What counts as Fair Use?

Keeping up with Copyright and Fair Use exemptions is critical for media generally, and digital media in particular.  In a post on the OnlineVideoInsider blog, Ashkan Karbasfrooshan takes a look at some recent Fair Use cases in the U.S. courts.
  Fair use exemptions are not explicitly provided in U.S. copyright law - rather, the law sets up a set of criteria that are to be used in determining whether a specific use is likely to significantly impact the value of copyrighted material.  Specifically, courts are asked to consider:

1. The purpose and character of the use, including whether such use is of commercial nature or is for nonprofit educational purposes
2. The nature of the copyrighted work
3. The amount and substantiality of the portion used in relation to the copyrighted work as a whole
4. The effect of the use upon the potential market for, or value of, the copyrighted work

 The post goes through the specific cases (and I recommend reading them through).  I'll end my own "Fair Use" exemption by providing his conclusions:

• Dealing for commercial purposes may be fair.
• Commercial use does not nullify fair use.
• The availability of a license is irrelevant in considering alternatives to the deal.
• It is not advisable to circumvent the underlying work, it is much better to transform, summarize and/or add to the underlying work.
• A plaintiff must bring evidence of any detrimental impact upon the market for its work if it wishes to have it considered. After all, to quote a CBS executive: “3 minutes of a Beyonce song might potentially hurt an entire album of Beyonce, but two minutes of ‘CSI' might be the greatest thing that could ever to the 44 minutes of ‘CSI’ that we put out weeknight on [CBS] or our affiliate partners.” 

Source -   Fair-Use Cases That Have Shaped Copyright Law,  OnlineVideoInsider

update - added header

Exploring New Markets - YouTube takes to the skies

One of the benefits of the emerging digital economy is that it's opened up a lot of potentially new markets for content distribution.

YouTube's signed a deal with Virgin America airline to put a selection of its premium streaming content on flights throughout the U.S., starting Dec. 15.

“We’re inspired by the quality of content our creator community is developing for YouTube, and we’re excited to get it in front of people in new ways. Partnering with Virgin America is one way we’re doing this. We feel the innovation and energy of both the YouTube and Virgin America brands align well,’ says Danielle Tiedt, YouTube’s chief marketing officer.

For now, at least, the move is more of a promotional test than a fully commercial service. A limited number of shows from premium YouTube channels will be made available, without commercials. As one reporter quipped, "the impression that little YouTube programs are on an equal footing with networks or theatrical big releases—and that’s exactly the message (YouTube) wants to deliver."


   It's also a good starting strategy if YouTube wants to commercialize their services later.  As Chris Anderson suggests in Free, it can be useful when introducing a new product or exploring a new market to offer free sampling, so that people can test the waters and start forming their own thoughts about the content/service's value.

Whether short-term promo or long-term market development, it's good to see media outlets exploring potential new markets, and exploiting multiple revenue potentials for their content.  At least it's indicating that they're no longer trying to hold onto the old market structures and behaviors.

Source  -  YouTube Goes on a Trip,  Vidblog

Cable - Still Slip-sliding Away

U.S. cable operators continue to lose video subscribers, at a rate of about 3% per year.  2012 will mark the ninth consecutive year of subscribership decline for their base TV programming options.  Initially, the decline resulted from a shift to DBS (satellite) competitors; some of the continued losses are similarly likely due to growing competition from telco-based multichannel video distributors (Verizon's FiOS, AT&T's U-verse, and (just starting) Google's Giganet).  Some, though, is a reflection of the growth of cord-cutting - people deciding that over-the-air broadcasts and the growing availability of quality video streamed on the Internet is sufficient in these difficult economic times.
  Still, reinforcing some comments from big cable MSO's lately, using the cable infrastructure to deliver other types of services continues to grow.  In the last quarter alone, cable companies picked up almost a million new data subscribers, and 276,000 voice subscribers (compared to a loss of 460,000 video subscribers).

Source -  Cable Operators Continue To Lose Video Subscribers,  MediaDailyNews

For Fun - IT One-Liners & Web Resource

From a short slideshow of IT cartoons -

The Evolution of Technology One-Liners  (from Tina Sieber)

"If at first you don't succeed, call it version 1.0"
"CAPS LOCK - Preventing Login Since 1980"
"To err is human - and to blame it on a computer is even more so."
"Artificial Intelligence usually beats real stupidity."

"There are only 10 types of people in the world: those that understand binary and those that don't."

Feel free to share your own in the comments.

While I'm at it, I stumbled across a neat site that points to "Cool Websites, Software, and Internet Tips" -
makeuseof.com that's worth checking out.


Source - Geek Humor,  from Citrix.

Milepost: Gaming Revenues

The latest big game release, Activision Blizzard's "Call of Duty: Black Ops II", topped $1 billion in retail sales in its first 15 days of release.  The previous installment had taken 16 days to reach $1 billion last year.
  To provide some context, the current record for feature films is 17 days for Avatar (in 2009), and total U.S. political ad spending for 2012 approached $3 billion.

