The (industrial) (r)Evolution of Media

The Social Trending Dynamics Re-Shaping the Media Business

1 05 11 note: as I look back at this diagram the smaller privacy related trending issue should be a much smaller shape relative to the other macro trends. It will still have a monster impact over time on how it shapes how and what businesses offer consumers.

orig publish date:  Oct 9th 2010

The diagram below establishes basic proportions to the social trending dynamics shaping the business of media.  What We The People want from tools that serve us in getting the content we seek, the way we want, is where things are going. 

This diagram below matters because it effectively organizes a hierarchy of effects shaping demand patterns. It may seem very simple but it goes a long way toward predicting a number of events, not too far away, in the process I call the (industrial) (r)Evolution of Media.  

 

There's no doubt this description is simplistic. It is intended that way.  Using trending dynamics to see how an industry serving critical social needs will evolve is not a fine tool but it does allow for much needed directionality when most now are looking in very different directions.  Yes, it is also intended to spark conversation. And since diagrams can often say so much more in the same space I will let this stand with only the few comments that follow.

You say you want a revolution! 2011: the first year true convergence is possible

A little looking back at 2010 to look forward this AM:

The future of the Advertising based business model is very bright (indeed!)

At the end of the year, I think this was the most important post this year as it will relate to the challenges of the next two to three years especially.  As the excitement surrounding new pay platforms seemed to distract us from the reality that people are looking for easy ways to get free content. A few can and will pay but the real point is how Choice is changing the balance of power in all content relationships. There is less and less room for greedy intrusions.

Check out this link that discusses a Pew survey this fall: Pew Survey Here. 

Some numbers associated with the survey:  1003 adults surveyed. Of them, 75% used the internet occasionally or sent email. Of this 75% group, 64% of those people said they paid for content on-line.

BUT.

I encourage you to click that link to read the details. The screaming metric to me was how this is not a deep dynamic. Of the 75% of the 1003 adults who do use the internet occasionally or more, only 25% of that smaller group actually paid for content on-line and even fewer paid for more than one kind of content (maybe 1 in 5 people from amongst the 75% of 1003 adults).  

I am not quoting these stats to make a point other than a very general one made in the September 10th post here linked again above. The ad based business model is still a legitimate, accepted, and necessary social contract. Moreover, the businesses that genuinely respect their customers in that relationship will prosper. Respect? Yes, Respect:

The Future of Old Media and New Media: What Really Matters Right Now?

I also wrote a lot about the TV networks and Cable TV retransmission pricing issues this year. Here's the post that sums up those thoughts best. Change is coming soon. The era of the small screen will force it to begin sooner than later. A great inside perspective weighs in with this bit of common sense

TV Networks, Cable TV distribution and the Coming iroM Events in video modalities

Will the iPad unintentionally pierce the cable TV bubble? (it'll now be the smart phone but still a good set of ideas)

Tablet PC's, fences, and information ownership as seen through the generational divide (Tending to your own herd of ideas (IP) out on the frontier and not demanding that someone else to do it for you) Does this sound familiar Viacom?

The Perishability of Content: Re-Evaluating the social contract, slowly  This idea is still ahead of its time but how much I wonder?

The difference between Pioneers and Settlers   This last linked post was the most read of 2010. Pioneers are not only people who cut down too many trees in the American West or stopped up other people's water supply.  They take liberties that were absolutely necessary for them to survive initially in a raw and undeveloped space.  As markets eventually develop around them social values develop and change.  The Pioneers are forced to adapt to these market based "impositions". I guess the real point is that successful pioneers must eventually become Settlers. Google is adapting to changing social expectations. Apple is clearly lagging and trying to hold onto fleeting glory.(remember the last line from the movie Patton?)  2011 will be a busy year in terms of the settlers stating their needs and Choice urging them to take more control. This is why social trends are better referred to as impulsive behavior.

Convergence is coming as told by the loud whispers of an explosion in smart phone use. Market problems with limited wireless access must be solved. OVERT Greed by access providers must be controlled if not stomped out. If it is, then the obvious strains in the critical media-verse will be short lived as adaptability will prevail as specialization is made able. This will still disrupt many existing content companies but the products will still be produced as tasks are increasingly distributed.  If however, we allow spectrum limits on the market for digital access to suppress needed quick growth and the entire media-verse will suffer with the consumers of content. When you really think about it, this issue goes well beyond profit margins and right to the bottom line of the health and well being of our American economy and republic. None of this is an overstatement...and this is how I characterize coming events in what is best called iroM (the blog's name). I am confident the right things will happen. It is too important for that not to happen. Convergence is both necessary and good.

