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FCC Diversity Index June 29, 2004

Posted by David Card in Uncategorized.
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Fascinating detail in a Washington Post interview with FCC chairman Michael Powell. The FCC tried to create an index of market concentration without taking into account audience size. But what would they use, since Nielsen and the ABC are under attack?

The diversity index was modeled on the Herfindahl-Hirschman Index of market concentration that the Justice Department uses in antitrust cases. As a former Justice antitrust lawyer, Powell was well-acquainted with this device. Yet the court slammed the door on Powell’s approach, saying it failed to take into account each media outlet’s audience size, a major flaw.

…Not persuaded by arguments in favor of the rules, the court wrote last week: “A diversity index that requires us to accept that a community college television station makes a greater contribution to viewpoint diversity than a conglomerate that includes the third-largest newspaper in America also requires us to abandon both logic and reality.”

BSkyB Tries “Free” Trials June 29, 2004

Posted by David Card in Uncategorized.
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The Journal details a daring plan by News Corp.’s British satellite TV provider BSkyB to offer 116 channels for the price of the hardware – with no monthly fee. The theory is they’ll upgrade to pay TV, esp. sports. No need to try that over here with DirecTV – US pay TV take rates are twice that of the UK.

JupiterResearch surveys show (see Figure 8)that free trials are a great way to boost paid online content conversion.

AOL and Advertising.com June 24, 2004

Posted by David Card in Uncategorized.
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AOL’s proposed acquisition of Advertising.com for $435M in cash seems to make sense. (I don’t pretend to understand finance; I analyze markets and industries.) Advertising.com is an ad network that buys remnant inventory from sites at CPM rates and pays out on a performance basis. It makes money on the arbitrage by optimizing placement in real-time with a sophisticated yield-management system.

AOL says it will grow Advertising.com’s $130M in revenue by adding some of its inventory into the network and continuing to support Advertsing.com’s existing business. It also hopes to use Advertising.com’s optimization technology within its own network of sites. So in theory, the merger would give AOL a better Web-wide play, and a tool to help tie some of its properties together (for advertisers) as it takes more of them outside the walled garden onto the Web.

Of course, as pay for performance systems mature, arbitrage opportunities will narrow.

In Defense of Broadcast TV June 23, 2004

Posted by David Card in Uncategorized.
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Gary quotes Starcom’s Tim Hanlon wildly praising online versus traditional broadcast TV. Regular readers know I’m highly skeptical of TV advertising, especially of TV measurement. But Hanlon fails to acknowledge that, as audiences fragment and absolute reach per program or network declines, relative reach will continue command a premium.

Hanlon’s best quote is:

A great case in point is the current Nielsen local people meter brouhaha: status quo broadcasters like the Fox-owned stations have a tremendous interest in not seeing any changes to TV measurement, because the current sloppy system of quarterly sweeps diary measurement is what they’ve historically been successful at selling. They are scared s***less of more accurate measurement, especially when it might show a real decline in previously thought broadcast station audiences.

Too true. But I’ll pick two other nits. Hanlon says:

Which leads to another, equally important point: that “niche overload” means that viewers will need help – likely through technology to wade through these embarrassments of programming riches, so as to maximize their viewing time and value.

Why just technology? Why not the heavy editorial hand of a network doing some of the “curating” of content? It works for the Big Three online. (I’ve got a report in the works that shows just how easy it is to herd the sheep.)

And, if Hanlon’s so smart, why is Starcom still buying media based on GRPs?

Commercial Space? June 22, 2004

Posted by David Card in Digital Home & Personal Tech.
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This is oool, in a sort of Buck Rogers way. But hold on, there’s no payload. There doesn’t seem to be any talk of industry, or science. Only tourism. Toursim?

Manned spaceflight without gov’t sponsorship is still proabably a bad idea. In fact, it’s probably a bad idea, even with gov’t sponsorship….

Disclaimer: my dad worked for NASA for 30+ years. We argue about this kind of thing occasionally.

Music Discovery the Old-Fashioned Way June 21, 2004

Posted by David Card in Uncategorized.
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Music discovery is a mysterious thing. The last two weekends, I’ve experienced the best and the worst of discovery in a physical store, courtesy of the same Virgin Megastore in Manhattan.

