September 2005 Archives

WSJ.com - Media Firms Dig Into War Chests For Latest Assault on the Internet

But Viacom and Disney say they aren't pursuing the portal strategy. Disney, which took a roughly $1 billion charge related to the closure of its Go.com portal, has said there's no reason to revisit those failures. "I don't see us playing catch-up to the Googles of the world," Disney President Robert Iger said recently at a Goldman Sachs investors conference.

I don't suppose it's wise to count out Big Content, but I think this quote from new Disney Prexy Bob Iger is quite revealing; I don't see Disney playing catch-up to Google or Yahoo! either.

As all media becomes digital, asynchronous, and delivered over the network, the companies occupying the high ground in digital network advertising will move from strength to strength. The content flows to the dollars, and the dollars are flowing increasingly towards more precisely measurable and targeted advertising models.

It used to be that companies like DoubleClick, my erstwhile employer 24/7 Real Media, Aquantive, or ValueClick were supposed to benefit from this evolution, but I think it's safe to call the game over for those guys and cede victory to Yahoo!, Google, and perhaps Microsoft.

See, they're the new platforms, and anything that's digital is just another application for them, like Gmail or Yahoo! News. They've successfully abstracted and separated infrastructure, platform, and business model to create the logical future "space" for media companies. In other words, Disney would be smart to focus on creating and owning things people want to watch, listen to, play, or buy, and accept the fact that they'll be splitting the ad revenue with (and possibly renting their exhibition/distribution space from) the new gateways to the audience (and the advertiser dollar): the web media powerhouses.

I suppose this is why News Corp's acquisitions, especially of MySpace/Intermix, make little sense to me. There's no end-run around Yahoo! or Google. Irony of ironies, the only company with the weapons to fight this fight head-on may be Time Warner, given AOL's (eroding) strength, although that's entirely mitigated by AOL's lack of control over their search advertising platform (currently supplied by Google); buying advertising.com doesn't give them anywhere near enough technology assets to be considered heavyweight in this case.

Zander recalls 'tearful' first days at Motorola | InfoWorld | News | 2005-09-23 | By Tom Krazit, IDG News Service

"Screw the nano. What the hell does the nano do? Who listens to 1,000 songs?" Zander said. People are going to want devices that do more than just play music, something that can be seen in many other countries with more advanced mobile phone networks and savvy users, he said.

I don't pretend to know any more about the Apple/Motorola ROKR project than any other outsider, but this comment from Zander seems odd.

Personally, I'm not surprised to hear the CEO of a handset manufacturer make this kind of comment. It's the kind of dismissive comment all of his colleagues make, given the size of their market; I've never heard a Nokia or Motorola executive who didn't think we'd all eventually do everything from computing to watching TV on our mobile phones. And, given how painful Motorola's software design feels to me, I rather expected this sort of contempt for the individual user emanated from the top of the organization.

At any rate, in a Zander-Jobs deathmatch, I got my money on the boy from Cupertino.

Technology News Article | Reuters.co.uk

Technology News Article | Reuters.co.uk

"There's no content in the world that has doesn't have some price flexibility," said Warner Music Group Corp. (WMG.N: Quote, Profile, Research) chief executive Edgar Bronfman at the Goldman Sachs Communacopia investor conference here. "Not all songs are created equal. Not all albums are created equal.

"That's not to say we want to raise prices across the board or that we don't believe in a 99-cent price point for most music," he said. "But there are some songs for which consumers would be willing to pay more. And some we'd be willing to sell for less."

Bronfman downplayed Apple's leverage. "iTunes needs our music as much as we need iTunes," he told Reuters on the sidelines of the Goldman conferences.

One record executive who requested anonymity countered that Apple's dominance is somewhat overstated. "The fact is that 50 percent of digital sales is ringtones," he said. "Mobile phones are going to get a bigger share of the download market over time."

He also noted that subscriptions services, such as Napster and Yahoo will gain traction.