Source -  New Call Of Duty: $1 billion in 15 Days,  Around the Net in Brand Marketing.

ITU Internet Governance Talks Get Heated

Among the agenda items at the current ITU conference was a new treaty giving the ITU control over international Internet governance.  (See Friday's post for details).
  After delegates voted down a U.S.-backed proposal to limit the scope of the treaty Friday, it was announced that an accord had been reached among coalition of several Arab states, Russia, and others, on a proposed amendment that would give local states greater control over the Internet, increase their ability to censor content and monitor and track user's behaviors, and to close down portions of the net if they desire.  While the specific language of the proposed treaty remains secret (for now), leaks and earlier proposals are giving observers concern.

"All of the indicators we have so far is it's something that could be a clear effort to extend the treaty to cover Net governance," said policy counsel Emma Llanso of the nonprofit Center for Democracy & Technology, which draws funding from Google and other U.S. Internet companies.

"What we're seeing is governments putting forward their visions of the future of the Internet, and if we see a large group of governments form that sees an Internet a lot more locked down and controlled, that's a big concern."

   The U.S. ambassador to the conference has promised not to sign any treaty that increased the ability of other countries to control Internet development and functioning, but is finding some resistance from a number of democratic states who would like to see content producers and commercial Internet services (like Google, Facebook, etc.) fund at least some of the costs of Internet transmission.  (Currently, those are paid primarily by governments or Internet Service Providers (ISPs) - and are passed on to users).
  The rest of the week will see the conference break into small groups to hack out details and proposals prior to the full body reconvening next Monday.

Source -  Internet governance talks in jeopardy as Arab states, Russia ally,  TelecomEngine

Goin' Mobile - E-mail

A report from email specialist Return Path suggests that people are increasingly using mobile devices to access and open emails.
  Mobile's share of email opens has tripled in the last two years, while the use of desktop email clients has declined slightly.  Much of that growth seems to have come from a shift from the use of Webmail portals, and may be less of a shift in terms of when and where people access email, than a change in the devices used.  That is, Webmail portals offered mobile (non-fixed) access on desktops and laptops.  Smartphones and tablets now enable mobile access 24/7 through personal devices, both extending mobile access capacity with smaller and lighter personal devices.  Users away from their primary desktops may be shifting their preferred access point from Webmail to mobile devices.
  Still, email access habits vary across regions. In the U.S., 38% of all emails are opened on mobile devices, compared to 31% opened through a desktop email client, and 31% opened through a webmail portal.  In Brazil, France, Germany, and Spain, mobile's share of email opens falls below 20%; with Webmail portals being the dominant email access point.  The U.K. is seeing mobile usage rising to about one-quarter of email opens.
  The study also asked users about how frequently they accessed emails on various devices.  Looked at that way, more people report using desktop email clients on a daily basis than report using mobile devices to access emails daily.  While use patterns vary globally, more than 70% of users in indicate daily email access via desktop email clients, and more than 50% of mobile users indicate using their devices to access email daily.
   Apple devices dominate mobile email use, at least for now.  The study found that 59% of all mobile email opens occur on iPhones, while iPads account for 26%.  Android mobile devices currently account for 14% (with an occasional Windows user accounting for 0.3%).  The report indicates that this number may be somewhat skewed, as Apple automatically opens images when grabbing emails from host servers.
  There's some interesting results on use of emails from retailers in the infographic.

Sources - Consumers Favor Mobile for Email,  Online Media Daily
ReturnPath press release and infographic

FOIA -"Transparency" not so

A review of nearly 100 federal agencies and departments found that most had not updated their Freedom of Information Act (FOIA) regulations and processes to comply with either Obama's presidential promise or a 2007 law.
  The latest study of FOIA compliance by a public advocacy group (National Security Archive) found that 62 (of 99) federal organizations have complied with Obama's 2009 presidential  promise (as set out in a Justice Department memo).  In addition, 56 of the federal bodies had failed to comply with the "OPEN Government Act of 2007."  One, the Federal Trade Commission, has not updated its FOIA compliance regulations since 1975.  The advocacy group blamed the failure by both the White House and Congress "to find a way to compel recalcitrant agencies to comply with FOIA,"

  Regrettably, this is part of a federal trend of failing to comply with either the letter or the spirit of laws deemed "inconvenient." And just as troubling is the general failure of news organizations to notice or care (unless its their FOIA request at stake).

Source -  Survey finds most agencies ignore FOIA update orders,  Washington Examiner

Getting It Wrong - "The Era of Error"?

Paul Farhi has an interesting and troubling piece in the latest American Journalism Review - Mistaken Nation, about the growing problem of errors in journalism.  He starts with a tale of one big story that turned out to be only half right.  In 2007, Ben Smith, at then start-up Politico, got a tip from a trusted source that Elizabeth Edwards' cancer had returned, and as a result John Edwards was going to withdraw from the 2008 Presidential race at a scheduled press conference later that day.  Politico went with the story, and created a modest media firestorm.  At the Edwards presser, he confirmed his wife's relapse, but announced he was staying in the race.
"It was a really awful moment, personally," Smith recalled, adding he saw no clear lesson from the event, although his credibility might have taken a hit.  No lesson? How about this - don't make predictions based on a single unverified source; people can change their minds.