Happy New Year!   Dave  

I recommend reading this letter/interview published by investment adviser John Mauldin on his Investors Insight web site. The interview of Michael Whalen is a very timely take on the business of media. (old media, new media, and content distribution as we enter a mobile age) The interview covers many points I have made here previously about where consumers are taking the business of selling content as well as some apt market analogies that exist today because of changing social dynamics. It is longer than a usual read but I highly recommend it if you care about where the business of selling content is going. What I have previously called, iroM related events, are coming to us very quickly. It will be an unsettled period of transformation but I believe it is possible to see very positive outcomes if what truly matters is focused upon by enterprises that wish to serve the American public in the future.   Dave

 

an update to the 11 29 post here about Google TV:  Google delays Google TV launch  as they focus on getting the software right. Apparently, Google's very successful Android mobile OS (as well as other software issues) needs to be better coordinated with this effort.  The Google TV roll out has been promoted with Logitec in a popular TV campaign and will now not be released at the CES. Mobile is the next huge consumer segment for video growth and where the Google bet is already placed. Their Nexus S is a cool phone by reviews I've seen and is selling well but, when they get all channels fully coordinated, this could lead to a meaningful new chapter in content distribution. Moreover, Google is developing their own wireless access networks. I have no idea how long that will take to roll out.  One key issue is the net neutrality debate and specifically how these rules will affect mobile as opposed to the cable access companies. Read about it. This issue is not just a technicality. Yes, it affects Google's interests directly but the larger issue here is about unfettered access to content across new mediums (like mobile) where big players are fighting for control that will affect how all of us spend money and time...and that is the business of monetizing content.

The future of old media and new media; What really matters right now?

Measurement...and partnership (and commercial partnerships with customers increasingly means "permission")

We have been living in a transitional age where technology is advancing so quickly that many socially accepted standards have been eclipsed and overlapped by competing forms of measurement. Which are better or best?  Is there a best right now?  Is it coming soon and what is it?

What really matters in the business of selling content today and yesterday has to do with measurement.  This is not a revelation to anyone in the business. The question is, how or when will a standard emerge that captures the updated value of engagement with content while being honored by the very people it means to measure?  If you are in the business you know just how challenging these questions can be. The harsh reality for all the critics of old media measurement is that measurement of consumer behavior on the internet (all things digital) is about to get even more difficult. It's been hard to miss the headlines but in case you did; both Congress and the FTC are considering new rules to stop many tracking practices associated with all things digital. The fact that this is happening is a result of social momentum in this area and the fact that it is building.  So, are there any answers that will direct meaningful new efforts by business, or support existing ones?

A consistent measurement standard matters because it behaves like a currency in creating accurate values associated with the advertising based business model. A very large industry stands upon these measurements and over the past decade + fractionalization of demand and measurement have occurred along with multiple currencies.  The tech world sees it one way and feels justified in supporting all the positive reasons behind tracking efforts. The old media world sees it another based on long experience and, the world of social media now sees a new way developing that makes them the center of the media universe.  Will their new advantage last and develop into outright dominion or, will behavior change along with attitudes toward privacy and sharing just as they have grown in recent years?

Is there any way to organize all these conflicting perspectives in how they will be affected in years ahead by social demands from the mass markets?

This post will be a little longer than others here (but not too long hopefully) because I will combine a key social trending issue with these specific industry challenges to paint an outline of the challenges directly ahead:

Google TV versus Choice; big picture observations

The Choice trend in the realm of content consumption is not hard to see. Now that people see it is possible, they increasingly want it in lieu of the old way.  Serving Choice profitably as a business is another matter altogether. The industry has been set up for decades to serve up content in a broadcast (appointment) mentality and that dynamic has been used in almost every media business model for many decades (in the US). (It is much easier for an enterprise when perish-ability works against the consumer and not the producer.)

Enter Google TV.

I read a review of Google TV recently that described it as techy, somewhat complicated, and for geeks. As one of the people who still has 12:00 blinking on my VCR, I can identify with both sides of this discussion. Google TV is not a break through for now. It is search being added to the dimension of what we think of as the tv experience. What I think really matters as far as Google tv is concerned is more likley secondary to what others see: Search rankings, over time, will become more and more perishable. This is a small factor now but may not be as the world of video content is organized into a digital marketplace that serves Choice.

