Chatalas Shrugged

The economist Milton Friedman insisted that “there’s no such thing as a free lunch.” His feeling is that no matter the label, something “free” always costs the recipient in some manner. However, Chris Anderson, in his new book Free, says the theory has lost its resonance in the digital era; free is the new price model. At the same time the establishment media is at wit’s end over free distribution of their content.

The July/August issue of Columbia Journalism Review featured a series of essays titled “No Free Lunch” discussing the challenges facing news organizations, and how they might be able to recoup some money for the content they produce.

“Open for Business,” by Michael Shapiro, suggests a free/paid hybrid, whereby some subscribers subsidize the free content. While society is indeed accustomed to free content, the fact remains that people do pay for in-depth and exclusive information they deem valuable. Sports sites provide “insider information” for a fee. And online versions of established publications have successfully utilized the “freemium” approach described in “Free,” in which some content is free, but there are costs to access enhanced information and services. Among those in this category are Consumer Reports, The Wall Street Journal and Congressional Quarterly.

The catch, of course, is that there has to be something that people are willing to pay for, and this requires an investment in reporting and creating content of value. This is where the paying customers also come in handy; they help underwrite the cost of producing more quality content that brings in both paying and free eyeballs. This fits into freemium’s 5 percent rule: the small percentage that pays for a premium version end up covering the costs for the many who access the content for free.

Clearly the establishment media created many of its own problems. They opted for the network television model: free access, mass audiences and high ad rates. Perhaps news organizations should have taken the cable television model instead: subscription fees and ad revenues driven by quality content. Ironically this approach is what newspapers and magazines operated under for decades, before the internet led to some rash, and arguably faulty, business decisions.

And now many media giants such as Murdoch and the Associated Press are circling the wagons, adamant about putting a price on the content. They believe that what they produce is valuable and merits a fee.

But just because media companies facing a crisis want to change the game, it doesn’t mean the people will necessarily go along. At least that’s what is indicated by a study by Hsiang Iris Chyi of the University of Arizona, “Willingness to Pay for Online News: An Empirical Study on the Viability of the Subscription Model.” The 2005 study randomly surveyed 853 Hong Kong residents, and found that very few would be interested in paying for information they’ve become accustomed to having for free. And those that were willing to cough up the cash tended to be both older and newspaper subscribers, demonstrates a generation gap rather than an income disparity. The takeaway from Chyi’s report, though, is that it will be difficult for media companies to rely on a subscription model for economic viability.

Rather than prying open the wallets of a generation used to free online content, Free suggests news organizations need to find ways to generate revenue within this new economic reality.

Slides:

EconFreeDiscussion

Slideshare Version

Resources:

Chyi, H.I. (2009). Willingness to Pay for Online News: An Empirical Study on the Viability of the Subscription Model. Journal of Media Economics, 18(2), 131-142.

Osnos, P. (2009). What’s a Fair Share In the Age of Google?. Columbia Journalism Review, 48(2), 25-28.

Shapiro, M. (2009). Open for Business. Columbia Journalism Review, 48(2), 29-35.

We often discuss the subject of revenue models in the online world. While there are a multitude of Internet businessess and offerings, the earnings that will support many of them are elusive. This is particularly so in the area of social media, where companies have innovative services being used by many, but the sources of revenue are a work in progress. Our recent guest from Nokia acknowledged that financial expectations are uncertain for its new online services; it was more important to provide these services and gradually see what practical models emerge.

As we’re also aware, the future of print publications is perpetually debated. So it is great to learn about a business that is successfully combining traditional publishing with user generated content. 8020 Publishing is running its travel and photography magazines in a cost-efficient manner by using online editorial and photo submissions. The San Francisco-based company produces its magazines based on the best material, and suggestions, of its online community.

8020 is creating these magazines and managing its websites with a staff of less than 20, a miniscule workforce compared to many other national print publications. Even better, the company is forecasting profits by next year.

This model has proven to be so effective, 8020 has plans for similar magazines dedicated to food and cars. With one small hitch, though… it will only proceed if its dedicated online community members say the new titles are worthwhile and that they will support it.

The netroots often receive credit for energizing and organizing the progressive movement. Using social media tools, these activists have had a profound effect on national and local elections. Indeed, Barack Obama has largely built his campaign and its coffers by embracing the netroots.

Alas, these online activists aren’t always accorded respect by political insiders. At times there’s been tension between the DC hacks and the netroots about tactics and effectiveness. And I’ve heard a local democratic leader refer to the movement as “the nut-roots”.

The netroots, though, perseveres with its brand of activism that is shaping the future of politics and the party. Its third annual conference, Netroots Nation, is in mid-July in Austin. And Lawrence Lessig will be a keynote speaker.

Lessig, of course, is a tech intellect and superstar who has advanced efforts toward ensuring the Internet remains democratic and open to all. In late 2007 Lessig announced that he would dedicate significant time to the issue of corruption.

In the meantime, the members of the netroots are ecstatic that Lessig will speak at the coming conference. This tech giant’s presence gives the movement more legitimacy, connecting the netroots’ political emphasis with the technological and cultural elements of the Internet. One netroots leader, Chris Bowers at OpenLeft.com, described the importance of Lessig’s participation:

It is an expansive moment where the netroots demonstrates a wider focus on more than just elections and party politics, but also on the broader social trends that make the netroots possible.

- Jody Chatalas

We already know there are publications available on the web, and many have made online publishing the thrust of their business. Included among these are Salon, Slate, Grist and Crosscut, just to name a few. Clearly this model is well in place, and online publications will continue to emerge.