  American journalism students are weened on the apochryphal "Dewey Defeats Truman" headline in the Chicago Tribune missing the call of the 1948 Presidential election.  Blamed on deadline pressures and a printer's strike, the rush to get the big story first is still an embarrassment for the venerable daily.  And for all the emphasis j-schools place on getting it right, once in the real world the focus seems to shift to getting it first, often at the expense of accuracy.
In addition, the capacity to review and verify is shrinking with the decline of copy editors.  A press that still reflexively and arrogantly proclaims its accuracy and veracity as the product of "layers and layers of editors and fact checkers" has laid off most of them.
  Scholars have been looking at the issue of accuracy and errors in news reporting for more than a half century - and in one of the biggest and most recent, found that more than 60% of local news and feature stories contained errors.

The reported inaccuracies included the relatively trivial and objective kind — misspellings, incorrect ages, titles and dates, etc. — to the more profound and subjective, such as misleading or distorted quotes, the omission of information or the overplaying of inconsequential facts (read: hype).

That study also found a correlation between the amount of errors and source's perception of the newspaper's reputation, and their willingness to cooperate with the paper's staff in the future.  Farhi concludes "errors not only hurt the newspaper's reputation, they damaged the media's working relationship with the very people they cover."

  And it's not just sources that notice errors and find that they damage credibility.  Gallup and Pew have regular tracking polls on the credibility of various news sources in the U.S. - and the number that find them to be generally credible keeps declining.  (here's recent posts on Gallup and Pew numbers).  Only about one in four (or less) feel that news generally gets their facts straight, and more see reporting as favoring one side and influenced by the powerful.  This should be a big problem for news organizations - after all, the value of news (as journalism) is directly tied to perceptions of its accuracy and veracity; to borrow a common claim among news outlets - "News You Can Trust."
   If you can't trust it, all that's left is a story's entertainment value.  While that may keep the readers and viewers happy and bring in the revenues, it's not what makes journalism the "Fourth Estate."
  After a few more anecdotes about "mistakes" large and small, Farhi brings the discussion to the confounding factor of the Internet.  The speed and reach of the Internet certainly makes it easier to compound errors, and certainly makes it easier and faster for people to note the errors.  You'd think that it would also speed and facilitate the ability of reporters to check and verify at least some of the more straightforward mistakes, but there's a bit of a problem there.  Reporters have to acknowledge that there may be mistakes - and most are loath to do so.  Another study from 2007 found that reporters and news organizations are reluctant to acknowledge errors.

News sources noticed lots of errors in the newspapers' stories... but they rarely complained about them. When they did, the response was about the same as if they hadn't bothered. Of the 130 cases in which a source informed the newspaper about an alleged error, the newspapers ran a correction only four times.

   Another issue is the rise of pack journalism, a groupthink mentality that almost rises to cult status - or in academic terms, the building of self-reinforcing memes that seems to create a truth that really never was.

As it happens, some of the greatest myths perpetrated by the media are about the media itself. One popular notion is that CBS News anchorman Edward R. Murrow's famous "See It Now" broadcasts in the 1950s "brought down" Sen. Joe McCarthy, the communist-hunting demagogue. Another is that President Lyndon B. Johnson concluded that he could not win reelection after another legendary CBS anchorman, Walter Cronkite, declared in 1968 that the Vietnam War was "mired in stalemate." Still another is that the press, particularly Bob Woodward and Carl Bernstein of the Washington Post, drove President Richard M. Nixon from office in 1974 with a relentless stream of revelations about the Watergate scandal.
These tales have been told so many times (often by journalists) that they seem true. But each is a case study in what satirist Stephen Colbert labeled "truthiness" — a statement having an emotional foundation or the ring of truth but with little or no evidence to support it. Each of these myths is dismantled in W. Joseph Campbell's 2010 book, "Getting It Wrong: Ten of the Greatest Misreported Stories in American Journalism," which demonstrates the self-reinforcing power of mistakes. 

 It's something I see a lot of, both among my students and among the journalism profession - a belief that all you need is one source that backs you up, particularly if that source is from a "trusted" news source.  And, incredibly, even after that "trusted" news source has issued a correction, most will rely on that first report that reinforces the meme and their beliefs. Farhi provides some additional anecdotes, including one from his own past about a missing footnote.
   Farhi wonders if "this may be a Golden Age of non-facts, the Era of Error."  I'd like to think that the reporting's not gotten so biased or sloppy that it's a fundamental problem.  It's pretty clear that the changes in the media landscape has increased the pressure to get the story out quickly, and that economic pressures have reduced the "layers" of fact-checking and copy-editing.  I'd also make the argument that the Internet's given those errors and mistakes that are made greater exposure, and eliciting more, and more public, challenges.  In other words, errors, and news organizations' reactions to errors, are more visible and public - and that most organizations haven't come to grips with that reality, retaining their fundamental belief that as journalists, they're more likely to be right than their readers and viewers are.  Which is not always the case. 
   All these factors compound the impact of journalistic errors and mistakes - continuing the decline in the public's trust of news media.