The (US) social trend toward Choice in all our content needs is straight forward but requires all manner of content businesses to serve Choice and not "broadcast thinking". Excuse the repetition but this point is central.  The major content service providers in place now resent Choice, not because they resent their customers but because it cramps their profit making system.

Why can't I buy CNN (as a cable tv customer) this week and not for the next two weeks if I do not need it? Why isn't it free for watching commercial ads?   Why can't I easily download a movie in theaters now that I can begin watching on my exclusive four inch screen and finish watching at home on my exclusive wall mounted TV? When will I be able to seamlessly utilize search in all my different modalities for content? Well, that one is here right now. That's Google TV. It is one small step for TV and one very small step for Choice.

Search is a critically defined capability and Google may have won this increasingly narrow race (past tense?). It is a specialty. And now it is increasingly a utility. Or is it?  In the scheme of Choice it is one element of a much larger system of enterprises that must be created to serve Choice. This is not futuristic nor is it idealistic. It is what is needed.

Maybe you are one of the large group of people who utilizes (regularly) many of Google's services other than Search, then Google TV is no mystery and is really a very simple development that has potential to grow distribution but, it is about making their search function just a little more ubiquitous in the changing content landscape. It is a natural step in convergence. Technology adoption begins with the geeks who eventually offer reasons to use it that makes sense for our larger changing (shared) value system.

I do not believe that millions of channels of distribution independently strewn across the web is our destiny for Choice but, right now Google TV seems to make ready for that possibility. It is more likely that Google TV will simply be yet another prime TV Channel in the new gadget mindset in the next several years as we reconfigure our notion of "what is TV?" Search is part of TV...that much is now clear. Or at least it will be when masses of people use search in conjunction with their big (home) screen viewing as this availability is well known. I have some gadget oriented friends who do not have search or their computer files anywhere near the home tv yet. I suspect this will be a simple transition and will happen soon. 

Eventually however, I believe that less channels and not more will prevail as part of Choice. When these new channels begin to emerge several years from now, they will serve customers and not fleece them or explain why getting it their way is expensive. When greed and inefficiency (and excess debt) are wrung out of existing media companies of the present the Choice trend will speed up and both sides of the marketplace will benefit at at an increasing rate. That inflection point.....when more Choice and faster increments of it are coming our way will be an important time.  Is Google TV one of these increments? Yes, but it is a small one that is preparing for other changes in the market for video content.

The critical innovation consumers are waiting for right now is: easier access to content. The market for access is bottled up in the old system of distribution.  More distribution channels through digital access pathways will create opportunity for competition. High speed digital access is not a luxury nor is it a suitable place to have limited competition. Many industry people would tell you the market will build more bandwidth as it is warranted. If we allow businesses to indirectly conspire with regulators to bottle up high speed access then the market for Choice will develop like feet bound in reeds (meant to prevent natural development). This is not some scary vision. The market for content must be free and that means access must be highly competitive and not allowed to exist as an oligopoly like cable tv is now. Allowing this market dynamic to exist will distort Choice. It will limit Choice.  This is an important part of freedom in our society. It is not idealistic nor is it needless worry. It's about expression and creativity and what we build using shared ideas in a free society. These added fee structures, (the ones we allow to exist) are taxes no matter who gets to spend them.

Google TV is a great step in the right direction as it prepares for an open competitive market for video content but it reminds us just how many other small steps are absolutely necessary to get to Choice.  

 One last thought: Google is increasingly showing itself to be a "settler". It is transforming itself into a member of our new digital communities and is adapting to our collective changing values. This should be recognized because there are plenty of players out there using proprietary software platforms to limit competition and replace it with coolness in lieu of delivering real Choice. In time, these pioneers will be the naked emperor and those that are supporting our changing values will be the new general store in town that people know to give their business to because it is good for everyone. Frontiers must be settled and settler's views (as opposed to pioneer's views) ultimately win all arguments in the long run. No matter how dynamic a pioneer once was in conquering unseen challenges others could not face, the new shared values are all that really matters. Choice is the value shared by the many and not the few...no matter how cool a pioneer once seemed to be in doing what no one else did before them. 

 A few posts from earlier this year you may want to read:

Revolution or Evolution of Our Media Tools? iroM 3 10

The Difference Between Pioneers and Settlers   iroM 6 10

Viacom's suit of Google-You Tube is making media's long term challenges very clear  iroM 3 10

Five Key Developments Impacting the Business of Media and the Social Trends Behind Each iroM 5 10

Cable company takes a step toward Choice begrudgingly

Time Warner Cable announced late this week a new lower priced cable tv package for what was described alternately as the lower end of the market or frugal customers. It was stated in this article that this offering would not be bundled with high speed cable connections or phone service. Apparently, poor people do not need deals on those things. The article also pointed out how if this package should become very popular with customers that it would have to be amended to include more expensive cable stations. Did you get that last sentence? If it becomes popular, then the price will be increased and the package changed.