Newspapers, however, continue to straddle the line between print and pixels. They have an online presence, but still hold on dearly to their sacred cash-cows. Although the Internet makes trees and trucks expendable, newspaper executives just can’t bring themselves to fully part with those two rather expensive items.

(more…)

How a Small-time Blogger Wreaked Havoc With a Media Giant

The media landscape has changed considerably amid the emergence of the Internet. People read, listen to and watch their news and entertainment online more than ever. Furthermore, the wired world offers the ability for all citizens to create their own content, including via blogs, podcasts and videos. This trend toward online media has posed challenges to those in the traditional media. Newspapers, radio and television have had to adjust to these new realities, altering business practices and fine-tuning approaches to consumers and advertisers.

At the same time the online era has also made it increasingly easy to hold the media accountable. Everyone can be a media critic or watchdog. Citizens and organizations scrutinize the media, searching for mistakes, bias and troublesome business practices. Bloggers use their websites to comment on and publicize unfair and inaccurate coverage. And some activists even challenge broadcast licenses and organize boycotts, claiming media companies aren’t living up to their commitment to provide quality programming. The digital tools are making it easier for these activists to track the media, and to communicate, organize and raise money.

Common Complaints About the Media
Among the largest points of contention surrounding today’s media are concerns about corporate ownership and consolidation, and uneven coverage and programming. Both subjects have become increasingly political, with democrats and republicans entrenched in the debates

Today roughly six major corporations dominate the media, including Time Warner, Disney, Viacom and NewsCorp (MediaChannel.org, 2001). Beyond the big six, there are several other corporations that own large numbers of newspapers, radio and television stations, and other media entities (Columbia Journalism Review, 2007). The Federal Communications Commission (FCC) has gradually attempted to relax ownership restrictions, which would enable these companies to acquire more media properties. This concerns activists on both sides of the political aisle who believe that fewer media companies will lead to fewer and less diverse voices in the marketplace of ideas. In 2003 an odd alliance of liberal and conservative groups loudly protested proposed changes to the media ownership rules; the US Congress paid attention, and overturned the rule changes. In 2007 the FCC passed a similar rule change, and activists are hoping that congress will intercede once again.

Another common complaint about the media is bias and slanted coverage. Not surprisingly, both republicans and democrats say the media is stacked against them. Conservatives have claimed for years that the media is liberal, saying that journalists typically vote for democrats, and that news stories reflect as much; the New York Times is a popular target of enmity by the right. The liberals counter that the right has “worked the refs” (harped on the media for being liberal) for so long that the media has made a conscious effort to provide more airtime to conservatives; the left complains that the media merely prints everything the conservatives utter without objective analysis of its truth, and that the media impose a different standard on democrats than they do republicans.

Perhaps a contributing factor to these grievances is that the media cares most deeply about the bottom line. The media corporations pressure the FCC and elected officials to make decisions that will enhance profits and growth. Journalism is viewed as a product that is valuable only as long as it contributes to the balance sheet. And the elimination of the fairness doctrine in 1987 is also attributed to the perception of uneven coverage and lack of fairness.

Media Companies Challenged by Media Watchdogs
Over the last few years, there have been several instances of groups organizing boycotts and challenging broadcast licenses over issues of local programming, indecency, and unfair coverage. They argue that media companies are shirking their responsibilities as set forth by the government. Federal law says that broadcasters may be licensed to use the public airwaves only if they serve the “public interest, convenience and necessity.”

In 2006 activists in Portland filed a petition with the FCC challenging the renewal of broadcast licenses of that city’s television stations. The Money in Politics Research Action Project contended that the stations failed to provide public interest programming, including local election coverage (Portland Mercury, 2006). The group cited a study of news coverage during the 2004 general election that showed that only one percent of news time was spent on local political coverage. FCC rules state “the basic responsibility to contribute to the overall discussion of issues confronting the community is a duty for each licensee.” The FCC eventually renewed the stations’ broadcast licenses.

Also in 2006, the Parents Television Council (PTC) challenged the broadcast license of CBS affiliate KUTV in Salt Lake City. The group claimed KUTV committed indecency violations in its rebroadcast of a “Without a Trace” episode that included a teen orgy scene (Eggerton, John, Broadcasting and Cable, 2007). After the original airing in 2004, CBS received thousands of complaints; Viacom, the CBS parent company, paid $3.5 million to dismiss all previous complaints and agreed to monitor itself more closely to avoid further violations. But when the same episode ran again, the PTC claimed that Viacom failed to live up to the consent decree, and subsequently filed the license challenge of KUTV. In 2007, CBS paid $300,000 to settle the license dispute.

Sinclair Broadcast Group, which is one of the largest media companies in number of stations owned, has faced the duel threats of license challenges and organized boycotts. Sinclair has drawn the ire of progressives who feel the company blatantly advocates for conservative causes and positions. The company requires its stations to air commentaries by Sinclair executive Mark Hyman which routinely praise republicans and denigrate democrats. And it ordered all of its ABC affiliates to block a Nightline tribute to soldiers who lost their lives in Iraq (Jensen, Elizabeth, Columbia Journalism Review, 2005).

In October 2004, less than a month prior to the presidential election, the company announced its intention to run “Stolen Honor,” a documentary critical of John Kerry’s military service in Vietnam. In response to the documentary, activists initiated a boycott against Sinclair’s local stations; they targeted local businesses, threatening to withhold support unless they stopped advertising on Sinclair stations (Journalism.org, 2005). When Burger King pulled its ads, Sinclair’s stock slipped, leading to concerns in the financial world. Sinclair subsequently changed its plans for “Stolen Honor” and instead ran a program that detailed the documentary allegations.

