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Final Exam

Media Industries (CMN 3165)

Dr. Strangelove

Fall 2009

Take Home Final Exam – 40 points (40%)

Due: 3 pm Wednesday December 9

Answer the following question:

“What are the main challenges currently faced by newspaper and television industries and how are they responding to them?” Your answer must take into account all relevant aspects of the lectures.

Pay close attention to the following guidelines:

1. Minimum words: 1500. Maximum words: 4000.

2. Exams must be deposited in Dr. Strangelove’s drop box located at the Department of Communication (554 King Edward).

3. Exams submitted by e-mail will not be accepted.

4. Answer using 12 point Arial font, double space, left-justified. Margins 1.5×1.5×1.5×1.5 inch.

5. Incorrect spelling, awkward sentence construction and poor grammar will be severely penalized.

6. Do not include a table of contents or abstract.

7. Include a word count, title page, and page numbers. Your title page is unnumbered, page zero.

8. Staple your exam. Do not use any other form of binding.

9. If you wish to get your exam back please enclose a self-addressed, stamped envelope with your exam. You must use a 9×12 envelope (not letter-size).

10. No extensions will be granted. Dr. Strangelove also has a deadline to meet.

Mobile Cell Advertising

Mobile advertising in the US is slated to touch a revenue of $ 3.33 billion in the US alone by 2013, said Martha Stone. According to her, there are 600 million mobile phone connections worldwide as of today and that Europe continues to be the digital hotspot both with regard to mobile phone and internet and that mobile texting is the most fetching revenue.– ‘Cellphone news, next big thing in media’

An Unsteady Future for Broadcast.

From the New York Times:

By TIM ARANGO and BILL CARTER

Oprah Winfrey is fleeing broadcast television for cable. NBC, once arguably the biggest cultural tastemaker in the United States, is being shopped to Comcast, the country’s largest cable company.

Have we finally reached a tipping point that suggests a remarkable decline in the fortunes of broadcast television in America?

In the NBC Universal deal, in which General Electric is negotiating to sell a majority stake of its media business to Comcast, it is the cable channels — USA, Bravo, SyFy, MSNBC and CNBC — that are seen as the most valuable, not the NBC broadcast network, which is mired in fourth place in the ratings among the four major networks.

Most analysts and many executives agree that the economic model of broadcast television — which relies much more heavily on advertising than cable — is severely fractured. What they are wondering now is if it is irreparably broken.

“It’s in a period of huge transformation,” said Horace Newcomb, a professor of telecommunications at the University of Georgia and the director of the Peabody Awards, which are awarded annually for excellence in radio and television broadcasting. “It’s in a state of confusion.”

The business model of the big three networks — which became four when Fox began prime-time programming in 1987 — has for decades relied on a simple formula: spend millions on original programming that will attract advertiser dollars and later live on as lucrative reruns in syndication.

But ratings are going down. In the 1952-53 television season, more than 30 percent of American households that owned televisions tuned in to NBC during prime time, according to Nielsen. In the 2007-8 season, that figure was just 5.2 percent.

The mass audience — the bread and butter of broadcast networks — has splintered into niches as viewers flock to alternative entertainment choices on the Internet, to video games and to cable channels dedicated to individual tastes, like Ms. Winfrey’s forthcoming OWN, the Oprah Winfrey Network.

And yet, programming remains expensive — a network drama costs about $3 million for one hour — and advertisers are becoming reluctant to pay ever-rising premiums for prime-time shows. All the networks have tried to adjust, putting on more reality programming, for example, that is cheaper to produce.

NBC made perhaps the biggest bet of all — moving Jay Leno to prime time each night at 10, saving the millions it would have cost to develop a scripted show in that time spot. The Leno move has been the subject of intense scrutiny by the media, because Mr. Leno’s ratings have lately fallen on several nights well below even the modest guarantees NBC made to advertisers.

Nicholas P. Heymann, an analyst at Sterne, Agee & Leach who follows G.E., said that the consistently ineffective efforts to rebuild the prime-time portion of the NBC network might have led G.E. to begin thinking it was time to exit the entertainment business. And this one particular decision may have pushed G.E. over the edge, he said.

“I think the Leno move was the last straw,” Mr. Heymann said, “the last roll of the dice for G.E.”