I will leave you with the link for this article after a few thoughts:

What kind of a market participant produces a package it really hopes will not become popular and then if it does, it promises to change the package and raise the price?  Yes, this kind of thing may well happen in what some people call a free market but, the player doing this is either operating in a monopoly or an oligopoly, giving them unfair pricing power over the market they serve. Interestingly, every other competitor selling content on the internet is having to compete very broadly on the level of quality being sold, consumer satisfaction toward all products, and/or individual prices and bundled package prices too.  How long will it take for tv style content to catch up with the rest of the digital economy?  The next election cycle maybe? Maybe it does not need to take that long. Maybe, the less popular cable tv stations can sell themselves for more than they get now by going it alone over the internet? Lifetime TV is worth more than .28 cents a month, right? Oh wait, the cable tv companies and the old tv networks own these lower prices cable stations now, right? Enough sarcasm.

It will not take long before a handful of video content providers begin going direct over the internet for distribution in order to maximize opportunity and this will be a great shot in the arm for Choice. It will also loosen the death grip cable tv distributors have on pricing.  Make no mistake about it. Networks and cable tv distributors fear this day.  This is not about winning and losing, however it sounds. As soon as Choice is delivered, any company doing it better will win and so will their customers. I am pretty sure that will begin happening just as soon as a few companies all realize this at the same time. If you glue this subject together with the reasons that demand better metrics covering consumer's actual use of content, then you may begin to see where and how this industry could be more effective competing very broadly instead of with one or two other fixed competitors.  Vertical stacking is holding back the tv business from being better, for now. Networks, most certainly, think of it as survival right now.  That's too bad. There really is a win/win waiting out there for all involved. Yes, much work remains to be done in terms of measurement and specialization. That is the central challenge of where we are taking the media business. Selling content is a good business because demand is still growing nationwide and will continue to especially as companies get better at delivering Choice.  Marketing efforts inside of an oligopoly can sound a lot like the leader of a dictatorship talking about the ideals of freedom in their country. You know something obvious is wrong or missing. The good news for us here in the US is that this type of situation in tv distribution will not last forever because the light will eventually shine right through the issue for everyone to see clearly. For now, the biggest holdouts are the biggest producers of content. Eventually they will be the most independent of the producer/distributors.  

Time Warner Cable TV To Introduce Lower Price Package   11 10 Bloomberg

Not all innovation will serve Choice equally (net neutrality reading recommendation)

iroM, the (industrial) (r)Evolution of Media is a social trend where we (the US) are collectively taking our media businesses on a journey to serve us Choice. Markets (of people) lead business innovations.  Technology is ahead of markets. It is only in the broad social adoption of various technologies that we begin to see our shared values express themselves through business' tools over time. This is why knowing which innovations will stick is so difficult, because it is challenging to see how socially shared values will shift next. **

Technology is making (customer) Choice possible but there are a few very important issues in the way of us getting Choice.

I went to see Barbara van Schewick talk about her new book Internet Architecture and Innovation a few days ago. I was certain I was jumping in over my head and would not understand the discussion but since Net Neutrality interests me, I thought it worth the time. I was amazed as I listened to her talk about such complex challenges in such everyday language. Her years of work, and diverse background have allowed her to distill a complex challenge into simple packets of choice as we collectively move forward with our digital economy. 

I just ordered the book myself and am very happy to have had the chance to hear her talk before I did.  I am unsophisticated when it comes to many tech issues. I did not realize what specific considerations and options are available to us all moving forward. If anyone knows how to discuss the subject of Net Neutrality, she is ideally qualified and her specific ideas, the core suggestions in the book, are obviously well thought out.  Even better; now that I know her position on which path to take, I am even more eager to read the book. Do not let the tile or subject intimidate you as it did me at first. This important subject breaks down into small bites. (no puns in here, really)

Political discontent is all around us and may well get worse. In the meantime, so many people feel like businesses have undue influence on the legislative process in Washington. If you understand how the one issue of net neutrality can change our digital future, then you would not stand aside and let business interests decide to create closed or discriminatory networks that sound as if they are open to all that matters depending upon the adjectives used to describe them in legislation.  Freedom is as big an issue in the digital domain as it is in each of the 50 states. As always, freedom requires trade offs and these must be discussed openly and understood. First, you must know about the available choices and the whys and whats attached to them.

