Hard News, Inc.

TV as We Know It is Dead: Shift to Web-based Video Costs Producers 88% of Ad Revenues

Can you say "Doomed"?

Apparently, a report called "And Now for the News," written by Craig Moffett of Bernstein Research, came out this week, and it's got both Mark Cuban, owner of the Dallas Mavericks, and, not coincidentally, HDNet, and the pundits at Digital Media Wire all atwitter over the stark economic realities.

Cuban made billions of dollars in the internet video game, and, while he's acted the fool at various Maverick games over the years, nobody has ever accused him of either being stupid or lacking passion. So when he starts winding up the air-raid siren, it gets my attention.

From Cuban's blog:

Starting with the disappointing but expected news that journalism is no
longer a service consumers desire to pay for, he moves on to the
problems facing Internet video.

(snip)

Five years into the video-over-the-Internet revolution, we have learned
two things. First; consumers won't pay for content on the web, so it
will have to be ad supported. And second; it won't be ad supported.

Oh, shit. (*stomach lurches*)

On the web, early evidence suggests that consumers will tune out –
click away – if they are forced to watch more than 30 seconds or so of
advertising up front, and maybe another 90 seconds of advertising over
the next thirty minutes. Hulu.com, for example, which has already been
lionized by many as the future of TV, serves two minutes of advertising
for every 22 minutes of programming(i.e. the programming duration of a
typical half hour show from television). Assuming identical CPMs for
web video and TV, and after accounting for lost affiliate fees, a 30
minute program on the web with two minutes of advertising yields
approximately 1/8th as much revenue per viewer.

Are content producers prepared to reduce production costs...by 88%?

In fact, the actual economics of web-based video are far, far worse than this.

Sweetie, can you get me a hemlock cocktail, please? Easy on the ice. And see if there are any razor blades in the junk drawer?

88%? Are you freakin' kidding me? That kind of revenue restructuring would be in line with what newspapers have experienced since classified ads migrated to the web (i.e. the "Craigslist effect"). And yeah, I know, there are some shellshocked newspaper reporters/editors who will nod wearily, taking schadenfreude satisfaction that the arrogant pacotillos in local TV are about to take the bollocking that print has taken these last 10 years.


Over at Digital Media Wire, Paul Sweeting explains the problem that video producers here in Hollywood face, seeing as how they're making the same goddam mistakes that music labels made when the internet came calling:

There's no reason to believe that video producers' experience will be
any different. Like it or not, the web simply isn't very kind to
publishers, packagers and distributors. It rewards enablers. Search is
an enabling technology--perhaps the ultimate enabling technology. And
as Google shareholders can tell you, it's been rewarded. The challenge
for publishers is not to figure out how to force the web to reward
them. It's to figure out how to capture the value created by enabling
technology.



In that sense, Cuban is right. It may not make sense for the networks
simply to make their schedules available for free on the Internet. That
doesn't really create any new value; it mostly just drains value from
linear platforms.



What the networks need is to figure out how to capture the value
created by enabling consumers to access, select, aggregate, transform,
embed and share content--in a word, to use it. Anything else is just TV with buffering.

For scripted TV entertainment, well, I'm not sure what the survival strategy is yet. I do know that there is not much love in the ad world for a CPM rate hike for online video that would bridge that 88% gap. There's just too much other product out there screaming for attention ... not to mention the fact that the scripted TV content (and movie content, for that matter) is a melting sandcastle to the surging broadband tide. Trying to make back a $160 million budget from some exotic cocktail of online subscription, advertising and branded sponsorship ... well, let's just say that I'm glad I'm not writing the checks on that one. I don't know how you can possibly monetize the budgets that Hollywood is used to.

And folks, we know - dammit, we know all too well - how the media megalopalies react to revenue reductions. For a time, they throw money at the problem. And then come the cutbacks. "We have to do more with less."


It comes down to our old friends, supply and demand. If there is
demand for the kind of spectacle that you get in Iron Man or Raiders 4,
or whatever, there will be someone out there that will supply it ...
but at the price point that the people on the demand side set.

Kiss those expense-account lunches at The Ivy goodbye. All the little perks that pampered writers, directors, producers and stars have gotten used to over the years. There is going to be a lot of screaming and whining hereabouts in the next decade or so.