Mr. Heymann acknowledged that it seemed unlikely on its face that such a huge deal could hinge on one decision in one slice of an enormous company. But he said, “It’s the domino effect of the move, on the shows in front of ‘Leno’ and the late-night shows after it. I think G.E. decided, ‘We can’t go on doing this.’ ”

While networks have found it difficult to charge ever-higher advertising rates in the face of declining ratings, big cable channels — like USA, TNT and TBS — have flourished with the millions of dollars in subscription fees from cable operators that they receive, on top of advertising.

“The cable players have a robust affiliate fee stream that allows them to better finance original programming,” said Anthony DiClemente, a media analyst at Barclays Capital. “The main structural issue right now with broadcast is that the vast majority of revenues are from advertising.”

Profit margins for cable networks are also much better than broadcast networks’. Derek Baine, a senior analyst at SNL Kagan, said big cable networks earned profit margins of 40 to 60 percent, while a good year for a broadcast network is a 10 percent profit margin.

Illustrative of this is a comparison of NBC to ESPN, one of the most popular cable channels. Last year, revenue for the two networks was roughly equal. NBC, according to SNL Kagan, generated about $5.6 billion in advertising dollars; ESPN generated a total of about $6 billion in revenue — $1.6 billion from advertising and $4.4 billion in subscriber fees. But ESPN was vastly more profitable. Its cash flow was about $1.4 billion, while NBC’s was $304 million.

“The viewership continues to migrate from broadcast to cable,” Mr. Baine said. “Over time, advertisers have continued to pay premium prices for prime time, but over time the audiences continue to go down. Eventually you are going to hit an inflection point.”

Perhaps the most steadfast defender of the broadcast model is Leslie Moonves, the chief executive of CBS. He says he believes broadcasters can survive without the additional subscription fee revenue that goes to cable networks. He frequently points to the power of broadcasters both to reach mass audiences and to create assets unmatched by anything on the cable side of the business.

Though he declined to comment for this article, Mr. Moonves, in an appearance at the Paley Center for Media in Manhattan earlier this week, said he had recently closed a deal for a new CBS drama, “NCIS: Los Angeles,” to sell its repeats for the impressive price of $2.35 million an episode. The buyer? USA network, which happens to be owned by NBC.

The original “NCIS” is the most successful program on USA — in repeat episodes.

Mr. Moonves noted that the two NCIS editions taken together “are a billion-dollar property.” No show created on any cable network has been able to approach that level of revenue. “My model isn’t broken,” he said.

CBS executives have pointed out recently that the advertising market has started to show signs of revival. The so-called scatter market, where advertisers buy time on an individual commercial basis, is up about 25 percent, the CBS executives said.

But the cultural implications of the decline of broadcast television may be as profound as the business forces at play. Gone are the days when the nation gathered around television sets in the evening to watch, say “The Cosby Show” or “All in the Family” and then chat about it the next day at work.

Broadcast television was “a place, an arena, where ideas were presented in a fashion in which people could become attached to or explore,” said Mr. Newcomb, the professor.

“Issues with civil rights and the women’s movement were embedded into entertainment programs and people would see them and either accept it or reject it,” he said. “Today, you can watch TV and not have to be challenged.”

Web 2.0 Expo: O’Reilly Warns Of Web War.

From InformationWeek:

 

The Web, which began life as an open community where information and tools were freely shared across geographic, political, and social boundaries, is in danger of becoming segmented into a federation of closed camps led by a handful of increasingly powerful vendors, said Internet pundit Tim O’Reilly.

“We’re heading back into an ugly time,” said O’Reilly, during a keynote address Tuesday at the Web 2.0 Expo in New York City.

O’Reilly said efforts by Google, Microsoft, Amazon, Apple, and other tech vendors—as well as publishers like Rupert Murdoch’s Dow Jones—to create closed communities around their products and services are jeopardizing the freedom, and the spirit, of the Web.

“It’s no longer about the Internet as a platform,” said O’Reilly. “It’s Google as a platform, it’s Amazon as a platform, it’s Microsoft as a platform,” he said before a packed room at the Jacob Javits Convention Center.