Activists also vowed to challenge Sinclair station licenses when they come up for renewal, guaranteeing that Sinclair’s practices remain in the glare of the FCC, congress and the public.

The Spocko Case: Blogger Takes on Disney
A recent and pertinent case of media accountability is that of Spocko, a self-described “5th tier blogger” in San Francisco who took on a major media corporation. This story highlights several of the issues involved in today’s media climate: media ownership, online activism, and legal matters.

ABC/Disney owns a national network of radio and television stations and affiliates. In 1996 Disney closed one of the biggest deals in media history when it acquired Capital Cities/ABC for $19 billion. That deal brought Disney the ABC television network and its 10 owned and operated stations, considerable cable television holdings, over 20 radio stations, and seven daily newspapers (Spring, Greg, Los Angeles Business Journal, 1995).

Today, Disney represents media consolidation to the extreme, with a wealth of properties across the media spectrum. Included among its portfolio are ten television stations and 21 radio stations. In addition Disney properties include cable stations (ESPN, Disney Channel, E!), magazines and newspapers, film (Disney, Miramax), online services, books, professional sports teams, theme parks and retail stores (Columbia Journalism Review, 2007). Its earnings in 2007 were $35.5 billion, 3.6 percent above its 2006 numbers (BusinessWeek, 2008).

Needless to say, the Disney label on its myriad properties is of immense benefit. To this day, Disney has come to represent family-friendly programming and society looks favorably upon the Disney brand. Not only is that helpful in the marketing of its products, but also in advertising sales, the primary revenue source of media companies. As a result of its sterling reputation, selling advertising on a network of stations under the Disney umbrella is a beneficial position in the market.

But media activists have been concerned about the programming on Disney stations, claiming that it favors conservatives. Critics of Disney cite several examples of its rightward tilt, and disdain for fairness. In 2007 it broadcast the controversial miniseries “Path to 9/11,” created by conservative filmmakers, and which was considered to be historically inaccurate in its premise that the Clinton administration was to blame for not preventing the 2001 attacks. A few years prior, though, Disney refused to distribute Michael Moore’ documentary “Fahrenheit 9/11,” claiming it was overly political (Boehlert, Eric, Media Matters, 2007). Disney even put Rush Limbaugh on its Monday Night Football broadcast; he was fired after a few weeks when he made racially offensive comments on air.

Meanwhile, the radio is where some of the most egregious offenses occur. Talk radio, one of the most commonly utilized media formats, has trended to the right politically for two decades. A 2007 report, “The Structural Imbalance of Political Talk Radio,” confirms that our radio airwaves are dominated by conservative voices. Among the findings in the report: weekday programming on the 257 news/talk stations controlled by the top five commercial stations is 91 percent conservative; each weekday, in terms of actual minutes, there is ten times as much conservative talk as progressive; and in the top 10 radio markets, 76 percent of the news/talk programming is conservative (Center for American Progress, 2007). This rightward tilt has led to increasingly partisan rancor regarding fairness on the public airwaves, and concerns that those with radio licenses are not serving the listening needs of all our country’s citizens.

One ABC/Disney radio station, KSFO in San Francisco, found itself under fire for its incendiary and conservative commentary. The station features several radio hosts who had a history of racial intolerance and for advocating violence. Included among the various hosts’ documented comments:
• Referring to Senator Barack Obama, who has a black father and a white mother, as a “halfrican.”
• Asking a caller to prove he wasn’t a Muslim, encouraging him to “say Allah is a whore… say you love eating pig.”
• Calling the country of Indonesia “just another enemy Muslim nation,” and threatening “You keep screwing around with stuff like this, we’re going to kill a bunch of you. Millions of you.”
• Commenting that for Egyptians and Arabs “lying is as natural as breathing.”
• Threatening House Speaker Nancy Pelosi: “We’ve got a bull’s-eye painted on her big, wide laughing eyes.”
• Saying of New York Times executive editor Bill Keller, and nine other Times editors, “Hang ‘em.”

In 2006 a blogger and activist who goes by the pseudonym of Spocko, compiled a series of these offensive comments from KSFO and posted them on his blog, SpockosBrain. In conjunction, he started a letter-writing campaign to KSFO advertisers, informing them of some hosts’ penchant for inflammatory comments and urging them to cancel their ads. Spocko not only directed the advertisers to the distasteful audio clips, but also appealed to their business sense. One of these letters, dated November 20, 2006 and addressed to AT&T, includes the following verbiage:

Thanks to radio hosts from KSFO your brand is being associated with torturing and killing people. Would your marketing people be happy to hear your commercial ran after Lee Rogers said this about a black man in Lincoln, Nebraska?

“Now you start with the Sears Diehard the battery cables connected to his testi*les and you entertain him with that for awhile and then you blow his bleeping head off.” (Audio link)

You should know the person calling for the execution and torture of the black man in that clip READS THE AT&T commercials on the air. Right now on KSFO Lee Rogers is THE VOICE of AT&T to the SF Bay area. (Audio Link)

Sadly, calling for the death and torture of individuals and groups of people is a regular occurrence on KSFO 560 AM, owned by ABC Radio Disney.