   Anyway, the article's worth a read.

Source  -  Mistaken Nation,  American Journalism Review
  

Internet at risk of politicization

It's taken a while, but it looks like there's a good chance that the UN, acting through the ITU (International Telecommunications Union), will try to assert regulatory control over the Internet.
  Almost since the globalization of the Internet, a lot of countries and interest groups have complained about the U.S. de facto control of the Internet.  While there's never been any formal regulation of the Internet by the U.S., early internet standards were created in the U.S. and largely funded by Federal research dollars; the U.S. (through the NSF) built and funded the Internet backbone in the U.S. (until 1994, when the backbone was privatized), and many international backbone links were funded wholly or partially with U.S. funds. But the major concern for most of the non-U.S. world was that the U.S. hosted and funded the top level domain name server - the address book for the millions of computers that form the Internet.  The threat that many feared was that the U.S. could unilaterally disconnect (virtually) a country from the net.  (A physical connection might still exist, but removing DNS addresses could make it nearly impossible to find sites and content).
 Early concern and pressures led to the creation of an independent nonprofit organization, ICANN, to take over regulation of the DNS system from what had been an ad hoc group of volunteers.  However, the U.S. still was the primary funder and the contracts included clauses that many interpreted as giving the U.S., through the Department of Commerce (DoC), legal authority to control.  Throughout this period, the U.S. publicly promised that it would never interfere with DNS and ICAAN operations.  These promises were broached in 2006, when the new funding contract and a concurrent memoradum of understanding explicitly granted the U.S. DoC final and unilateral oversight over some ICANN operations.
  Around that time, ICANN undertook to create a revised addressing system and new top-level domain names, as the Internet was expanding so quickly that it was likely to run out of viable addresses within a decade.  In addition, ICANN began to internationalize DNS operations which may have prompted the DoC to release a public statement that it had no interest in giving any outside group, including ICANN, management and control over the authoritative root zone file (the "official" address book).  Around the same time, the UN started hosting meetings to address issues related to the operation and regulation of the Internet - mostly with a specific goal of replacing the U.S. as the dominant authority with an international regulatory authority within the U.N.
  The U.S. had managed to keep these efforts more or less on the back burner, until the U.S. started unilaterally seizing Internet addresses of sites and services (including many not in the U.S.) by removing the seized address from the DNS.  Previously, while the U.S. had always asserted authority over the top-level DNS, it had also promised it would not do so absent some emergency.  In recent years, though, it has regularly and almost routinely interfered in DNS operations, by seizing and removing domain names with minimal legal authority or oversight.

  As a result, the move for the UN to claim regulatory oversight has strengthened, enough so that the U.S.'s motion to delay or stop discussions about regulating the Internet at the current full ITU meeting failed.  As a result, discussions on possible Internet regulations will proceed, and possibly become a part of a revised ITU treaty.
  It seems quite likely that any revised ITU Treaty will include language giving the ITU, or some international body operating under the ITU or UN, regulatory and operational oversight over the global Internet.  There's also a strong consensus about providing a legal framework to facilitate combating criminal activities on the Internet, when the activities cross borders.
  The bigger battles will be over the nature and degree of oversight, particularly related to local control over content and Internet activities. 

The 12-day ITU conference, which began on Monday, largely pits revenue-seeking developing countries and authoritarian regimes that want more control over Internet content against U.S. policymakers and private Net companies that prefer the status quo.

There's also likely to be strong debate over proposals addressing security issues and the potential for information warfare.  Those discussions are likely to pit states trying to remove or lessen the anonymous nature of internet (ostensibly for security purposes) against business and human rights groups concerned that any such changes could also be used for monitoring Internet use and thus repression of internationally recognized human rights to privacy and speech.
   And where there's strong debate, there's the likelihood that deals and trade-offs will be made for support, and further politicization of the Internet.

   As noted previously, the U.S. has lost a lot of its moral authority in that debate - those pushing for more oversight and control can now argue that all they're looking for is the same things that the U.S. has asserted and used in recent years.  Still, groups like the ITU like to operate under the pretext of consensus, so it's unlikely that a revised treaty will be adopted and ratified.  What's likely is that a formal draft will be developed either for ratification by individual countries, or to serve as the basis for continued debate and politicization.

Source -  US fails to win early limit on net controls at global gathering,  TelecomEngine.com

There's nice overviews of issues at:
World War 3.0,  Vanity Fair
The U.N. and the Internet: What to expect, what to fear (FAQ), c/Net

  
 

Netflix in the News - Still out to change the (TV) world

Earlier this week, Netflix and Disney announced a deal that will bring Disney and affiliated studio content to Disney.  But the big news was that Netflix will become the primary pay-TV outlet for future features.
  Older Disney fare had been available on Netflix through its deal with Starz, but that deal expired earlier this year.  Now, older content from Disney, Walt Disney Animation Studios, Pixar Animation, Marvel Studios and Disneynature will be available shortly, while new feature films will become available on Netflix when they move into the pay TV window (typically six months after the initial theatrical run ends. A spokesman for Disney indicated that content from Lucasfilm will be included once its acquisition is finalized, while noting that DreamWorks, while it uses Disney for theatrical distribution, will honor its current deal with Showtime as a pay-TV partner.  High profile direct to video releases (Tinker Bell, cartoon series, and shorts built on feature film characters) will come online in 2013.