O’Reilly pointed to Murdoch’s intention to create pay walls around Dow Jones newspaper sites, to Apple’s mandatory vetting of all third-party iPhone applications, and to a recent Google announcement in which the search giant said it would release a free turn-by-turn navigation system—but only for use on phones powered by its Android operating system.

“That’s not the way the Web works,” said O’Reilly, founder of O’Reilly Media and the first to coin the term Web 2.0, a concept where the Web is, in effect, the operating system for the Internet. And that OS, O’Reilly said, should be made up of “small pieces, loosely joined.”

Instead, vendors are attempting to create “one ring to rule them all,” said O’Reilly, referring to the one ring that would supposedly give the wearer ultimate power in Lord Of The Rings.

To counter the trend, O’Reilly said vendors like Google and others “must be rigorous in thinking through the benefit to the user” when it comes to developing new products, instead of focusing on how the product will enhance their competitive position.

“Do what you do best, link to the rest,” said O’Reilly, citing an oft-quoted Web 2.0 maxim.

Spending on subscription media up 7%.

From Hollywood Reporter:

Americans are spending about $115 a month per household on subscription media services, up 7% from a year ago.

That figure includes television, DVR, satellite radio, subscription music, newspapers and magazines, mobile phone data, Internet access, Netflix and similar offerings, and online gaming services.

The data comes from researcher NPD and is contained in its just-released “Entertainment Trends in America” study.

“Despite concerns that the recession would cause consumers to reduce spending on entertainment subscription services, most forms of subscription entertainment are doing just fine,” NPD analyst Russ Crupnick said.

Print media would be an exception. According to the study, newspapers are in 29% of U.S. households and magazines are in 41%, but both are down two percentage points from last year.

While mobile voice subscriptions weren’t counted, data plans were, and they are one of the big growth areas. NPD says 9% of U.S. households subscribe to data compared with 6% a year ago.

The DVD-by-mail category that Netflix made popular rose two percentage points to 14%.

NPD said 81% of U.S. households subscribe to a TV service, 76% to Internet access, 17% subscribe to an online music service or satellite radio and 14% subscribe to online gaming.

Software zaps free downloads on illegal Xboxes

From the New York Post:

Microsoft is playing hardball for the holidays — in one shot zapping a key feature in 1 million outlawed Xboxes, which will have to be replaced with new consoles.

In its biggest single attack on video game pirates, Microsoft permanently banned the units, which the company believes were modified so they could download and run pirated software, from logging on to its gaming site, Xbox Live.

More than 20 million subscribers use Xbox Live to play against each other, and buy and download games, movies and other content. Users of the modified consoles were able to avoid paying for games on Xbox Live, where they can cost $40 and up.

The sweep was waged through Microsoft’s all-seeing servers with the help of tracking devices, and was timed to catch the maximum number of culprits as gamers swarmed onto Xbox Live to get the new release “Call of Duty: Modern Warfare 2.”

Activision Blizzard, which created Modern Warfare 2, pressured Microsoft to make the move.

A record 4.7 million games were sold on the site on launch day last Tuesday, bringing in more than $310 million for Activision and Microsoft.

By terminating as many as 1 million consoles capable of hijacking the red-hot game, Microsoft prevented a likely sales loss of $65 million on launch day alone. Analysts see annual sales of Modern Warfare 2 breaking $800 million.

The rigged Xbox consoles, which are now only good for playing offline, flooded Craigslist and eBay.

Microsoft issued a consumer alert yesterday that buying a used Xbox could pose a risk. There’s no easy way to know if a console has been modified, except to log it in to the Xbox Live site — where an illegal unit will instantly be identified as tainted.

The company is poised to sell as many as 1 million new Xbox360 consoles — costing $200 and up — to replace the rigged units, which are permanently blackballed from the Xbox Live universe.

Sales of the Xbox360 sales have been weak, plunging 33 percent in October from a year earlier, to 250,000 units, said NPD Group, which tracks sales.

The move stirred up controversy in the gaming world. Some bloggers claimed they were lured into “a honey trap,” while others rushed out elaborate step-by-step guides for getting around Microsoft’s server blocks.

Pirates also face permanent personal from expulsion Xbox Live, which costs $50 a year to access. They would also forfeit the ability to post their scores, a source of status in the gaming world.