And…

I understand you can’t listen to all the shows you advertise on – no one can. You rely on the accurate representation of the sales reps and the show description. But you don’t need to take my word, listen to the programs. You probably won’t have to listen long to hear something that offends or disgusts you. If you wish to hear the complete context on any clip or the audio during a date your ad ran contact me I have an educational archive of audio clips, I’ve listed a few below.

I want to emphasize that if you withdraw your ads you aren’t limiting their free speech, just removing your paid support of it. Some other company without the values you describe on the AT&T website can support them. You can choose to advertise elsewhere. This is really about YOU. Do YOU want to be associated with these comments? Do you want your company and brand to be associated with these comments?

(Excerpts from Mike Stark diary on Daily Kos website, 2007.)

This campaign resonated with some advertisers. MasterCard, Bank of America and the Michigan Economic Development Corporation pulled ads from KSFO programming after hearing excerpts and determining it was divisive. A spokesman from the Michigan Economic Development Corporation said, “the speech was about as offensive as one could imagine.” (Garofoli, Joe, San Francisco Chronicle, 2007). Visa, Netflix and others also reportedly curtailed advertising on KSFO.

In December, 2006, ABC Radio Networks responded by sending a cease and desist letter to Spocko’s Internet service provider claiming that the excerpts on his site violated copyright law. The letter demanded the audio clips be removed immediately. The service provider, 1&1 Internet, took down Spocko’s website soon thereafter. 1&1 said it was acting on the advice of its lawyers, and that “the decision was made to remove the copyrighted material from our servers until the matter is resolved, whether by the parties involved or the judicial system.” (Cohen, Noam, New York Times, 2007).

The altercation got the attention of liberal bloggers, who gave the story widespread coverage. The case raised the hackles of digital freedom advocates who were concerned that ABC/Disney’s action would have a chilling effect on online debate, and that corporations can silence critical voices by merely threatening legal action. One organization, the Electronic Frontier Foundation (EFF), came to Spocko’s defense in the matter, providing legal consultation.

The foundation countered ABC/Disney’s claim, asserting that fair use applies to the excerpts posted by Spocko. EFF attorney Matt Zimmerman, in a letter dated January 25, 2007, wrote that the “characterization of Spocko’s criticism as copyright infringement is false. The use of these audio clips was clearly protected fair use under copyright law” (Electronic Frontier Foundation, 2007).

Under copyright law (US Code 17 107. Limitations on Exclusive Rights: Fair Use), fair use permits the use of copyrighted material for the purposes of commentary, parody, education, or artistic expression. Fair use is determined by the consideration of four factors: the purpose and character of the use; the nature of the copyrighted work; the amount and substantiality of the portion used; and the effect of the use upon the potential market or value of the copyrighted work. All four factors favor Spocko:

1. The purpose and character of the use.
The use of copyrighted words for criticism and commentary is permitted under copyright law. In Chicago Board of Education v. Substance, Inc., 2003, the Seventh Circuit Court of Appeals wrote, “Copyright should not be a means by which criticism is stifled with the backing of the courts.” This case involved standardized tests created and copyrighted by the Chicago Board of Education. A teacher published the tests to demonstrate that they were deficient. The courts ruled in favor of the board of education because it would be “goodbye to standardized tests in the Chicago public school system” (Stull, Jillian Clark, Journal of Law and Education, 2006). Nonetheless, facets of the decision upheld fair use for criticism; the ruling states that fair use facilitates “criticism of copyrighted works by enabling the critic to quote enough of the criticized work to make his criticism intelligible.” As Zimmerman at EFF notes, Spocko is covered in this regard because he posted audio excerpts of KSFO broadcasts in order to criticize its content and to provide context for commentary about talk radio in the area.

2. The nature of the copyrighted work.
This factor recognizes that some works are more deserving of copyright protection than others (Rich, Lloyd, 1996). Informational works are differentiated from entertainment; creative work typically falls closer to the core of copyright protection. Facts and information are more acceptable for dissemination than fiction, particularly if the material is in the public interest. News and talk show material is more likely to be subject to appropriation for fair use purposes. In Spocko’s case, the audio excerpts he used were taken from broadcasts intended to be, and presumably described by the radio station as, informational in nature.

3. The amount and substantiality of the portion used.
The excerpts Spocko posted were merely fragments of KSFO’s total broadcasts. The short clips were taken from programs that broadcast several hours each day and hundreds of hours per year, and clearly are not significant in terms of quantity. In addition, KSFO has claimed that the comments in question are anomalies and not common in respect the total number of broadcast hours. That would indicate that the excerpts are not considered to be the “heart” of the work.

4. The effect of the use upon the potential market or value of the copyrighted work.
If the use of the material deprives the copyright owner of income, or impairs a potential market for the work, the material is more likely to be protected. In Spocko’s case, the copyrighted material, those broadcast words that he posted, have not become less valuable as a result of being heard on a blog. KSFO can still use its material in any way it chooses to try to make money. And while ABC/Disney may claim it has been financially harmed because of the loss of advertising, it is irrelevant in regard to fair use. In Campbell v. Acuff-Rose Music the Supreme Court said, “the role of the courts is to distinguish between biting criticism that merely suppresses demand and copyright infringement which usurps it.” Spocko is using the material for criticism, and he cannot be held liable for the decline in advertising revenue.

On all counts, Spocko’s use of KSFO material is protected by fair use. He has a new service provider, and the audio clips can be found around the Internet after sympathetic bloggers made them available to draw attention to the issue.