I think that my clients over in newspapers have actually got a significant advantage in this arena. The future of video is going to be like the future of news: disaggregated and hyperlocal. Papers can do this. Papers ARE doing this.

I can't figure out how to take a 2 1/2 hour piece of video - hell, video of any length, from a blipvert to the entire back catalog of the Museum of Radio and TV - and make it pay off a $320 million opening weekend return.

But I can teach you how to monetize short clips shot by reporters that go along with local news stories. That's do-able.
One last thing: in the comments was this gem, sure to be included in my next series of trainings for newspapers migrating to video on the web:

I've never seen ABC.com and the rest put an RSS, Email, or text message subscribe/alert button on their video pages. Instead they want us all to *remember* show schedules, come back, and sit through ads. They're blowing a huge chance to have a relationship with the audience. The sad truth is that TV networks don't want a relationship. They want us all to sit around the glowing box together on *their* schedule as if it were 1966.

When Free Just Isn't Cheap Enough

Radiohead gives music away for free - kids prefer to pirate it off BitTorrent anyway

OK, this has got to have a lot of entertainment execs reaching for the Maalox. TechCrunch reports that even though Radiohead, in a much-ballyhooed move, allowed customers to set their own price point for downloading their new album (and yes, one of the options was $0.00), within a week

over 240,000 users got the album from peer to peer BitTorrent networks on the first day of release, according
to Forbes. Since then, the album was downloaded about 100,000 more
times each day, totaling more than 500,000. By comparison, Radiohead
pushed 1.2 million sales of the album through their site, including
pre-orders. File sharing networks are expected to surpass legal
downloads in the coming days.

That's just ugly.  Basically, Hollywood, the RIAA and the MPAA have so poisoned the well with the audience that even when they try something innovative to bust through the conventional ripoff business models they have established and are clinging to, the target audience out there is preferring to go to the pirate sites to get the content.

The question that arises is, why?  Why would some mook with broadband prefer to navigate to Pirate Bay or TorrentSpy to find the same thing that he could get for free, or for what is absolutely no big amount of cash? 

Well, the first thing that occurs to me is that the kids don't trust the music companies, Hollywood or anything remotely resembling authority anymore.  The rootkit shit that Sony pulled a while back is still reverberating, and there's a lot of "up yours" attitude for the years of overcharging $15 for a CD that had maybe one decent song on it.

The interesting bits come in the comments on the TechCrunch story, where the commenters basically slammed Radiohead's site for being too crowded to allow downloads for 2-3 days, and complained about the Big Brother feeling of the registration process. 

Once again, interface design comes into play - like our recent experience trying to buy a classified ad from the LA Times, which resulted in an entire lost morning (simile alert: "it was like trying to buy something in a store, only the cashier keeps making you go back to the store and fill up your cart and wait in line all over again") and ultimately, no purchase of an ad in the LA Times.  They really are stupid over there.  When a company makes it difficult for you to give them money, there is nothing but bad news, layoffs and ultimately bankruptcy and extinction in the future for that firm.

The best that can be said from this is that maybe the labels are learning from it, and they might be ready to actually treat their customers like human beings, rather than criminals.

Whoops! Guess NOT.

Santiago, Chile - Day 1

I have arrived in Santiago, Chile to find that it is one of the cleanest big cities I think I've ever seen. Especially in South America. I mean, this place couldn't be MORE different from the Caracas that I remember, where there were massive random holes in the sidewalks that would break your ankles if you didn't constantly keep your head down to watch where you were walking.  Where on Thursday nights on Avenidas Fuerzas Armadas, the textile shops and restaurants would their trash out into the streets, and the stinking rotting piles would be swarming with filthy, slimy sewer rats by the time I got off work and staggered to the subway.

No, this place reminds me, if anything, of Calgary. There are shiny new avant-garde looking skyscrapers all over the place, and even more cranes dotting the landscape, erecting more. The streets are smooth and well-maintained.  The cars are shiny and well-maintained.

The quibbles that I do have are that it was a drag getting into the airport this morning at 5 a.m., after flying for 15 hours, to find that after waiting in the  long immigration line, I had to get out, walk all the way across the terminal to get to a window where I had to pay a $100 "reciprocity" fee to enter the country.  The Canucks get slammed for $167, so I don't feel so bad.