Microsoft said its crackdown was necessary to stop pirating. Its help line for Xbox Live was so swamped yesterday with calls about the banned consoles, it answered with a message saying bans on the Xbox were permanent and couldn’t be reversed by the help desk.

 

AOL and Time Warner to Officially Split.

From USA Today:

Time Warner made it official: On December 9 it will divorce AOL, closing the book on one of the most disastrous mergers in business history.

The media giant will spin off the online operation, turning it into a separate publicly traded company. Investors will get one share of AOL for every 11 shares of Time Warner that they own on November 27.

The transaction is structured as a dividend that will be tax-free, at least for federal income taxes.

AOL shares will trade on a when-issued basis beginning November 24. Regular trading will begin on December 10.

The spin off is part of Time Warner CEO Jeff Bewkes’ effort to focus on news and entertainment, particularly the company’s film studio, magazines, and cable channels including TNT, CNN, and HBO. In March he spun off Time Warner Cable, the No. 2 cable operator.

But by cutting the connection with AOL, Bewkes formally ends former CEO Gerald Levin’s grand dream from 2000 to create the world’s largest, most diversified, and most technologically advanced media power. Reflecting the enthusiasm of the time, Ted Turner — then Time Warner’s Vice Chairman — said the $163 billion deal was “better than sex.”

That optimism vanished soon after the merger took place in 2001. Investors lost about $200 billion as the Internet bubble collapsed, executives at AOL Time Warner engaged in internecine warfare, and the Justice Department and Securities and Exchange Commission challenged the company’s accounting practices.

Time Warner shares, which soared over $200 in early 2000, closed Monday at $32.35.

Viacom’s top lawyer: suing P2P users “felt like terrorism”

From Ars Technica:

Michael Fricklas is Viacom’s general counsel, and it’s his job to oversee the company’s legal efforts, including its $1 billion lawsuit against YouTube. When people talk about Big Content, they’re talking about people like Fricklas.

So it might be surprising to watch him tell a class of Yale law students this month that suing end users for online copyright infringement is “expensive, and it’s painful, and it feels like bullying.” While the recording industry was big on this approach for a while, Fricklas certainly understands the way it came across to the public when some college student went up against “very expensive lawyers and unlimited resources and it felt like terrorism.”

Customers “need to be treated with respect,” he added, and that respect extends even to DRM—much of which has been “really bad.”

When it comes to Big Content’s copyright stances, Fricklas is on board with some of the criticisms leveled at the content industries—and he doesn’t want to take your mashup down. “Even as part of a big company, and as a consumer, and as a guy who loves technology and loves gadgets and all the interesting things that are happening on the Internet, I kind of agree with [the criticisms],” he said. “I actually care a lot about fair use… What we’re really focused on in our business right now is the exact copy.”

Fricklas points to the recent MTV music awards, where Kanye West rushed the stage, grabbed the mic, and delivered his Internet-meme-producing-line, “I’mma let you finish, but…” Viacom quickly uploaded the evening’s footage into the content recognition engines of sites like YouTube, which can then block exact uploads of the same footage or allow rightsholders to monetize it with ads. Viacom used the tool to block copies of the clip, but not without offering a solution of its own: the clip was hosted on Viacom websites and was embeddable and linkable.

The company wanted the clip to go viral and wanted people sticking it on their blogs… but it wanted them to use the official Viacom-hosted version, and it made it as easy as possible for people to do so. (Viacom was happy to link to parodies of the clip in question, even when they were hosted on different sites and used bits of the original clip.)

Fair use, not suing your customers, providing the content people want in the way that they want it—it sounds pretty good. So why are we in the middle of what copyright scholar William Patry calls the “Copyright Wars”?

Kinder, gentler, but still lovin’ DRM

Part of the answer is that “Big Content” is of course a convenient fiction; every creator and company has a different outlook, is staffed by different individuals, and relies more or less heavily on exclusive rights under the Copyright Act.

Viacom, for instance, creates copyrighted works every day, but it’s also a heavy “fair user.” Consider The Daily Show, for instance, and think about just how much of its daily show relies on video footage from other organizations. Fricklas even showed a spoof movie poster that Viacom had done years ago—for which it was sued by famous photographer Annie Leibowitz—and with which it eventually prevailed in court, claiming parodic fair use.