  The deal prompted a piece in GigaOm by Janko Roettgers, who sees the strategy of going directly to content producers and distributors for streaming rights (rather than acquiring them as secondary rights from pay TV networks), along with other recent moves, as building a platform that could transform traditional TV.

Netflix doesn’t just want to compete with traditional pay TV networks like HBO, Showtime and Starz – it wants to change television forever. The company envisions a future for TV in which old-fashioned things like ratings, schedule and recaps simply don’t matter anymore.

 Roettgers interviewed Netflix's Chief Content Officer, Ted Sarandos, about the Disney deal and other recently announced deals - and what was behind the moves.  One of the moves is the decision to produce original content - last year Lillyhammer led the way, and two highly-anticipated TV series are set to launch February with original content.  One, a return of Arrested Development has been generating a lot of media buzz and fan chatter since the series' relaunch on Netflix was first announced.  The other series slated for February debut is House of Cards. But these days, a lot of channels (beyond the traditional broadcast networks) are airing traditional programming in the hunt for bigger and better ratings.
   Where Netflix is changing the game is in terms of its scheduling strategy - releasing all of a season's episodes at the same time.  Sarandos argues that ratings, and thus worries about scheduling, are irrelevant from Netflix's perspective (and business model).  Unlike commercial networks, a program's value is not determined by its ability to attract large simultaneous audiences.
   “The most difficult thing in linear television is the pressure on the time slot,” Sarandos said.  Some content works well on what he termed linear television (content is offered as a linear sequence of programs) - like sports, news, and talk.  “The immediacy of Jon Stewart…. lends itself to linear business models.”  However, he suggested that scripted content is different - it has a longer shelf life, and it comes closer to giving viewers the flexibility in viewing options they want (as seen in DVR behaviors), while avoiding scheduling conflicts and losing audiences if the network shifts the air times.  In addition, program creators like the ability to build storylines over episodes without having to recap the previous episode.
  Netflix's on-demand and subscription business model, he noted, is based on building the value of available content, and the choice and flexibility an on-demand model provides to its subscribers.  Thus, success for Netflix is not built on the popularity of any single film, content, or episode, but in providing access to programming that at least some of their subscribers want to watch. 

  In addition, Netflix learned from Amazon the value of developing a recommendation system that personalizes the service.  (They even had an open challenge/contest to develop a better systems).  A more formal differentiation is coming in its new "Just for Kids" interface - that allows parents to provide their kids with family-friendly programming.
  As that Netflix business model (programming strategy) continues to prove itself, it may transform TV viewing, if not TV markets.  Sarandos wasn't shy when asked about the future of TV -

“It’s gonna look nothing like we’re seeing today.”

Source -   How Netflix wants to change television forever,  GigaOm

Infographic: Global Internet Map 2012

From TeleGeography, a map showing Internet connections (and capacity) among the countries of the world.

(There's also an interactive version where you can zoom in to look at various areas)

It may be a bit of a surprise initially, but they show International Bandwidth Growth rates slowing (falling to around 40% annual growth rate for the last year).  But that's partially the result of the fact that a lot of the basic international infrastructure has already been established, combined with the utilization of already-installed dark fiber.  (Fiber optic cables are installed in bundles - those that aren't immediately used for traffic are called "dark fiber" and are held in reserve to handle traffic as demand and utilization grow.  Thus growth doesn't necessarily require rebuilding whole networks).

They also show that despite the huge increases in traffic and network expansion, the prices for IP Transit Service (moving data across networks) continues to fall.

Sources - Global Internet Map, TeleGeography
Global Internet Geography, TeleGeography

NewsCorp. Splits, Drops The Daily

Murdoch's News Corporation announced that it will be separating print and audio-visual (film and video) operations.

  Current newspaper and publishing operations will retain the News Corp. name under the leadership of current Dow Jones editor in chief Robert Thomson.
  Current TV and film businesses will be shifted to a new corporate entity to be called "The Fox Group."  The Fox Group will be led by Rupert Murdoch as CEO, and Chase Carey as President and COO.
  As part of the move, the grand experiment (or bastard stepchild) that was The Daily - an only news outlet available on Apple's iPad, will be shut down.

“At Fox Group, what began with the acquisition of a modest film studio over 25 years ago has grown into one of the world’s most successful media companies of all times, defying conventional wisdom at every turn by pursuing excellence in creativity and innovation,” said Murdoch in a statement. “Fox Group is perfectly positioned to deliver even more inspiring stories that engage audiences through film, television, sports and digital platforms, driving not only financial results but a lasting imprint on the millions of people who enjoy our various services, in every corner of the world.”