Junior's may come to regret his lack of a formal education, as his definition of a market need some work. Last I checked, WMG had the flexibility to offer songs for whatever price it could get on other music services. After all, the market for digital music certainly isn't limited to the iTunes Music Store (or so Big Content keeps trying to tell everyone). If the WMG's vision of differential, windowed pricing is really what their customers want, then the service that offers it should steadily eat away at Apple's marketshare, right? After all, if Apple needs WMG as much as Junior would like to believe, then they should have all the leverage they need.

Go ahead, Junior. Put your money where your mouth is and sign a deal with a WMP-based digital music service to sell Top 40 for $3.

New York Post Online Edition: business

According to two sources familiar with the matter, Time Warner is in talks with Microsoft about selling the stake in AOL and then combining it with Microsoft's Web unit MSN.

Under the plan being considered, Microsoft would pay some money to Time Warner for the AOL stake, leaving the two companies approximately equal partners in the venture.

While AOL began testing the [free] portal in June and has won plaudits for the quality of its videos and other features, the company has yet to make a big marketing push, even though it promised one by the end of August, noted Rich Greenfield, an analyst at Fulcrum.

Greenfield, who said it's too early to judge whether the portal strategy is a success, believes Time Warner should wait before making a decision on the future of AOL.

"I think it's too early for it to be sold or spun out," he said.

AOL has seen the number of subscribers decline from 26 million in 2003 to fewer than 22 million now, as users fled AOL's dial-up service for broadband.

Its portal strategy — a reversal of its prior focus of offering exclusive content — puts AOL in direct competition with Yahoo!, MSN and Google.

The main reason this sounds vaguely plausible to me isn't mentioned anywhere in the story: that with this move Microsoft can just about double the distribution of their nascent search advertising business, simultaneously advancing MSN Search while hurting Google.

AOL is the only top online destination (out of AOL, Google, Yahoo!, and MSN) that doesn't own 100% of their search revenue. Seeing as how search-based advertising has extended itself into display and brand advertising (it's not just text ads anymore), a play for search distribution is a play for ultimate online, interactive advertising dominance (why else do you think old-line online ad players like DoubleClick, advertising.com, and my old employer 24/7 Real Media are nowhere to be found when people discuss the future of online advertising?). This means AOL hasn't got a clear path to long-term success in a market where they compete with companies who do recognize 100% of the revenue from the search engine ads on their sites. In other words, AOL was entirely dependent on generating traffic to their own properties, where Yahoo!, Google, and (eventually) MSN will also have revenue from syndicated advertising. AOL was a sitting duck.

Ex-FEMA Chief Tells of Frustration and Chaos - New York Times

In his first extensive interview since resigning as FEMA director on Monday under intense criticism, Mr. Brown declined to blame President Bush or the White House for his removal or for the flawed response.

"I truly believed the White House was not at fault here," he said.

He focused much of his criticism on Governor Blanco, contrasting what he described as her confused response with far more agile mobilizations in Mississippi and Alabama, as well as in Florida during last year's hurricanes.

Brownie's trying to be a good soldier here, insisting that the problem lay with the (Democrat) governor, (black, Democrat) mayor, and their employees. Unfortunately, he's hasn't completely covered the grenade for the Bush White House platoon.

In addition to claiming that the state and local response was obviously inadequate, he implies that he informed DHS Secretary Chertoff, White House Chief of Staff Card, and others of the nature of the crisis. This means that Brownie's version of events has him realizing pretty early on that the situation in NOLA needed federal intervention, and that he said as much to his superiors.

Naturally, this raises the question of why FEMA, DHS, or the White House didn't move faster and more forecefully to cut the bullshit procedure and mobilize federal resources, rather than relying on state assets (like Guard troops and equipment).

Here's a question I've not seen asked nor answered: why would it come as a surprise that Louisiana's response was disorganized? In one fell swoop, they lost their largest city, their economic engine, media capital, and transportation hub. Wouldn't a reasonable first assumption be that Louisiana, for all practical intents and purposes, had been "decapitated" once the levees broke?

Godwin's Law - RIAA's Big Push to Copy Protect Digital Radio

Immediately below is the text of the joint resolution by RIAA and other groups, asking Congress to copy-protect radio (which has never been copy-protected before). Following that is RIAA's "one-pager" outlining for Congress the reasons RIAA offers for Congress to authorize the FCC to put in place a copy-protection scheme for radio. (Note the use of the term "HD Radio" -- implying that there's something "high-definition" about digital audio broadcasting, even though everyone who knows anything about digital audio broadcast content knows it's of much lower quality than that of audio CDs.)