Read this book and be informed. I am. It is important to our future and especially to the next generation of Americans.

A good review of the book is here.

 ** changing shared values is the core of the socionomic perspective and also what my other blog focuses on

ps. While I do not talk about social mood much on this blog I do refer to it in the context of us being in a period of social correction, which I define to be larger and longer term periods of negative social mood. During social corrections societies of people tend to construct more rules, are generally critical of large business practices, and have a generalized impulse to control things that were once believed to be better off free of regulatory scrutiny. We see simmering this all around us today no matter where you look in our economy. As we collectively move through years of social correction you can count on structured rules being errected that do not exist now with regard to this subject. This almost certainty is why I urge this reading now. The argument is only just beginning and the result has yet to be hammered out. That makes this read that much more timely. Dave

TV Networks, Cable TV distribution and the Coming iroM Events in video modalities

How we get and use video content is changing and will change more the next several years.

Here are two very distinct opinions on what is happening in the world of TV/video content:

The Man Who Blacked Out the World Series Say Politicians To Blame  Bloomberg 11 09 10

Why Hulu is the OPEC of Online Video  Mark Suster's Both Sides of the Table blog 11 09 10

On the heels of Fox TV's blackout of the World Series games (in 3 million NY homes) on Cablevision, neither side (Fox or Cablevision) is backing down a week later because they sense growing concern wanting to point blame. Fox contends Cablevision should make customers pay more to get their channels so they may watch their advertising and the content between commercials.  The same Fox exec also states that government intervention made the disagreement seem worse and last longer. (It's the "They made me do it!"argument that allows them the opportunity to use the negative phrase "government intervention" as if the TV content industry is a freely competitive marketplace being hobbled by intervention, and is not really a vertically stacked deal forcing industry)

No matter your opinion on recent developments it is clear that TV content is slowly being forced into the same meat grinder that every other medium has suffered since newspapers and magazines migrated on line into digital coding. It really began with the era of recordable CD's if you follow closely. The majority of record label dependent musicians have been re-tasked to performing "for supper" in this new era of technology and lower prices. Once again, success in the music business is more likely based upon live engagement. I believe it is important to see that this is happening because of changing shared values.  If you focus on the technology you risk missing why we will change again soon. Focus on the behavioral "why" and you may just see a lot farther.

iroM, as I call it, is a social group process. It is a long term macro trend of a critical social need...information.  To see it in the best light you must use flexible time frames to see different parts, otherwise it is a lot of chaotic noise...like this recent cable tv "negotiation".  The technology is in place for TV content to have already migrated on line but network studios are holding their fingers in the profitability damn trying to hold onto the present levels of pricing but, players like Tivo, Boxee, and X Box, Google TV and other emerging distribution channels continue to evolve video content toward the Choice mandate.  Choice is where the business of content will go because that is where customers want it to go now that it is clearly possible.

My goal for this post is to have you think about the importance of use metrics in valuing our content experiences, and then inject the two opposed views with this important feature in mind: Fox TV's executive in charge of blackouts and Mark Suster's Both Sides of the Table blog.  Each have very different views on the hows and whys in the world of Video content.

What's most important (IMO) is that if engagement metrics were improved, much would change quickly in the world of video content. This may even be a catalyst to break up cable tv oligopolies and at the same time focus networks on a better definition of value for their content customers.

As the changes that Mark Suster suggests are coming in his blog post, so too will even more changes behind those that support increments in Choice. The part I see mattering most (now)is the development of metrics that will support new channels for video distribution...and eventually, probably smother them too. It is my contention that the currency of advertising is waiting to be reinvented or at least, sharply updated. The metrics of engagement are what give content/viewership value.  CPMs and even the impression in the digital age is very different than an impression in an opened newspaper on the breakfast table or office desk two decades ago. Our ratings metrics are out of tune with content consumption dynamics. We need a new way of seeing engagement; one that allows better descriptions of who and how much. 

Social trending directly opposing these needs are the privacy trending dynamics developing around us too. This will complicate everything but it will also guide the process in time. Social trends are about changes in shared values that distribute widely. There are answers, and they will unfold in waves of change. Right now, reach and frequency mean less because of the diverse formats of achieving impressions deliver different value.

Inflation & deflation are not consistent forces in markets. They affect some parts of value more than others and in the process, often scramble the central idea of value, especially as new tools become available. This is, again, why technology is a secondary concern to "how we (collectively) value things".