Murdoch's note to staff stressed his vision of making the world a better place through storytelling as being at the heart of his vision for NewsCorp., but coming to the realization that the kinds of storytelling used by traditional print news (and other print outlets) was different from the kinds of storytelling undertaken by entertainment media.  As such, separating the two would help each to pursue their own path to excellence.

It could work out.  What it's sure to do, though, is rekindle arguments about Fox News Channel (is it news, or is it entertainment?)

Source -  News Corp. Splits Into Two: Fox News Now Part of 'Fox Group',  TV Newser

BI's Future of Digital - Mobile

Last, but not least among the areas covered by the BI Intelligence slide show at the IGNITION: Future of Digital conference last week is the Mobile sector.  Here's some highlights -

 As pointed out in my initial post - mobile is booming.  The explosive growth is driven by two complementary trends - the expansion of broadband networks (especially wireless broadband), and technology going "tiny."
  By "tiny", I'm talking about the continued miniturazation of digital devices - we've gone from mainframes filling a large room, to desktop minicomputers, to lug-able portables and laptops.  Now, smartphones and tablets offer more speed and processing power than mainframes, combined with screens and batteries capable of providing a day's service on the move.  And as with everything digital, capabilities continue to grow even as prices drop.  Today, mobile devices are outselling desktops and laptops, offering personal connectivity and 24/7 net access wherever service is available.
  Broadband Internet access is poised for explosive growth.  With fiber replacing coax in terrestrial fixed networks, telecomm operators have been able to offer high-speed (high-bandwidth) digital connections to users.  As the fiber infrastructure extended closer to the home, the bandwidth available to users increased.  Now, the definition of "broadband" (i.e. available bandwidth or data transmission speed) varies a great deal - one international standards group set a minimum speed for "broadband" of 1.5 Mbs, but the latest FCC report on broadband diffusion in the U.S. looked at services offering speeds from 1 Mbps to 50 Mbps.  In the meantime, Gigabit broadband networks (1 Gbps, or 1000Mbps) are being tested in Kansas City (Google) and Chattanooga, TN (provided by local power utility).

  Still, what's driving the rapid expansion of mobile isn't coming from the fixed networks, but the rise and growth of wireless broadband.  Wireless broadband began with local Wifi hubs bringing broadband capabilities to mobile devices - but with very restricted range per hub.  (Wifi "N" standard can reach 300 Mbps).  Meanwhile, wireless telecomm operators have been making inroads in their ability to handle data services.  3G wireless networks can offer data access speeds approaching the low end of what's considered broadband speeds - depending on which system/standard being used, 3G can offer speeds up to 14-16 Mbps (shared).  Like Wifi, though, the available bandwidth is shared by however many users are downloading through the local hub/tower.  The big gain in this sector will come with the transition to 4G services.  As before, there are multiple technologies and standards falling under the 4G umbrella, but they all offer data speeds between 20 Mbps up to 300 Mbps (and one claims that data speeds can reach 1 Gbps under ideal conditions). Other wireless broadband networks are being discussed, from interconnected Wifi networks to wholly data wireless services in newly available areas of radio spectrum, that could expand access and bandwidth.
  There's extensive diffusion of fixed telecomm networks offering  broadband in industrialized areas - but terrestrial networks remain costly, which limits their viability in rural areas and poorer countries.  The explosion of cellular provides a much cheaper option for bringing Internet connectivity and data services in those areas.  Already 90% of the world's population live in 2G service areas, and thus have Internet access with "smart" mobile devices.  Global mobile penetration hit 87% early this year.  As for broadband, almost half (45%) the world's people live in areas with 3G service that currently provides low-end broadband access, and Ericsson is predicting that half of the people of the world will have 4G access within five years (85% will have 3G service).

  Studies are showing that people are adopting connected mobile devices (i.e. smartphones and tablets) and using them for a lot more than talking to people.  Mobile users are increasingly using their devices to access a wide range of content and programming - and doing so while they also use traditional media content formats.
  Around 40% of smartphone owners report using their devices while watching TV on a daily basis, more than 60% do so at least several times a week, and about 85% report multitasking at least monthly.

  They're also beginning to show that mobile devices are impacting traditional media habits and usage patterns.  Streaming music listening is shifting to mobile: 70% of Pandora listening goes through mobile devices, 55% of music listening via Twitter is on mobile, as is a third of music listening through Facebook. A recent study by NPD Group (see this post) suggested that people are increasingly listening to Internet radio or other streamed music services - and that listening through personal mobile devices is replacing listening to music on physical discs.
  Mobile's also starting to impact news consumption (see this post), watching recorded online videos and TV programming (check here); watching live events); and magazine reading.  Not only are tablets emerging as viable alternative for media consumption, their ability to expand access and consumption options are starting to change long-established traditional media behaviors.

  Still, the preeminent concern is whether content and online service providers can benefit financially from the shift to mobile devices.  Research suggests that mobile users can and will pay for content read and viewed through mobile devices.  In the U.S. more than half of mobile users report that they've paid for books, movies, and music consumed through personal media devices.  Other research suggests that tablets, in particular, are becoming the preferred medium for consuming online content.

