audience (as measured by GRPs, or gross rating points) does not necessarily reflect on it power to make the audience enthusiastic the media product or advertisements that surround it. For example, a cable program with a relatively small audience may be more valuable to an advertiser because its audience shows great devotion to the characters and pays more attention to the commercials connected to it than do audiences for especially popular television series. "Engagement" has become the new buzz word that marketers and media firms are using to express how connected audiences feel toward media and marketing materials. There is, however, much disagreement about what engagement really means and how to measure it.

In Robert Marich, "Measuring Engagement," Broadcasting and Cable, April 26, 2008.