The metrics of engagement need to be effectively bench marked for today so that they capture what value is to content consumers today, and only that will newly satisfy advertisers. 

Cord cutting for cable tv consumers is now possible with declines in quality. Soon it will be much more common and that eventual demand will create new opportunity. The real gold in this process will go to any one enterprise that can better capture value delivered in the content delivery exchange. Ratings metrics are the currency of the content world. The real question is how do you make them more transparent and realistic to both the consumer and the advertiser at the same time?(It's a tough question!)

The answer is in trusting the consumer and really allowing content customers to be "partners". This is a platitude so often heard in many businesses but one that will be realized only when it is delivered in a ways that acknowledges Choice. Fox is not ready for that yet but customers are waiting and the newer competition knows how much it matters.

ps. My latest few posts here might indicate I have a big problem with cable tv companies or networks. I do not. I see a much larger, longer term picture of change where we must re-establish benchmarks of value to the content needs in our lives. This will take a few more decades to evolve but that does not mean things will go on as they have for the past several decades. They are already changing just by introducing smartphones to 1 in 4 people in big markets. TV will not be kept off the smart phone or the tablet modalities and that means it is headed everywhere. (Fox may choose to be left behind, that is their choice.) This introduction of video to mobile is breaking the last barrier down on the hold cable tv had on our collective perceptions about what TV is really about in our lives...just keep in mind that every other media medium has gone through this change already. Sometimes, the original pioneers have to be dragged into a new day kicking and screaming, and to be shown their place in today's world.

What really matters to all Americans ? Choice & Smarter Spectrum Allocation too

Social trends that are everywhere can usually be effectively described in just a few words.

"Choice" is the dominant theme in how markets for content are developing now and for many years since the internet has entered our everyday lives.  Since I first began writing about this a few years ago I've noticed how many other writers characterize it as a "control" issue. That's fair. It is also very revealing. If you are writing about control (in this sense), chances are, you connected to the side losing it. If you're gaining it? Well, it can be confusing with regard to the frequency of changes.  From a macro perspective, it is a process that is being guided by socially shared values and not businesses telling us what our values are, because more often, businesses offer us reflections of shared values that are lagging indications of what really matters.

In today's Washington Post, Julius Genechowski, the current FCC chairman opines about the importance of spectrum allocation going towards the exploding mobile internet revolution we are witnessing. If you are not new to this blog then you might think I would celebrate this letter of his but, I find myself responding with considerable concern while also welcoming his editorial. Here's why:

Many times in these pages I have urged the further development of spectrum based allocation for wi-fi and wi-max platforms to allow Americans more ubiquitous digital access, all across the US. It is obviously needed as his editorial clearly today states. It is also essential, however, that in this process we balance the competing interests reflected by our government agency. "Balance the interests" What does this mean?

Mr. Genechowski argues in a very generic manner how some unneeded spectrum allocated to TV companies might be sold off to build new wireless opportunities. Here's the problem:  Spectrum is not real estate or real property. Spectrum is highly unique.  It is a precious and very limited resource owned by all of The People. The notion that present users of spectrum must somehow be compensated for giving it up after enjoying the benefit from it for many years (and are often no longer making active or productive use of it on behalf of all Americans) is somehow owing to an outdated set of values that are supported by businesses lobbying our government.  Think about it this way: How did we ever get to where our government needed to tell us how some businesses that fail must be saved with our money for our own good. I know this argumentation has been overused lately but, these two arguments are from the very same family of thinking and are part of a social era that is now ending because shared values we collectively hold are now changing.

Spectrum belongs to all Americans, and should not be sold forever to businesses with the highest bid. It is a national resource that cannot be recreated or washed away. It does not need to be insured against damage.  Spectrum is a conduit between all the people and it is an essential social resource. I admit it is a form of property and therefore any taking might be argued that compensation is due.  The chairman's letter this AM suggests how a lot of it is being wasted right now.....mostly because there are large unused segments of the old broadcasting allocations.  In many cases these broadcasting assets have declined by 75% in value in the last decade.  However, each by itself is not made valuable just because there is another use for the spectrum.  In almost all cases, large chunks of broadcasting frequencies would need to be bundled to have enough to build local wireless platforms for digital access. So, public need is running smack into the same brand of defiance as many dot com stock owners has as they rode their shares to zero value. Unused broadcast licenses are not stores of value that the public can tolerate as mobile digital demand grows exponentially.