My guess is that this is close kin to the fees and fingerprinting and other indignities that the Brazilians have implemented for gringoes - but only for gringoes - as a result of the parade of stupidity that Homeland Security has foisted on foreign travelers trying to get into the U.S. in the last six years.

Anyway, the other thing that blew me away was how much the airport in Lima has changed. When I was first through there, the whole place resembled some 3rd tier airport - something that you might find in Podunk, Texas.  These days the floor are spotless shiny marble.  There is a Peruvian flute band playing on the concourse. The stores are all new and look like gift shops that you find at LACMA or next to Ceasar's Palace in Vegas.  I almost bought an amazingly soft Alpaca blanket just because it felt so inviting.

Anyway, here are a couple of shots out the window of the hotel room, and of the room itself.  The Hotel Novo here is obviously designed for Japanese visitors - the furnishings, the height of the tables and toilets and the small space are reminiscent of the small hotels that starting springing up in the early 90s in Hawaii, specifically to cater to the Japanese tourist trade.

Now all I have to do is to pull two 90-minute presentations out of my ass (complete with funny and penetratingly wise slides) by 11 a.m. tomorrow.  Did I mention that I am sick and my back is in agony from 15 hours confined on the flight? 

I did want to be challenged more in this new career/life...

K-Fed and Britney: Divorce, Web 2.0 Style

An (absurdist) lesson in the lightning multi-platform flow of information these days:

It is worth noting that the same day that I cited the election results as being exemplars of the pervasive and still growing influence of the web and New Media ... comes this example of a confluence of all manner of instant information flows.  This incident is a valuable case study in the way that the cameras-are-everywhere ethos of reality TV ran headlong into instant wireless communication, all to be regurgitated as streaming video on the web, and, of course, immediately tagged and put up on YouTube.

What earth-shaking event could bring such powerful forces to bear?

Britney Spears filing for divorce from Kevin Federline, of course.

It seems only logical that Britney, who is immersed in media overexposure - no, strike that - she's been floating like Neo in the pre-awakening Matrix pod in a thick funky slimestew of pervasive media hyper-exposure since she played the Naughty Catholic Big-Boob Schoolgirl ... (erm, ahem) ... it seems only logical that since every other goddam move in her life is instantly observed, uploaded to the celebrity media cloud, tagged, blogged, cross-referenced, Dugg!, Tailranked, Newsvined and then translated into Urdu ...

...it seems only logical, I say, that her divorce is also created, pervaded by, exploited and tut-tutted by the very media that has spawned, tormented and controlled Britney's very existence.

A brief chronology is in order:

1.  Britney's ne'er-do-even-average-let-alone-well husband Kevin Federline (aka K-Fed, Federleezy, or the most pathetic no-talent rapper since Vanilla Ice) was being followed around by a camera crew hoping to do a reality-TV show about his new album.  Why anyone would waster perfectly good electrons to capture this is beyond me. But whatever.

2.  K-Fed was being his normal embarassing self - and for those of you who have not caught his act, the very act of observing his act is to be an unwilling dupe, a victim, kind of like volunteering for the traveling hypnotist act back in college, and awakening to find yourself naked, on-stage in a mass circle jerk, regressed to the age of 8, with a stack of Legos crammed up your butt.  Or was that just me?  Anyway - K-Fed was going off about how great his career was, how Britney was his biggest fan, pushing him to do his genius music, blah blah, transparent desperate stupid lie, blah.

3.  At dinner, the camera crew caught K-Fed scrolling through his Sidekick mobile device. No big deal, yeah, yeah, his bored expression said.  And then -

4.  All blood, all plasma, all fluids drained from his face. His jaw dropped like Bush dropping Rummy.  Yep.  Britney had told him she wanted a divorce VIA TEXT MESSAGE.

5.  The next one deserves a number all its own, even though it is just one word.  That word is:

6.  Classy.

7.  So now comes the fun part - Brit dumped him - via an instant email messaging system - that was picked up by reality-TV everpresent cameras - and the whole thing was uploaded and put on YouTube within A DAY.  And now the web has the papers detailing the two sides starting to battle over money and the kids.

8. And of course, then along come I, to blog about the whole sordid mess.

Now then.  I used to work in the celeb scandal mining biz. But it used to be that meltdowns like this took days, weeks or months to happen.  This one happened in HOURS. 

Wow.

