MediaSavvy

Joe Flint, in the Wall Street Journal, writes that if cable systems sold networks a la carte, prices wouldn’t go down and a lot of niche networks would be killed off. I think he’s wrong on both counts.

Supporters of a la carte billing like Sen. McCain and FCC’s Mr. Martin are well-intentioned — they want to lower consumers’ cable bills and stop forcing subscribers to pay for services they don’t use. While that might sound like a good idea, the reality is such a move likely would have the opposite effect: Cable bills would increase, while programming choices would shrink, hurting both consumers and the industry. That’s because pooling a big group of specialty channels into one cable package effectively lowers the cost of offering all the channels.

Bundled pricing allows everyone to make consumers pay for things they don’t want. Cable monopolies cross-subsidize their own networks. Owners of popular networks force their dogs onto the systems. Owners of desireable content (e.g. sports) demand prices out of line with their value to consumers because they increase the value of the bundle.

Ideally, unbundling networks would be accompanied by regulations forbidding cable operators from investing networks. This would give them the economic incentive to meet customers’ needs directly. But even if that weren’t done, unbundled pricing would improve cable content and prices.

It’s impossible to know what would happen if cable networks were unbundled. That’s one reason free markets work and why they scare monopolies. But here’s what I think would happen.

A lot of really lousy channels that are on the system because they’re owned by the operator, or are a forced buy with a valuable network, would get dumped because no one wants them.

Sports content owners would be forced charge prices more in line with their real value to consumers, lowering costs for cable operators.

Cable operators would begin looking for programming to fill the empty channels on their system, or to produce more revenue than existing networks. The availability of revenue from real consumers will stimulate the creation of new networks to serve their needs. The need to compete with existing providers in the primary categories will stimulate new providers to either differentiate themselves or cut their costs.

But one thing is certain. It’s impossible for cable programming to be more expensive or any worse.

Today my cell phone rang. I checked to see who it was and it came from area code 666. Yikes, a call from The Beast!

Indeed it was. My carrier, SprintPCS, was calling me to sell me features. When I told them not to call me at this number to sell me stuff, I was told they weren’t trying to sell me anything, but to inform me of services they were offering.

This is another indication that business has carved out too much latitude for themselves in current privacy and telemarketing rules. Take a look at your bank, credit card, telco or other big company privacy statement. They pretty much reserve the right to pimp your privacy to anyone they please as long as they have a relationship with you and the john is “an affiliate”.

This is also more evidence that your phone number doesn’t belong to you.

Legitimate marketers use images in HTML mail to track how many people open the message. Spammers use them to verify addresses. Hotmail is now giving users the option of turning off images from senders who are not in their address book.

Legitimate marketers don’t like this one bit. InternetNews.com quotes one legitimate marketer who is clueless about why anyone would want this:

“If the objective of adding this feature is to reduce spam, it’s going to fail,” said Al DiGuido, chief executive of e-mail marketing firm Bigfoot Interactive. “We don’t think that any feature in or itself will end the [spam] problem.”

The direct marketing industry has dragged its feet at every step to limit their ability to sent us whatever they please whenever they please. I’ve been writing about this for years. Their unwillingness to help consumers address the spam problem will eventually make email useless as a marketing medium. And they will have only themselves to blame.

Lawrence Lessig has an excellent report from Australia on the course of media deregulation and consolidation in the land down under the thumb of Rupert Murdoch. The key paragraph describes the tipping point beyond which resistance is futile:

Once media concentration is allowed to creep past a certain point you are in trouble. The media owners can push for more concentration due to the fact that they control public opinion via TV and print media.

Australia is a very different environment in many ways, and probably calls for a solutions to media concentration. But most of what has happened there is basic economics and politics.

Ed Foster has a excellent exchange on how Comcast is handling the takeover of AT&T Broadband. Comcast’s user agreement requires the purchase of a higher-priced service if you want to use a virtual packet network to, say, communicate with your office, but AT&T didn’t. It appears that Comcast is beginning to sporadically implement extra charges for VPN across their own and AT&T’s old network.