It speaks volumes regarding the legitimacy of Big Content's position when they consistently shade the truth, oh hell, lie when they push legislation or regulation designed to shore up their business model at the expense of innovation in technology and consumer electronics.

Whereas American arts and entertainment industries account for 6% of the American Gross Domestic Product and employ 2.6 million Americans;

That seems an implausible number. In 2003, the last year for which comparable numbers are avaliable for all industry sectors, the Department of Commerce's Bureau of Economic Analysis says that Publishing, Sound recording and motion pictures, Broadcasting and telecommunications, as well as Arts and entertainment accounted to 5.1% of the GDP. That number is clearly an overestimate, as the "Publishing" component, representing 1.1% of that total figure, also includes the software industry, the "telco" component of "Broadcasting and telecommunications" (worth 2.6% of the total) includes the contribution of companies like Cox, Verizon, or AT&T, and the "Arts and entertainment" industry includes live sporting events, and gambling revenues.

I can't even imagine the RIAA et al would be brazen enough to throw retail contribution to GDP in there, simply because music retail is a puny slice of the overall number.

Obviously, Big Content accounts for nowhere near the 6% of GDP they claim.

Whereas digital theft of music has caused extreme harm to the American music industry over the past five years;

A questionable statement on many levels: does "digital theft" really exist? Making a copy of something and stealing are two different things. As to the "extreme" harm, and attribution thereof, it's not clear that other explanations for the music industry's doldrums aren't also to blame (and in far greater proportion than this idea of "digital theft"): cartel-like price-fixing behavior, poor product pricing, competition for discretionary spending, overall economic conditions, poor product mix (such as fewer singles), and simply bad product.

Whereas the digital theft of music stifles the careers of new artists, betrays the songwriters and recording artists who create it and threatens the livelihood of the thousands of working people—from recording engineers to record-store clerks—who are employed in the music industry;

If "digital theft" existed, I guess that would be bad. On the other hand, file sharing and other forms of digital distribution have certainly enhanced the careers of artists like Wilco, Pearl Jam, DJ Danger Mouse, and others.

Sure, it's not hard data, but I'll take my anecdotal examples over Big Content's straw man any day.

Whereas the United States Supreme Court ruled in MGM v. Grokster that it is illegal to engage in digital theft directly or to encourage or induce digital theft;

I am not a lawyer, but this one also seemed fishy. Grokster, as I read it, isn't quite that cut-and-dried. First of all, "digital theft," like Pamela Anderson, is a distortion emanating from Los Angeles. The term doesn't appear in the SCOTUS opinion. It's not a minor point. Grokster doesn't define a different standard for liability for digital forms of infringement (in other words, they didn't undo Sony). What they did was create a netherworld with an new "intent" standard that will now have to be painfully clarified by trial (literally) and error.

Whereas Korean and Australian courts followed with similar rulings preventing the establishment of business models predicated on digital theft;

I notice India, with their thriving intellectual property industries (pharmaceuticals, films, music, software) isn't on this list of worthies. Why so picky?

Whereas public broadcast spectrum is granted by the U.S. government to be used in the public interest;

Finally, a factually correct statement.

Whereas the public interest is not served by the allowance of digital theft;

Again, if "digital theft" existed, this might, or might not, be true.

Whereas Congress has stated that radio broadcasts should not facilitate or result in the digital theft of music;

Whereas the Federal Communications Commission promulgated rules to protect digital video broadcasts from illegal redistribution over digital networks;

Whereas the Federal Communications Commission is examining the promulgation of rules to protect digital audio broadcasts from illegal copying or redistribution over digital networks;

Whereas the United States Court of Appeals for the District of Columbia Circuit recently vacated the Federal Communications Commission’s ruling on digital video broadcasts based on a need for a direct Congressional grant of authority;

Whereas given the breadth of this decision regarding the Commission’s scope of authority in this area, any direct Congressional grant of authority should include both digital video and audio broadcasts;

Whereas Congress is considering efforts to expressly grant such authority to the Federal Communications Commission;

Translation: our buddies at the MPAA got screwed when they tried to end-run Congress and go straight to the unresponsible (in the political sense) bureaucrats of the FCC. As long as they're asking you for their Broadcast Flag, we'd like one for radio, too. Thanks.