Part of the conditions we impose on the future use of spectrum should involve be some kind of test of value being delivered in exchange for its continued use. Tucking it away so it might appreciate should not be an option...nor should largely unused transmissions be allowed to justify holding onto this scarce resource.

If America's electromagnetic spectrum is to be allocated properly and in the national best interest, it must be leased on a conditional basis that favors the interests of citizenry over the interests of businesses, who have considerable influence with our lawmakers in Washington. If the public use of a company's spectrum allocation is a tiny fraction of what it once was, the right of the people to reclaim their national resource should be available and enforced. This is especially true if alternative channels of distribution (for the signal) are available now and were not previously when the spectrum was allocated in exchange for nominal fees.

Choice is the true American social priority in this leg of the information era trend. It is about all of us being able to get the information we need where, when, and however (modality) you need it. Matters of profitability must, in this specific case, be exceeded by the nationally urgent need to expand our digital infrastructure.  Profitability can only ever be considered second to the nation's need to communicate efficiently and effectively. We have entered a brave new era of new technologies that allow us to share exponentially growing numbers and layers of ideas, and Choice is how we will make the highest and best use of spectrum.

I am not a lawyer but there must be a clear differentiation in the future between the higher priority nature of public spectrum based services and what title to spectrum rights actually conveys. What I am suggesting here will cause considerable litigation so the priority now should be to unwind parts of our spectrum that can be easily reallocated because it is unused and less valuable to current holders in the small bits as it has been parceled out over the decades. The other parts will eventually come back to the nation's inventory as the era of trading little pieces of localized spectrum becomes even less valued as current consumer modality use shifts to wireless from broadcast technology. Is eminent domain a potential pathway?  I think so. The ability to hold and use spectrum should be highly conditional on the specifics of use and presently, in these small distinct chunks, it is less valuable than if we gathered it up again and deployed it for modern uses.

Reallocating spectrum Mr. Chairman, is a great idea but how it gets done is critical to the fulfillment of Choice for all Americans. If, as a reader, you choose to focus on the aspect of control, then you are likely exposed to a business interests concerned about declining value of existing spectrum rights.  The value of some ideas and property goes up and down with social mood over time.  This is an important part of how social trends develop and eventually dissipate. How did those pieces of spectrum become so valuable? ...and just why it is that they have lost so much value so quickly in recent years?  The first 80 years of broadcast was the true beginning of the growth phase of the information age. We are now about to accelerate yet again if we allow it to happen. It has been a remarkable decade+.  Now, it is time for all Americans to take it to the next level by acknowledging our changing shared values. What really matters most?  Choice matters most because it will make us all better at what we do. Control will shift as true Choice develops from here onward but, the payoff will be a more productive workforce and society over time. Control is business concern. New, smarter businesses will always replace old ones to serve all Americans. Businesses are the servants of a nation, not the directors of social values. 

Mr. Chairman: Spectrum can and should be allocated to serve growing social needs but permanent allocations do not fit with the changing world we are experiencing. Leasing, or "Pay as you go" is a concept that should and will grow more valued over time. Please reclaim unused and underutilized spectrum and then lease it out conditionally. This will do more for us in the long run than more deficit spending will do next year.

...Of the people, by the people, for the people.

This is obviously a forward looking set of ideas. How far forward depends upon whether we choose to embrace the past or look forward to what is possible.

If you dare venture into the world of the technical this paper suggests that more efficient use of existing digital networks probably holds much of what we need in future spectrum use. I offer this not as an alternative to my suggestions in this post but as an addendum because it is just too difficult to predict with any accuracy how much connectivity will be required in tens years time (in major markets of the US)on current growth trajectories. This paper describes most existing Wifi networks as inefficient. I can only imagine how they would view the potential use of broadcasting signals.  

What Will "The Era of Choice" Mean For the TV Business?

The (industrial) (r)Evolution of Media is a social trending process that is being made possible by technology. "Choice" is the primary trend in this market.

What really matters in this social trend is how we value our engagement with content has changed because technology has enabled us all to manage how, where, and when it fits into our lives. Content consumption is continuing to rise as modalities increase. Historically, significant improvements in technology cause deflationary forces to be unleashed in markets of products and people. That has happened in media overall but has been muted in the market for TV content because of the inefficient option of leaning on government sanctioned (cable) franchises that purposefully limit price competition.

The battle this week between Fox and Cablevision in the NY area is a perfect example and worth a flyby discussion.

Over many decades the market for selling sponsorships and advertising in television programming developed to a point many would consider to have been characterized as a mature market. Then, the economic upheaval of the internet era began to erode previous margins earned by monetizing TV content because it was exposed to waves of significant new (internet based) competition. The advertising revenue pie began changing.