From top to bottom, the news - you know, that word really doesn't even fit anymore, but "information" just seems so squishy - business has changed.  Blogs are the instant watchdogs of the electoral process.  They drum up support for candidates, they extract campaign contributions, they suggest policy, hell, they are all over the process.

And now the New Media - by which I include 3rd-tier reality-TV cable outlets,  streaming web video, instant messaging, blogs, etc. - are all over the celeb scandal niche? Folks, the war is over.  The world has moved on.

 

Etymology and Rock Band Names

As a person obsessed at time with etymology (which is the study of words, as opposed to entomology, which is the study of bugs, also known in my house as  "Those Disgusting Crawly Things That Must Be Killed") I love this list of band names and how they got to be named.

If I had more time, I'd whip up some impressive (sounding) thumbsucker on identity and creation thereof, and how that is all tied into the Great Big Inevitable Digital Thing, but it's a Friday night and my ass hurts from sitting around all day in the office.

So here's the link and a sampling:

BUCK  CHERRY - possibly a goof on the often heard speaking disorder wherein the speaker will interchange the first letter{s} in two successive words i.e. "I have just   received a Blushing Crow  {crushing blow}  Metallica uses such a device in   their album entitled "Cunning Stunts."  Buck Cherry would then equal Chuck Berry, famous classic rocker.

GREEN DAY
  -  1)  It may have come from the sci-fi movie Soylent Green when they said "Tuesday is soylent green day."  Soylent green was a food  produced by a corporation to feed the way overpopulated masses; turns out they   were also making it from the masses!   2) Another story is   that when they dropped out of school to be musicians, their principal said "It'll  be a green day in hell before you make anything of yourselves".  3) Some say that in drug slang - if you smoked pot and goofed off all day, it was a "Green Day."

LIMP BIZKIT
Got the idea from Fred Durst's dog Biscuit who has a limp.

SILVERCHAIR
-   1)  The Silver Chair  is one of the titles in C.S. Lewis' "Chronicles of Narnia"  in which Prince Rilian of Narnia is held captive under the spell of the witch who killed his mother.

During brief moments of returning sanity he is restrained in a silver chair. He is rescued when two children magically transported from earth, and a dour resident of Narnia find him and destroy the chair thereby lifting the curse. 2)  A combination of "Sliver" by Nirvana and "Berlin Chair" by You Am I. They were requesting the songs from a radio station and the name was inspired by notes a band member made to himself to remember the song titles while he was calling the station.  * Original name of band:
Innocent Criminals.

LA Home Electronics Show

The LA Home Electronics show is kinda like a CES-lite.  For all that, there were a lot of high-end gear manufacturers there, setting up their booths and blasting tunes to roomfuls of rapt audio nuts.  I wandered around with a mini-disk recorder (there were a few amused raised eyebrows at such niche audio gear - guess it didn't have praesodymium-hafnium magnets in it, so it was obviously plebian) and a camera to record the fun.

The main impression I came away with is that Sony is absolutely bathed in flopsweat: they are seriously clenched-jaw freeked at the thought that their Blu-Ray franchise is shaping up to be Betamax.  I've written about this before, and seen the stories that others have written about it.  But it was impressive to see Sony take over a theater room to project movies (sorry, couldn't take pictures of a dim projected image) while also having a separate room to show off its monitors.

To top it all off, at the end of the day, Sony arranged for a couple of busloads of people to get ferried over to the Sony lot to take in a gala demonstration of how gee-whiz wonderful the whole Blu-Ray standard is ... or will be, once it actually hits the store shelves.

Meanwhile, the digerati wandering the hallways with their bags of XM radio swag muttered darkly about how the new Sony disks would probably also put tracking viruses onto your hard drive.

Embedding Experiment with You Tube

Man if this type of technology actually works, in the long run, this will allow everyone to have and share all their video moments through blogs like this ... no man is an island, but he very well may be his very own TV station and multi-media producer ...

I post this because this is the soundtrack of the Memorial Days of my youth, which I remember as endless long-shadowed warm mosquito days spent running around with my cousins, throwing frisbees and footballs, and jumping into Wisconsin lakes that had not yet scummed over with algae from all the farm runoff.  I had never really understood why a hottie like the mid-70s Cher had flipped for the greasy, drugged-out Greg Allman, but watching this video, I kinda get an idea why.