  As for the advertising potential of mobile devices, that's emerging - although at this point it's not seen as competitive (the screen's too small, the audience too fragmented, etc.)  While the effective CPM (cost per thousand exposures) for online ads going through desktops is around $3.50, but averages $0.75 for online ads delivered through mobile devices.  Mobile online advertising is also going primarily to web portals (Google gets over 60%).  Still, mobile online advertising market is in its early stages, and should grow rapidly.

While online advertising will grow, for mobile as well as generally, for now the dominant mechanism for monetizing mobile lies in apps.  Apps are dominating mobile device use, and are generating significant revenue growth.
  Apps also have a variety of ways that they can generate revenues.  Money can come from purchasing the app outright, and it can also come from in-app commerce (advertising, or purchasing upgrades or special content/features).  How big is in-app commerce?  Two-thirds of the top-grossing iPhone apps actually generate all of their revenue though in-app commerce.  That is, they're free to download apps that make money from people's continued use of the app.  In-app commerce is widely used in iPhone and Android apps (93% of top 100 iPhone apps include in-app commerce features).
  At this point, Apple's iOS platform is dominating mobile revenues, accounting for three quarters of app revenues in 2011, and around 70% of Ecommerce-related traffic from mobile devices.  However, the latest rounds of Android OS smartphones and tablets are matching Apple's technical capabilities at lower price points, and are beginning to eat into Apple's share of device OS for smartphones (Android has already overtaken Apple in this segment) and tablets (Apple still dominates, but Android is overtaking).  Eventually, the revenues will follow the leading OS/device pairings.

  So is mobile real? Here's one last slide illustrating the growth in sales of mobile devices.

Certainly looks like connected mobile has a future.

Source - The Future of Digital [Slide Deck],  Business Insider

Future of Digital - Social

The BI Intelligence slide show at the IGNITION: Future of Digital conference last week also had a lot to say about Social Media.  Here's some highlights -

  As noted in the previous post, Social Networks are becoming the gateway to the Internet - for the last two years, people spent more time on social networks than they did on Web Portals.
  Facebook is the dominant global giant of social media (i.e., the Google).  About 1 of every 7 people in the world are active Facebook Users (at least once a month).  And Facebook is truly global - it's the leading social media site for most of the world, with a few notable exceptions.  Several countries have banned or severely limited Facebook service, and in some countries a native language alternative dominates.  While Facebook supports more than 70 languages and dialects, it seems to be less successful outside the English and Indo-European core languages. 

(A glance at the map shows most of the countries with a different leading social media service speak non-Indo-European based languages.)

  With the recent public stock offering for Facebook, there's been a lot of focus on Facebook's ability to monetize its reach and user base.  Google dominates the digital advertising market, although it's share is slowly falling as more channels and online advertising opportunities develop (including Facebook).  This led the BI Intelligence folk to ask the question Facebook investors ponder: Will Facebook ever be bigger than Google?  They don't think so, offering this analogy - Google is like advertising at a store, while Facebook is like advertising at a party.
  While Facebook's ability to drive referrals to e-commerce sites is growing rapidly, those numbers remain minuscule compared to Google and other online portals/search engines.

  In fact, at the moment the biggest challenge to Google's supremacy in digital advertising revenues looks to be from e-commerce sites.  In-store advertising has always had the advantage in that it reaches buyers while they are shopping, and proper ad placement (targeting) can put the ad's message in front of prospective buyers.  Amazon is already generating more than $1 billion a year in advertising, and U.S. online retailers are generating more than 20 billion ad impressions per quarter. With retail sales shifting online, there's a lot of opportunity for growth.

Then there is the new category of "social commerce," sites and services that blend marketing and commerce.  Revenues are still in the early market stages, and are experiencing the type of explosive growth common in the early stages of diffusion.

  The "Social" online markets are still in the early development and growth stages, but there's good evidence that social sites are finding ways to monetize their user base - through advertising, in-game fees and purchases, and through marketing and linking arrangements.  Perhaps not as much, or as fast, as hoped by the people and institutions buying stock at Facebook's Initial Public Offering, but the potential is there.

Next up - Mobile

Source -  The Future of Digital [Slide Deck],  Business Insider

Future of Digital Slideshow: The Big Trends

New research firm BI Intelligence got off to a running start at the IGNITION: Future of Digital conference last week, with a quick slideshow introduction.
Some key points:

• Global Internet Population should surpass 2.5 billion this year.
• Globally, Internet users tend to be well off - 82% of Internet users have incomes in the top 30% in their countries
• The Internet's quickly going mobile - smartphone sales currently surpass PC sales.  (With a number of new & cheaper competition for the iPad, tablet sales should soar in 2013).
• This trend is supported by rapid expansion of broadband access in industrialized countries (G20 nations)
• Connected mobile devices have, or will soon, achieve 50% penetration rates in more advanced industrial countries.