This week, I heard Celine Dion doing a cover of Stevie Wonder’s “I Wish.” Yes, at a Virgin store, in downtown Manhattan. Apparently it’s from her latest “live in Las Vegas” album. I can’t begin to think what Virgin was thinking. Celine’s on Sony, so it wasn’t even a forced-synergy thing.

However, the previous weekend, I bought – and am enjoying immensely – a CD based solely on the fact its cover art attracted me to a listening station. Could you pass this by?:


New Paid Content Forecast June 16, 2004

Posted by David Card in Uncategorized.
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We’ve just updated our online Paid Content forecast. US consumer spending on General content – i.e., excluding music and games – will grow slowly but steadily from $2 billion in 2004 to $3.1 billion in 2009. Spending should be up about 17% between ’03 and ’04.

We didn’t fundamentally change any of our assumptions from last year’s forecast. Personals and Porn are still the biggest categories; Audio/video and health are the big growth segments. Growth drivers are broadband and network effects. “Network effects” means Metcalfe’s Law, that is, markets where the value of the network increases dramatically based on the number of users in the network. Network-effect markets include personals, community, fantasy sports, and health.

Two key findings, based on JupiterResearch surveys, about the buyers of paid content:

– Purchasing one type of online content is a leading indicator of purchasing another. There are some intriguing marketing or even bundling combinations – how about games and diets?

– Buyers who tried free trials first are six times more likely on average to subscribe. Free trials are definitely under-utilized.

We’ll be doing an update on online consumer services soon.

Jobs Changes Tune? June 14, 2004

Posted by David Card in Digital Home & Personal Tech.
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Maybe QuickTime’s – or is it iTunes? – video DRM isn’t ready yet….

The Journal says Apple’s – or is it Pixar? – Steve Jobs is advising holding off on HD DVDs until they’re secure.

Elsewhere, Walt Mossberg interviews Jobs, and gets some good stuff. I still think Jobs is wrong about music subscription services, but he captures some key differences between music and movies:

The other thing is that people are much more attuned to visual quality than audio quality. What was the successor to the CD format? MP3, a lower-quality format but one that provided a convenience of being able to transmit music over the Internet that no other format had.

But that’s not going to be the case with video. With video, people have ratcheted up to the DVD format and no one is going to go back to VHS quality just because they can download it faster over the Internet. It ain’t going to happen. So to download a DVD-quality movie takes hours over most people’s broadband connections.

And therefore the threats to Hollywood are very different than the threats to the music industry, and actually the biggest threat to Hollywood isn’t the Internet. The biggest threat to Hollywood is DVD burners. And likewise the Internet might not be as big of an opportunity.

Chicks with Attitude June 11, 2004

Posted by David Card in Uncategorized.
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Maybelline New York is missing several online opportunities to promote the fact that it’s promoting a concert tour.


The idea’s good and the site’s pretty slick. You’ve got to be 16 to enter the sweepstakes – no problem – but there’s no way to invite a friend. Nothing e-mailable and not much that’s shareable, since the site’s all in Flash. (There are screensavers and wallpapers.)

No music downloads, or even samples! Maybe they couldn’t clear the rights. JupiterResearch surveys on Teen Influencers show that the kids love the music, as well as the style sites and sharing info in general.

And neither Maybelline nor House of Blues seems to be buying keywords. Search on “chicks with attitude,” and you get a Billboard story – no sponsered links. Or maybe you’ll get this blog, since I’m shamelessly using headlines and pictures.

Barney, Elmo, and Comcast June 9, 2004

Posted by David Card in Uncategorized.
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The Journal says Comcast is in negotions with PBS, Sesame Workshop and UK based HIT Entertainment to set up a commercial-free digital cable net for preschoolers. HIT Entertainment owns Bob the Builder and Barney; Sesame Workshop owns Sesame Street, but not the Muppets, except for Elmo and Big Bird. (Disney owns the rights to Kermit, Miss Piggy, et al.)

The Journal thinks the combo could threaten Nick’s Noggin and Playhouse Disney, but I think the potential ratings drain could end up being from PBS itself. That makes things all the more interesting – is this the future of PBS? In contrast to NPR that has been growing its audience lately, PBS is struggling.

See JupiterResearch’s DTV forecast here.