Similarly, the circumstances surrounding documentaries’ use of copyrighted material serves to support fair use in case of Spocko. Upon facing exorbitant costs to use movie clips in Wanderlust, a documentary about American road movies, the Independent Film Channel (IFC) decided to aggressively cite fair use so the film could be completed within budget. Alarmed by the prospect of nearly $500,000 in fees for clips from movies such as “Easy Rider” and “The Grapes of Wrath,” the IFC turned to entertainment lawyer Michael C. Donaldson to provide insight on copyright law (Dutka, Elaine, New York Times, 2006). Donaldson indicated that under fair use filmmakers, news gatherers, critics and educators can use material for free so long as they add something to it, use just the amount needed to make a point, and don’t harm its value. Armed with this information, the IFC told copyright holders that unless they accepted $1,000 per clip, the documentary would move forth and use the material, citing fair use as the defense. Fair use, in this instance, provides an obvious application to Spocko’s situation: he surrounded the clips with description and commentary, he used small portions to make his criticism, and his use of the excerpts did not lessen the value of the material.

There were other legal issues brought forward by the Spocko case. The EFF claimed that the ABC/Disney letter amounted to intimidation, and that the corporation could be liable for misuse of the Digital Millennium Copyright Act (DMCA) for misrepresentation of liability (17 USC 512(f)). The DMCA allows copyright owners to issue subpoenas to identify alleged copyright violators (Electronic Frontier Foundation, 2006). Since Spocko is covered by fair use, ABC/Disney may be misusing the DMCA and intellectual property law in efforts to subdue him.

Amid the controversy, Spocko also raised the possibility that he may face a CyberSLAPP suit (an online version of Strategic Lawsuits Against Public Participation). In such suits, a target of criticism files a lawsuit, often frivolous, so it can issue a subpoena to an Internet service provider to discover the identity of an anonymous critic (Cyberslapp.org). Online activists claim that these suits are attempts at intimidation and that they lead to a chilling effect on freedom of expression. Spocko, citing fear for his safety, has steadfastly maintained his pseudonym and resisted sharing his identity.

In March of 2007, ABC/Disney sold its 24 radio stations to Citadel Broadcasting Corp. for $1.35 billion. In March of 2008, Citadel did not renew the contract of Melanie Morgan, one of KSFO’s talk radio hosts to which some of Spocko’s excerpts are attributed. KSFO said the decision to end the relationship with Morgan was due to an “across the board cost-cutting mandated by our parent company” (WorldNetDaily, 2008). Citadel reported 4th quarter losses of $848 million in February, 2008, and an annual loss of $1.29 billion; the previous year the company had $48 million in annual losses (Associated Press, February, 2008). Spocko contends that his actions indirectly led to Morgan’s termination, as ad revenue declined due to his efforts. He also says that Citadel will continue to struggle financially: “The number one source of revenue for the ABC Radio Network is advertising. With Disney gone they will no longer have the brand muscle to sell bulk ads or the deep pockets to sustain them from other sources during down times,” (Richman, Josh, Political Blotter, 2008).

The case of Spocko demonstrates the ease with which activists and organizations can hold the media accountable. Armed with digital tools, media critics can scrutinize, organize and publicize in an efficient manner. As these activists continue these efforts, it will be engrossing to assess whether they are ultimately effective in holding the media to higher standards that are in the public’s best interest.

Resources

Associated Press. Citadel Broadcasting 4Q loss widens. February 29, 2008.
http://news.moneycentral.msn.com/ticker/article.aspx?Feed=AP&Date=20080229&ID=8262248&Symbol=CDL

Boehlert, Eric. Spocko, Glenn Beck, and ABC. Media Matters. January 6, 2007.
http://mediamatters.org/columns/200701160012

BusinessWeek, Disney Co. Earnings. 2008.
http://investing.businessweek.com/research/stocks/earnings/earnings.asp?symbol=DIS

Center for American Progress. The Structural Imbalance of American Talk Radio. June, 2007.

Cohen, Noam. Bloggers Take on Talk Radio Hosts. New York Times. January 15, 2007
www.nytimes.com/2007/01/15/technology/15radio.html

Columbia Journalism Review. Who Owns What? 2007.
http://www.cjr.org/resources/

Dutka, Elaine. No Free Samples for Documentaries: Seeking Film Clips With the Fair-Use Doctrine. New York Times. May 28, 2006.
http://www.nytimes.com/2006/05/28/movies/28dutk.html

Eggerton, John. CBS Tempts FCC Ire Over ‘Trace’. Broadcasting & Cable, October 29, 2007.
http://www.broadcastingcable.com/article/CA6494954.html

Electronic Frontier Foundation. Spocko, KSFO, and the Blogosphere’s Allergy to Copyright Thuggery. January 12, 2007.
http://www.eff.org/deeplinks/2007/01/spocko-ksfo-and-blogospheres-allergy-copyright-thuggery

Garofoli, Joe. Trying to censor blogger: Owner of conservative radio station KSFO demands liberal critic quit using audio clips. San Francisco Chronicle. January, 11, 2007.