The company also runs various user-generated content sites of its own, so it has a direct stake in many of these copyright issues from both sides of the question.

There are plenty of copyright maximalists still in the business, those whose mantra is “more copyright is always better,” but Fricklas insists he’s not one of these. But he’s also no copyfighter, however, and he remains a vigorous backer of tools like DRM and graduated response. While his brief talk was hardly a detailed explication of his thought on all issues copyright-related, it did illustrate why tensions exist between consumers and even forward-thinking content creators.
DRM

While bashing the experience of many earlier DRM schemes, Fricklas is a firm believe in the basic concept, saying that it allows consumers to have experiences they could not have without DRM (or not at the same prices).

The classic cases are 1) online content rental (usually movies) and 2) online streaming (audio and video). While DRM has largely vanished on paid audio downloads, it still exists in many streaming and subscription services. Record labels aren’t keen to allow users to pay for a month of music, download 80,000 tracks, and then stop subscribing.

Movie rentals and on-demand streaming (iTunes, Hulu, Netflix, Epix, etc.) pose similar challenges, and all use some form of encryption to keep a bit of control over content. Sure, it’s all available on the Intarwebs, but some percentage of people won’t be willing to locate and grab all the same files from P2P, even though they might be willing to run a simple, local streamripper.

Fricklas argues that DRM is essential to these kinds of rental models, and we’re willing to concede the general point, when it’s done well. (Despite using Netflix and Hulu regularly, I have yet to be impeded by any sort of encryption or DRM, and there’s no real issue about making backup copies when the content lives in the cloud.)

But consumer frustration with DRM isn’t generally about rentals; it’s about ownership, and video producers have been unwilling to remove DRM either on physical media (in fact, Blu-ray’s gotten much tougher) or digital downloads. This certainly isn’t a “new” business model in any way, and DRM on these products does in fact butt up against consumer rights (fair use) and expectations in obvious ways. Ripping a DVD to an iPod, using an external Blu-ray drive to load a film onto a PC for a long trip, making backup copies of those expensive Disney films your kids love, using a film clip in a mashup or piece of criticism—these are all rendered difficult or impossible to do legally by DRM. What is content protection “enabling” here?

One argument sometimes heard from rightsholders is that DRM applied to ownership models still “enables” other models like rental because unencrypted Blu-ray discs (for instance) would be easily pirated. And once pirated, they exist all over the Internet, and people can simply download them for free instead of dropping $3 on an online rental.

But the films inevitably make their way to the ‘Net regardless of such protections (and often in advance of the “protected” versions even being offered for sale at all), so it’s hard to see how this applies. A comparison with the music business is instructive here; after pushing hard for DRM, the industry eventually abandoned it once it realized that the system made it overly dependent on the dominant DRM provider (in this case, Apple). And the digital physical format for music, the compact disc, has gone unprotected for a couple of decades.

The result? Streaming and subscription models continue to proliferate at places like Rhapsody, Spotify, Last.fm, Lala, and the Zune store. The “DRM enables new business models” idea may have some truth to it, but the movie and video businesses are more than happy to apply tough DRM to their old-style ownership models, long after even music has abandoned the practice.

As the examples above indicate, DRM also goes far beyond copyright law in restricting what buyers can do with things like Blu-ray discs. In this sense, code trumps law, and it’s a criticism that people like Fricklas recognize (it appeared on one of his slides, but was not discussed in the talk). Their answer—do things like offer digital, computer-ready copies of films on Blu-ray and DVDs—is helpful, though it simply swaps one DRM scheme for another.
Graduated response

Another area of tension between consumers and rightsholders is graduated response, sometimes referred to as “three-strikes” policies that sanction those accused of repeat copyright infringement online. While the content industries like to tout graduated response as a kinder, gentler way to handle these issues, the worldwide public hasn’t been sold on the plan. The European Parliament voted several times to ban such schemes unless they had judicial oversight, while France’s attempt at passing a graduated response law was defeated once in the legislature and once by the Constitutional Council before finally being passed. New Zealand had to scrap its three-strikes plan and start over after resistance from users and ISPs, and the UK is in the midst of a furious row over the idea. Graduated response has never been introduced in Congress, and no major ISP has agreed to adopt the approach voluntarily.