One result is that digital content revenues are booming (although have yet to match the peak levels for analog content revenues).
   Digital advertising revenues in the U.S. are also rapidly growing, although still below more traditional media levels.  They are, as the slide below indicates, increasing their share of total advertising revenues and should continue to do so.  Interestingly, Google's earnings from advertising are 50% higher than the total for all other online revenues combined.
  As for the rest of the world, digital advertising markets in most other countries are still in the earliest stages of market development.  They should pick up as the U.S. industry develops and adopts widely-acceptable metrics for digital advertising exposure and impacts.

Online digital media have already significantly disrupted news media.  A series of studies are finding that online news sources are the places people go to for breaking news and information.  The shift has almost killed the traditional urban daily newspaper in the U.S., and new studies suggest that connected mobile devices are quickly becoming the medium of choice for many kinds of news and information.  Online news audiences are growing rapidly, and revenues are following the audience.
  Another Google tidbit - in the first half of this year, Google generated as much U.S. advertising revenue as the entire U.S. newspaper industry, and almost as much as the entire U.S. magazine industry.

  Looking at the TV market, one can see the start of disruption and shifting audience viewing habits.  Access to, and use of, online video is booming, and the increased availability of DVRs and on-demand video channels is changing viewing habits enough that broadcasters are calling for extending the periods in which watching a program will be included in the basic ratings numbers.  In the meantime, pay TV subscriptions in the US are increasingly volatile, and trending down.
  In the meantime, revenues from online video subscriptions (more than $4.5 billion in the U.S.) and online video advertising ($2 billion in the U.S.) are increasing.

  It's also becoming clear that, online social media services are becoming the new Internet portals, both as entry points and in terms of the time spent online.  Almost concurrently, we're seeing that mobile devices are starting to drive Internet use and traffic.  With connected mobile devices, the Net and its content are accessible anytime, and anywhere (with wireless broadband, anyway).
  Already, there's some hints that mobile devices will contribute to the continued disruption of traditional media.  But this post is running long, so I'll save most of the discussion of mobile for later.

I'll leave this with a couple of thoughts -

First, digital content, broadband, and connected mobile are clearly transformative and disruptive technologies.  They are changing the way people are accessing and consuming both information and entertainment content.  With the advent of social media systems, they are fostering whole new forms of media consumption in the form of active, interconnected, and engaged audiences.

Second, people are finding more and better ways to monetize online media consumption, particularly in the U.S.  Online digital advertising is rapidly growing and should reach levels competitive with at least some traditional media in the near term.  In addition, online content providers are developing viable business models based on subscriptions or access-point fees (on-demand, or through app payments).  Economic support for online content distributors is growing, at least in the U.S., and seems to have the potential to overtake more traditional media revenues.

Third, if you think the U.S. market bodes well, think about the potential of China.  They already have twice the number of Internet users as the U.S.  As their economic foundation continues to develop, the market potential could easily take off and bypass U.S. levels.  It may take some time to develop, but don't be surprised if China becomes the largest Internet market in the next decade or two from an economic perspective as well as in the number of users.

Source -  The Future of Digital (Slide Deck), Business Insider.

Digital Streaming Changing Music Listening Habits

A new study by market researchers NPD Group found that half of US internet users listened to an online radio station or from an online on-demand service in the last three months. A bit more than a third (37%) listened online through a streaming service (Pandora or Internet radio). a bit less (36%) listened via a pure on-demand service.

  The shifts in listening patterns are becoming apparent - over the last year, Internet radio listening is up 27%, audiences for on-demand music streams is up 18%, listening to digital downloads is down 2%, listening to terrestrial radio is down 4%, and listening to CD's is down 16%.

“Although AM/FM radio remains America’s favorite music-listening choice, the basket of Internet radio and streaming services that are available today have, on the whole, replaced CDs for second place,” said Russ Crupnick, senior vice president of industry analysis at NPD. “We expect this pattern to continue, as consumers become more comfortable with ownership defined as a playlist, rather than as a physical CD or digital file.”

The study also looked at the changing music listening habits of Pandora users. Compared to 2009 levels, the number of Pandora users listening to terrestrial radio is down 10%, listening to digital downloads on personal media devices is down 21%, and listening to CDs (on devices other than PCs) has fallen 21%.  Similar changes were found for listeners of leading on-demand music streamers.
  Still, the biggest change in listening is the result that 34% of Pandora listeners are listening in their cars over the car's audio system (directly, or indirectly through a link to a mobile connected device).
  As for those concerned that the shift to online music listening might tend to stifle interest in new music, the study found that 64% of online music service listeners reported that they had rediscovered old favorites and music, and 51% reported learning about new music.

“AM/FM radio has traditionally played a significant role in helping consumers learn about new music from well known artists, as well as finding new ones; however, Pandora and other music services are an increasingly important part of the music-discovery process.”

  Given that last result, the music industry might want to rethink their push in Congress to place significantly higher royalty fees on online music services - between the push for more royalties from radio and online, they may just price music listening out of regular use.

Source  -  The NPD Group: Internet Radio and On-Demand Music Services Rise, Putting Pressure on Traditional Forms of Music Listening, press release from The NPD Group