Jensen, Elizabeth. Sinclair’s Shadow: Canned news and conservative commentary – Coming soon to a station near you? Columbia Journalism Review. May/June 2005.
http://cjrarchives.org/issues/2005/3/jensen.asp

Journalism.org, State of the News Media, 2005.
http://www.stateofthenewsmedia.org/2005/narrative_localtv_ownership.asp?cat=5&media=6

MediaChannel.org. Media Ownership. 2001.
http://www.mediachannel.org/ownership/

Portland Mercury, Local TV News Fails, December, 2006
http://www.portlandmercury.com/portland/Content?oid=97453&category=22107

Rich, Lloyd L. How Much of Someone Else’s Work May I Use Without Asking Permission?: The Fair Use Doctrine, Part I. 1996.
http://www.publaw.com/work.html

Richman, Josh. Spocko weighs in on Melanie Morgan’s layoff. Political Blotter. March 4, 2008.
http://www.ibabuzz.com/politics/2008/03/04/spocko-weighs-in-on-melanie-morgans-layoff/

Spring, Greg. Los Angeles Business Journal, August 1995.
http://findarticles.com/p/articles/mi_m5072/is_n32_v17/ai_17377197

Stark, Mike. Spocko Rocks ABC! Micky Mouse blinks! Updated: Spocko jumps in
DailyKos. January 3, 2007.
http://www.dailykos.com/story/2007/1/3/202110/2838

Stull, Jillian Clark. Copyrighted Standardized Tests: Is There a “Fair Use?”
Journal of Law and Education, October, 2006.
http://findarticles.com/p/articles/mi_qa3994/is_200610/ai_n17190730/pg_1

WorldNetDaily. Melanie Morgan off KSFO airwaves: Move America Forward founder connected to talk radio audience for 14 years. March 03, 2008
http://www.worldnetdaily.com/index.php?fa=PAGE.view&pageId=57965

In December the Federal Communications Commission (FCC) relaxed its media ownership rules. And in doing so it most likely invited confrontation with the US congress.

The recently approved policy allows companies to own a newspaper and a television or radio station in the same city. The 3-2 decision overturns some measures of long-standing regulation preventing media cross-ownership. Under the new ruling newspapers in the top 20 media markets are allowed to merge with broadcast stations in the same market, provided the television station isn’t among the top four rated in the city. Smaller market mergers would need to prove that the newspaper faces financial crisis.

There is also speculation that the FCC will seek to alter rules regarding the number of television and radio stations a company can own in the same city. Presently, the limit is two television stations in the large media markets as long as both aren’t among the four largest in an eight-station market. As for radio, companies are limited to owning up to eight stations in a particular market.

These prospective rule changes are already attracting attention from a variety of organizations opposed to media consolidation. Public meetings held at the end of 2007 typically drew large numbers of comments critical of loosening cross-ownership laws, arguing that it isn’t in the public’s interest. Critics will next set their sights on influencing elected officials, hoping they will intercede and kill the FCC decision.

Congressional interference in FCC rulings is not unprecedented. In 2003 similar changes to the laws were moving forth under then-chair Michael Powell. The FCC removed the restrictions on newspaper and television ownership; it also increased the percentage of media ownership permitted in a single market to 45 percent (up from 35 percent), and decided that broadcast licenses would no longer be reviewed based upon “public interest” considerations. These new rules passed the FCC by a 3-2 vote, but an odd alliance of liberal and conservative groups loudly protested, getting the attention of the US Senate and House. Congress overturned the media rule changes, but before that was enacted the US Third Circuit Court of Appeals struck down the FCC decision, claiming that the FCC had not adequately justified the new rules.

The maelstrom of discontent surrounding the 2003 proposal was in large part fueled by the repercussions of the controversial 1996 Telecommunications Act, which loosened radio ownership caps. The act relaxed ownership percentage restrictions with the stated objective of increasing competition and diversity. But critics claim that competition, localism and diversity have actually receded since those rule changes. Concerns about the radio ownership trends since 1996 are often cited as reasons to oppose further media consolidation efforts.

Another wrinkle in the ownership discussion is the emergence of online media. Most of the newspapers and broadcast stations now have an Internet presence, attracting an audience and advertising. And opinions about consolidation of online media are just as contentious as those regarding traditional media. Google and its search technology and ad placement techniques are front and center in this conversation. Those wishing to compete with Google favor consolidation; Google, though, is challenging Microsoft’s recent bid for Yahoo!, claiming that the proposed acquisition raises issues of competition and policy, and threatens innovation.

Pros and Cons of Relaxing Media Ownership Rules
There are several arguments for and against the relaxation of media ownership regulations. Those in favor of changing the rules, typically media companies and free-market and deregulation proponents, assert that:
•    The rules are outdated. They went into effect in 1974, and were not even applied retroactively; the New York Times Company already owns a radio station in the city.
•    Competition will be enhanced, as companies will have more capital to challenge the media conglomerates.
•    Costs will be more readily controlled due to consolidation. And the opportunity to repurpose content will lead to savings across platforms.
•    Media companies will be in a better position to create new products and services demanded by the consumers. New and diverse market segments can be a greater focus of attention.
•    Traditional media, and newspapers in particular, are suffering as advertising is moving to the Internet. Allowing media to combine will help them be more efficient.
•    The Internet has produced millions of new and diverse voices in the form of websites, blogs and more. Everybody now has the ability to reach a large audience, and being a media conglomerate isn’t necessarily an advantage anymore.

Of course, the anti-consolidation forces are armed with arguments against the rule changes:
•    Media conglomerates are large enough already. Consolidation trends are well-documented, and the actual number of media companies has dwindled over the years.
•    The 1996 Telecommunications Act serves as an example of tampering with the ownership laws. That act resulted in mergers of several media companies, which was the opposite of its goal to increase competition.
•    News outlets in communities are too tightly controlled by too few companies.
•    Consolidation leads to less diverse opinions and voices available in the media; the marketplace of ideas becomes limited.
•    Fewer opportunities for reaching the public and voicing concern.
•    Market-based competition is diminished, resulting in less innovation and higher prices for advertising and content.
•    It undermines the community-oriented communications crucial to democracy; media have become too large and lost touch with their audience.