Still, Fricklas is big on the idea. It’s definitely a saner solution to the issue than hauling college kids into federal court, and feature sanctions “more proportional to the harm.” (This is certainly debatable when it comes to France-style disconnections and blacklists, however, especially on family accounts.)

And Fricklas wants to make sure that there are rights of appeal, since the process can sometimes be a bit too “guilty until proven innocent.” But he’d like to see it handled in a “non-court way” through an ombudsman or arbiter, not through a judge. Being able to appeal the issue to a judge would certainly increase everyone’s costs and could result in more of the same spectacle that Fricklas hopes to avoid, but Internet access has become a fundamental utility. When sanctions, and especially disconnection, are on the table, issues of due process and law become critical (and even France’s scheme now has judicial oversight of the final step, disconnection).

This is especially true given what Fricklas said earlier in his talk when he was bashing the record industry for suing individuals: IP addresses can be spoofed, mistakes can be made, and even with an IP address it’s often not possible to tell who actually did the sharing. For all these reasons, a mandatory graduated response with Internet disconnections and no judicial right of appeal will remain one of the areas on which consumers and rightsholders just can’t see eye-to-eye.

The whole talk is worth watching (it’s 37 minutes) if you want to better understand Big Content’s copyright perspective from one of its top practitioners. Of special note is the segment on Viacom’s “innovation,” where Fricklas defends the company against charges often made against copyright owners that they are all but incapable of doing anything new and interesting.

It’s also a good reminder of places where consumers and the content industry part ways, and why the Copyright Wars continue to be fought.

Various News Items

Celebrity Newscasters

“News has become personality-driven more and more so,” said Brad Adgate, director of research for Horizon Media, an ad-buying firm. “With slow news nights, CNN doesn’t do as well because it’s not personality-driven.”

CNN boasts one of the most-visited news sites on the Web. It’s a destination for viewing online video as well as reading news. Like a lot of traditional media outlets that have made the move online, CNN is packaging Web and TV sales to draw advertisers.

Ironically, all the effort it has put in and the success it has produced may be siphoning viewers from television.

“Their digital strategy is dead-on,” said one ad buyer. “The problem is it’s so good it hurts the network. Headline News’ site gives me all the news in half an hour; CNN’s gives me all the news in eight minutes. You spend a few minutes on their site and you’re done.” — NYP

Faceplant at Facebook?

According to comScore, the average number of minutes spent online with the site among 18- to 24-year-olds fell in September for the third consecutive month compared to the same period a year ago. And the drop-off rate is accelerating. In July, usage fell 3 percent, in August 13 percent and in September 16 percent.
“There’s a ‘parents turn up at the party, the party’s over’ kind of thing going on,” said Mark Potts, North American managing director for consumer insights at Mindshare. — AdWeek

News — Americans Will Not Pay (commies…)

Americans, it turns out, are less willing than people in many other Western countries to pay for their online news, according to a new study by the Boston Consulting Group.

Among regular Internet users in the United States, 48 percent said in the survey, conducted in October, that they would pay to read news online, including on mobile devices. That result tied with Britain for the lowest figure among nine countries where Boston Consulting commissioned surveys. In several Western European countries, more than 60 percent said they would pay.

When asked how much they would pay, Americans averaged just $3 a month, tied with Australia for the lowest figure — and less than half the $7 average for Italians. The other countries included in the study were Germany, France, Spain, Norway and Finland.

“Consumer willingness and intent to pay is related to the availability of a rich amount of free content,” said John Rose, a senior partner and head of the group’s global media practice. “There is more, better, richer free in the United States than anywhere else.”

Paradoxically, in every country, the people who were willing to pay the most for news online were the people who already pay the most for news: avid newspaper readers.

The study, which drew from a survey of 5,000 people, concluded that charging for online access to news would not greatly increase a newspaper’s revenue, but since the cost of reaching Internet readers was very low, it could significantly increase profit.– NYT

MySpace is a Mess

MySpace is planning several design and structural changes that will deemphasize the site’s reliance on user-generated content and sanitize its notorious free-for-all look and feel.

“We have to clean up the site,” said CEO Owen Van Natta. “We’ve been way too spread out. We’ve been a mile wide and an inch deep…and the product wasn’t always great.”