Business headlines consistently reveal how internet advertising is increasingly cannibalizing the reliable revenues TV content companies enjoyed for many decades. This same effect had already transformed the record label business, the newspaper business, the magazine business, the radio business, and several other hybrid content businesses. The advertising based business model was under pressure from the new economy of the internet. In the TV business, however, there is another option to shift the burden of missing profits back to the consumer directly. With the era of rooftop antennas long gone, the cable company is the only way to get broadcast programming. Free TV became a small monthly payment for many channels and slowly, over many years it turned from a monthly stipend (for more channels than you ever used initially) into a monthly TV utility payment sanctioned by the government. Broadband connections have been added in recent years and now the most basic NY cable bill for broadband and basic cable is over $100 a month with taxes and fees. Free TV through cable was transformed into a pipeline to the world on a pay for viewing basis. And while the quality of program variety available has increased, higher overall costs have affected consumer's Choice.  Choice is being delivered as if you must pay first and then sit through just as many commercials as ever too. The social contract regarding advertising was ignored as if it is not enough anymore. This was only made possible because competition was limited intentionally, if not obviously.

The point of this post is to direct your attention to the lone finger in the TV damn. In lieu of not being able to efficiently compete for advertising revenues in a more competitive advertising market, TV content companies have decided that making people pay for their programming directly is the best way to do business. Having this option available blinds them, additionally, to the need to change how they interact with their customers.  The market problem, for consumers, is that cable companies do not really have direct competition in the major markets. Dishes are an option for a small percentage, and Fios is a newer option over telephone lines that simply mirrors the pricing structure based on cable's monopoly pricing format with very small differences.  The finger in the cable TV package pricing damn is tenuous at best and liable to lose control to the flood of demand for content that fulfills real consumer Choice. Technology is certainly capable now of allowing full consumer Choice over timing, modality, and selection.

So the real question is why are TV content producers not going direct to consumers now over the internet? The answer is that it is more profitable to use the cable company monopoly pricing format to continue to fulfill their quarterly profit forecasts until something specifically forces them to get better (more efficient) at serving Choice.

So what separates this post from being a rant about cable TV is the fact that ubiquitous Wi-Fi or Wi Max will eventually create opportunity in competition for video content that would cause the cable TV pricing damn to break as it should. It would only take a few defections to cause a chain reaction in the entire market for TV programming. 

Many on the TV content side will argue vehemently that quality will suffer, and I agree. Quality will suffer until companies like Fox can adapt to the new market dynamics, and in the meantime, other content producers will step up and deliver an increasing level of quality because they can. Until that day, as the market for video content develops more we will see options grow and quality levels vary as the market resets over and over. That's what healthy competitive markets do.

These resets have happened in every other media business since the home internet connection became widespread. The unique aspect of TV's transformation will be what has seemed like a myth until now. Convergence.  Convergence will be a reality at the end of this transformation. True convergence will make Americans better equipped to get and share the benefits of the information age in more aspects of their lives than ever. Transformation of the TV industry into a competitive format capable of truly interacting with their market will change the perceived iddiot tube into something that can be programmed (by the consumer) for maximum benefit...just like our social life has changed. It is a fundamentally sound idea that will happen because anyone looking to this time cannot help seeing how Choice will improve experience. 

 Cable TV is presently situated on a social fault line and it is overdue for major movement in the market's demand structure. The only thing preventing this movement now is the willing suspension of disbelief that tells us that the fight this month between Cablevision and Fox is a real free market dynamic.

The fact that the market for TV style content has held up their pricing format this long only adds to the pressure that will ultimately force change on an industry wide basis. When Fox TV blocked Cablevision customers this weekend from getting the Giants game (on TV or the internet through Hulu) they showed their customers their growing weakness, not their powerful presence. The days for transparent pricing pass-throughs is over. Send us your content directly over the internet and while you are at it, make it all interactive and allow us to schedule it for ourselves. That is where Choice begins for TV.

Maybe George Steinbrenner's relentless focus on value was more right than anyone could see at the time...but Yes TV might just be the best future format of major sports franchises...small and highly focused on delivering the best experience possible for fans(?)   In a direct to consumer format over the web, the value of that style of programming will be set by the ad market as well as the consumers very quickly and efficiently.  In the meantime, the artificial fight this past week really has to be called what it is: a confidence scheme where neither "competitor" loses, only the consumer. Choice will not be denied now that consumers know it is possible...only delayed.