Recommendation
As in 2003, the congress and senate should intervene and repeal this recent FCC decision regarding media ownership. The decision was hurried amid an arbitrary deadline; the required public hearings were sparse, hastily announced and poorly organized. Public comments ran almost entirely in opposition to these new rules, and elected officials seem to be uneasy about them as well.

Among the duties of the FCC, as laid out in the Communications Act of 1934, are to act in the “interest of the public convenience, interest, or necessity,” and to grant spectrum licenses to broadcasters for commercial use, provided the broadcasters act in the public interest. However, over the last few decades we’ve seen the FCC gradually move from its focus on public interest. During the 1980s the FCC eliminated the Fairness Doctrine, which required broadcasters to give airtime to opposing voices on matters of public importance.

Going further, the manner in which the 1996 Telecommunications Act has impacted the radio business provides more concern about the affects of relaxing media ownership restrictions. The act aimed to foster innovation, competition and diversity in radio. But as a result of the new law, now just a few large companies dominate the radio industry. This consolidation has actually made radio less competitive, with less local content, and more commercialization. Ten major companies control two thirds of listeners, revenue and spectrum in the country now; meanwhile 4,300 smaller owners fight for the remaining 33 percent. Radio station ownership has declined by a third since 1996 as smaller stations sold to conglomerates rather than compete with them.
Clear Channel and Viacom together control roughly 45 percent of the audience and sales revenue. Clear Channel owns over 1,200 stations in 300 markets, and the consolidation has enabled the company to cut costs and staff. Clear Channel largely relies on syndicated programming which has resulted in less attention to local programming; the company often uses a technology called voice-tracking to make it appear that the hosts are local and live, when the programs have really been recorded in a far-away location.

Similarly, some of the largest media corporations will benefit from the latest FCC decision, among them such behemoths as NewsCorp, Disney, General Electric and Cox which have considerable numbers of entities across most media platforms, including the Internet. There is genuine cause for concern that greater media consolidation will have a negative effect on the marketplace of ideas. Ideally media should represent the community and the public interest, but instead money and earnings reports have become the primary focus.

Proponents of less stringent media ownership rules frequently cite the Internet to demonstrate greater competition and access, and an increased number of voices in the market. But while acknowledging the tremendous growth of online media and its effect on society, the emergence of the Internet still isn’t reason enough to ease the regulations. The true power of broadcast companies lies in the license to use public spectrum. In this Internet era, television and radio stations are increasing in value. And in reality, few (if any) online media ventures based on content have become financially successful. Instead, those that are viable are websites owned wholly or partly by the larger media corporations.

In regard to the Internet, though, media consolidation is becoming a concern, too. Companies such as Google, Microsoft, Yahoo!, IAC, NewsCorp and AOL have the vast majority of holdings related to online ventures. At some point rules surrounding online ownership may become necessary, just as they have been in the world of traditional media.

Conclusion
This latest FCC rule change seems to fall in line with the recent attempts to cater to media conglomerates over the public’s best interests. This is all the more reason for congress to over-turn the FCC’s December ruling, much like it did in 2003.

What is truly required is a comprehensive assessment of media ownership and trends, which would include a thorough examination of the various broadcast, newspaper and online components. The piecemeal approach of the recent FCC plans merely serves an influential minority of moneyed interests. The current administration is politically weak, but is nonetheless seeking to pass corporate-friendly laws that have little public support.

Arguably there are more pressing issues the FCC should attend to, including improving coverage of local events and greater ownership of stations by companies controlled by women and minorities. These relevant matters need to be considered in an analysis of the media in the US.

Congress should kill the latest FCC decision and require an expansive appraisal of the current state of the media. Recommendations from this report can become the basis for future communications actions, which a new presidential administration can consider beginning in 2009.

Current FCC member Michael Copps says that the media consolidation debate is crucial to society. “At stake… are our core values of localism, diversity, competition and maintaining the multiplicity of voices and choices that undergird our marketplace of ideas and that sustain American democracy.” The US congress would do well to respect this viewpoint, and invalidate this latest attempt to modify the existing media ownership rules.

During our November 20 class we met in groups to discuss the books which we read, and about which we wrote our second book review. Of the four books offered as options for our reading pleasure, the majority selected Cluetrain Manifesto.

Our Cluetain discussion group identified several important points in the book worth conveying:

• The Internet (and technology) is changing the way we communicate and do business.
• The Internet has led to a flattening of the power hierarchy, which should lead to decentralization. Information is power, and everybody now has access to information.
• The market is a conversation. Businesses must listen to their customers and employees to best succeed in the wired world.
• The approach of the book epitomizes the open-source democratization of the web.

We all had opinions about ideas within the book that intrigued us, including…

• The authors’ optimism about the rapid changes to be created by the Internet
• Consumers desire honesty; we can tell when something is not genuine.
• We don’t like being mere marketing targets.
• The book wasn’t realistic as to how to truly affect change.

Of utmost importance, though, is the group members’ feelings about the historical context of the book and its content.

• The industrial revolution giving way to a networked society
• A revolutionary book using the web and theses to challenge the status quo
• Prophetic in predicting doom for antiquated business models that fail to adapt to technology

Christensen et al attempt to gaze into the future of the telco industry, using the methods put forth in earlier chapters. Taking a look at the various players and technologies is quite interesting. And I don’t doubt for a moment that suppression will rear its head as the companies scramble to maintain market share and delay disruptive innovation. I also don’t doubt that the telcos will remain strong in the face of competition and new technology.