Michelle Malkin: MEMO TO BUSH: FIRE MICHAEL BROWN

This is not the time to give a weak performer the benefit of the doubt. The FEMA director's role in the ongoing recovery effort is too important to be entrusted to a clueless political hack with such poor judgment.

Rather than praise Michael Brown, Bush should fire him.

Sorry Michelle (and Andrew), but there's only one way this story plays out in the Bush administration.

As surely as the girls from The Apprentice will wind up in Maxim, Brownie will be awarded the Presidential Medal of Freedom.

Bush Says Results of Aid Efforts Were 'Not Acceptable' - New York Times

Mr. Bush took note that the Mississippi home of Senator Trent Lott had been destroyed, the president said he saw himself one day sitting with the former Senate Republican leader on his rebuilt front porch.

I, too, have a dream that, someday, multimillionaire leaders of the political elite will once again sit on the porches of their mansions.

The only way Bush appears to be a man of the people, concerned with the troubles of ordinary citizens, is in comparison with stuffed shirts like Gore, Kerry, and his father (or a killer cyborg like Cheney).

Guardian Unlimited | World Latest | London Bomber Appears in Farewell Tape

"Your democratically elected governments continuously perpetuate injustice against my people all over the world, and your support of them makes you directly responsible, just as I am directly responsible for protecting and avenging my Muslim brothers and sisters,'' he said.

So much of this idiot's statement saddens me.

Like his misguided, crush-like profession of fealty to jihadi poster-boys bin Laden, Zawahri, and Zarqawi. For starters, I don't even believe Khan's heroes knew he existed, or what he planned to do. His bombing was the "martyr's" equivalent of writing "Mrs Osama bin Laden" 100 times in his school binder. Now that he's dead, though, Zawahri is only too glad to co-opt this poor loser's desperate plea for attention. He knows the signal it will send to star-struck, belt-bomb-obsessed fanboys everywhere, as he uses al Jazeera to play Bob Saget in Al Qaeda's Funniest Home Videos.

Sadder still is this British-born South Asian's belief that any of his fatwa-issuing idols would ever view him as an equal. Arabs within the same country can often barely stand each other, but at least they're all agreed on the inferiority of Pakistanis, Bangladeshis, Indonesians, and Filipinos. Clearly Khan felt living in Britain was hard for Pakistanis. He should have tried life in the Arabian Peninsula.

"His people" don't actually care about his people, except as cannon fodder.

Here's an interesting (to me) fact

As I watch the Washington Nationals' new fans experience the Expo-itis (unexpected early season success, followed by a drop off, a tight finish, but ultimately, disappointment) that had become second nature to me, I once again thought about Montreal's rap as a city that couldn't support a "major league" team.

I think the real factors were many: bad overall league economics; a bad ballpark (made worse by team owners and league management unwilling to consider paying for a new one themselves); a decade of poormouthing the product on the field (an interesting marketing ploy, to say the least); the fact that the Expos weren't part of a larger media business, with their own regional cable/satellite outlet.

That last one's probably the killer: a team could probably get away with being only break-even on its own if it can claim a large proportion of the ad revenue generated through radio, cable, and internet distribution. It's even better when they own the cable channel, and get a carriage fee.

Nevertheless, what caught my interest was the list of MLB franchise-sporting cities (urban agglomerations, really) that were smaller than metro Montreal (with approximately 3.6 million people). In descending order:

  • Minneapolis
  • San Diego
  • St Louis
  • Denver
  • Tampa
  • Pittsburgh
  • Cincinnati
  • Kansas City
  • Milwaukee

Oakland, Anaheim, and Baltimore don't make the list because they're rolled into the greater San Francisco, Los Angeles, and Washington DC agglomerations, respectively.

As it turns out, Montreal is the 16th-largest market in the US and Canada, by population.