After five months on the job, Van Natta is trying to recast the social networking site by pulling back on its communications aspects to focus on content. As part of that reshaping, Van Natta said he was planning to eliminate some channels on MySpace, such as sections on classifieds and jobs, and is mulling utilizing technologies like Ajax to dial down the heavy volume of page views generated on the site.

Page views “are really a way of measuring yesterday’s technology,” said Van Natta. “And we’re not trying to be a communications platform. Messaging between people is not very monetizable.”

But content is, specifically produced, professional content. That’s where MySpace is focusing going forward, while still embracing its social nature.

Van Natta envisions the site serving as a hub where users go to share and discuss content like music, TV and movies with friends and strangers. In fact, he sees the site’s more open nature — you don’t have to be friends with a MySpace user to interact with them — as a strength. “We see MySpace as a next-generation content distribution platform,” he said, adding that the site touts hundreds of content partners. “The future is all about content being distributed by people. The asset we have is that our social graph is open.” Some changes MySpace made to its Music channel last week [such as a music video hub and instant alerts on what music videos a user’s friends may be watching] provide an indication of where the site’s content strategy is going, added Van Natta. So expect changes, though none too radical. “It’s got to be an evolution,” he said. “It’s all about user experience.”

If Van Natta can pull all this off, MySpace could attract advertisers who are looking to target super-engaged users.– AdWeek

More Mythological Thinking

On the evolution of Internet video business models: We’re at a unique time. We’re finally talking about getting paid for content on the Internet. It’s one of the reasons I came [to Move] at this stage. We’ve been talking in this industry for a long time about video on the Internet, in phases. We went from, “it’s all going to be free” to “it’s going to be user-generated content” to “it’s going to be professional content paid for by advertising.” Now people are saying there’s going to be video everywhere, but the ad model alone doesn’t work; somebody’s got to pay for it. The model you see now is the first step. We’re taking a [video on demand (VOD)] model and allowing people who have a subscription today on a paid service to watch content [online]. That will evolve to [include] not just a list of VOD. If I were DirecTV or Comcast or whoever, if I could truly broadcast over the Internet my full TV lineup, I think people might be willing to pay for it and not just pay for a subscription.

On adding incremental over-the-top (OTT) revenue to TV subscriptions: We have the ability to broadcast through the Internet, encode [content] once, and people can watch it on their TV, their PC or their phone. I think people will be willing to pay for our service [in addition to cable TV subscriptions]. We’re at the first stage of this. The conversations we’re having today we weren’t having a year ago. The conversation today is: If you have a paid subscription, you get to watch [free content online]. That’s a great first step, but it’s not the end game because people won’t produce content unless they get paid for it. At the end of the day, there’s a win-win for everybody. As a consumer, if I could get on my computer and stay connected to my DirecTV service anywhere I went, I’d be thrilled. We can also do enhanced ad insertion, so we can increase ad revenue. We also have a lot of data on who’s watching what. — Telephony Online

Rupert Murdoch is a Poopy Pants

Rupert Murdoch is flexing his media-mogul muscles. In an interview with Sky News he said that News Corp. will block Google from indexing any of its content and charge for access to online content.

“We’d rather have fewer people coming to our website, but paying,” Murdoch told Sky News editor David Speers.

Blocking Google from indexing your Web site is certainly a great way to get fewer people to visit your site, but it’s unclear how that would increase paid subscribers.

And now Fox News is going after bloggers who rely on YouTube video clips of Glenn Beck, Sean Hannity and Bill O’Reilly to criticize the network’s right-wing commentary. One popular YouTube channel News1News was suspended on Nov. 12. News1news archived the most outrageous statements made by Fox News bloviators.

As a result, now blog posts linking to News1news videos have a big gaping whole in them – words with no video support.

There used to be such a thing as “Fair Use,” but not anymore. Fair Use is supposed to allow anyone to copy and distribute portions of news, books, movies and radio for any purpose, usually to add to original reporting or to criticize the original source. Where’s the Electronic Frontier Foundation when you need them?

Judging by Murdoch’s statement about blocking Google search indexing and Fox News’ war against YouTube and bloggers, this isn’t over. — Examiner