The access duopolies can be expected to ratchet up this behavior as they break free from regulation and start looking for ways to extract revenue from their customers without investing in their networks. Especially since there is no commonly agreed definition to “broadband”, “Internet”, or “access”.

[Ed Foster used to write the excellent Gripe Line column for InfoWorld. HIs new blog is really promising.]

Ryan McFarland of Liquify says that we ought to be tagging premium content so it can be indexed and searchable on the search engines. This is a killer idea.

Now, I would prefer if all that premium content were free, and I think publishers would be better off. But, if we’re going to move to a world where some content is behind a barrier, we should make certain it’s not a barrier to linking and indexing.

Anybody who has spent time trying to track down useful articles in the current maze of databases knows that it doesn’t work. Furthermore, there’s evidence that no one is making much money doing it this way. Ryan McFarland’s suggestion looks like a good way to harness network effects for paid content.

What is “content’ and what does it mean when we talk about selling content on the Web?

A while back, I expressed my unhappiness with the Online Publishers’ Association and Jupiter’s definition of content. They included a lot of stuff their sizing of the content market that didn’t seem like content to me. But I didn’t propose my own definition of content sales. I know from experience that creating these definitions and taxonomies is really hard. And it makes my head hurt.

I have been thinking about defining the content market. I’d like to share my ideas with you and get your feedback.

I went back and read some of the responses to the reports. Vin Crosbie was critical of the OPA about six months before I caught on.

“Digital intellectual property”? I can understand Brittanica.com’s content being defined that way. But a personal ad labeled “Sexy Guy Seeks Comfy Girl” on kiss.com? A post of “Uma’s Unmentionables” on The Well Dressed SIM? Gift certificates on Hallmark.com?

Do I detect OPA inflating the definition of paid online content? Why not add online revenue from Ticketmaster and other traditional services?

…

Did American consumers spend $675 million for online content last year? Depends how you define content. Most people wouldn’t define it the way OPA does. But OPA’s definition sure makes for a spectacle of a press release.

He followed up with a fanciful (and clever) definition and a suggestion that the real problem with the content business is that it’s not satisfying its audience:

In several European languages, the word “content” has two meanings: subject matter and satisfied. I know one director of content development who jokes his real job is to make his company’s developers happy.

Why not combine the meanings? Subject matter that satisfies. People will pay for satisfaction but won’t hand over a dime (or centime) for content that doesn’t make them content.

After I beat up the OPA and Jupiter definitions, Rick Bruner at MarketingFix took a swipe at defining content and said I was defining it too narrowly:

Since I invoke the name Interwoven, which is a leading “content management system,” I went to their site and found this definition for “content”:

Narrowly defined, Web content is HTML. Broadly defined, it includes rich media, documents, application code, and XML. Whether your initiative is an intranet, Internet or portal, Interwoven manages all Web content from creation to delivery.

The broad definition is a lot closer to what to what Jupiter, the OPA and I would seem to have in mind compared to Barry’s narrower one.

So, like most IT vendors, Interwoven defines content as “bits”. That definition is broad enough to be meaningless, and it’s a lot like “digital intellectual property”. Even their “narrow” definition isn’t very useful. But I don’t necessarily disagree with it.

Literally, “content” is something that is contained. Back in the 90’s we started using the word “content” to refer to information that was to be repurposed from physical media to the Internet. It’s the stuff the media were intended to convey. A book is the container, but the words, pictures, and ideas that it contains are the content. If you buy a book, you’re buying the physical thing and not its content. Ditto for CD’s, or even MP3 files. The file is not the content. The music is the content.

In other words, the medium isn’t the message. At least not literally.

I’d have to agree that “content” is the bits (but not the file), the intellectual property (but not the media). It turns out that my problem isn’t so much with the definition of “content”, but with the definition of “content sales”

More on that later.