Generally, it would seem that due to the recent patterns of innovation, the best opportunities for growth would be in services offered via IP. Yes, VOIP might not be the best quality at present, but it will be fine-tuned and improve. In the reading, I was struck by the cable companies’ initial decision to go for the primary telephone line market; this only would set up a battle with the established telcos, and would bring challenges in defining differentiation. Of course, the cable companies figured this out pretty quickly, and moved to the IP technology.

When I read about non-users, I sometimes wonder why consumers delay the inevitable. But here I am, a classic member of that category when it comes to the smart phone. I’m well aware of the myriad features that would benefit me, but it just hasn’t been a priority for me. I’m fine with my cell phone and computer… maybe the smart phone overshoots me for now. Either way, I watched fascinatingly today as friends accessed every football box score, checking on player statistics. It seemed a little cumbersome, but the convenience is what will win the day. (As an aside, in an unscientific poll, of the 14 men at this baby shower, every one had at least one fantasy football team.)

Questions

• What benefits do cable companies derive by being in the telephony business?
• What has transpired in the wireless industry since the book was written?
• Which of the technologies discussed in the chapter do you see as having the most growth potential and prospects for longevity?
• What technological innovations do we foresee coming on the scene over the next few years?

One of the thesis points of The Tragedy of the Commons is that “freedom in a commons brings ruin to all.” Essentially, as we derive gain from the common, we inevitably serve our self-interests to the detriment of the common-good. Let’s bring this to the present-day internet. Much of society has access to the internet, and when online there is a wealth of information and uses. But at what stage do the common facets of the internet move to selfishness, negatively impacting the experiences for others? E-mail and spam is an example where profit motive intrudes and often makes our in-boxes an unpleasant destination. And the beauty of so much free content is tarnished to some extent by meddlesome advertising. Politics is rife with instances of the tragedy of commons; corruption becomes king to those who obtain keys to the kingdom. What is created as a commons for our representatives to advocate for constituents falls victim to personal indulgence. Of course, business provides several examples as well: broadcasters/media acting as if they own rather than use the public spectrum; drug manufacturers complaining about onerous regulations that are in place to protect citizens; car manufacturers, oil companies and tobacco put the bottom line above society’s best interests. Of personal interest in the commons article was the mention of national parks; I’ve spent practically every summer in Glacier National Park, and it was easy for me to apply and visualize some of the comments and speculation.

The study “Around the World Wide Web in 80 Ways” attempts to assess uses and gratifications of online activity in the realm of political interest. Since much of my time on the internet is spent related to politics, it was interesting to see the research results, and where my habits fall. It’s pretty obvious that I mostly reside in the group that uses the web for Entertainment and Social Utility in regard to political information. Politics is entertainment for me and I love following its daily fluctuations; and it is a large part of my discussion with others, including providing points for argument.

Questions for Discussion

• What are some political and social ramifications of overbreeding?
• At what stage will the commons of the internet move to overt self-interest, negatively impacting the experiences for others?
• In what ways are you finding gratification in your internet usage?

Flavián, C., and Guinalíu, M. (2005). The influence of virtual communities on distribution strategies in the internet. International Journal of Retail & Distribution Management, 33(6/7), 405-425. ABI/INFORM Global database. (Document ID: 877316031).

techcommunity.ppt

Businesses are accustomed to employing the Internet in their endeavors, and it has been an effective tool for reaching large numbers of consumers. But the use of online communities is proving to be an excellent method for building brand loyalty.

The Influence of Virtual Communities on Distribution Strategies in the Internet, by Flavian and Giunaliu, details this important trend, and provides case studies of five companies that are successfully utilizing virtual communities.

The article gives background of brand communities as part of business strategy. Its primary components include:

• Consciousness of Kind – connecting individuals to a brand, often in comparison to competing products.
• Ritual and Tradition – the transmission of community meaning, relating with history of the brand.
• Sense of Moral Responsibility – Commitment which hels integrate and retain members, ensuring the community’s longevity.

These sound practices are taken exponentially larger via technology and online community. The Internet is known for helping connect people; virtual communities take it farther by creating dedication to a product. The case studies of Guiness, Apple, Manchester United, Amazon and I-Village confirm the rationale of investing in virtual communities. Some of the benefits of these communities include…

• Enhanced relationships and trust
• Sharing of information
• Ease of sale and distribution of products
• Ad revenue

Adamic, L. A. and Glance, N. 2005. The political blogosphere and the 2004 U.S. election: divided they blog. In Proceedings of the 3rd international Workshop on Link Discovery (Chicago, Illinois, August 21 – 25, 2005). LinkKDD ‘05. ACM, New York, NY, 36-43. ISBN:1-59593-215-1.

Adamic and Glance examine the effect that political blogs had on the 2004 US presidential election. The study analyzes some trends of liberal and conservative blogs during the two months prior to the election, mostly focused on the use of linking by the blogs, which demonstrates how the left and right communities attempts to further their agenda. In 2004, 63 million people turned to the internet to get political information, and nine percent of those read political blogs frequently. This paper looked at the linking patterns of the liberal and conservative blogs, including to other blogs, news sources, news stories and newsmaker names.

The political blogosphere is a community, with common interests, objectives and characteristics. The Daily Kos blog epitomizes community, including a consciousness of progressive policies, comparisons to the competition (conservatives), and trust in those who engage as writers and contributors. Political blog communities are entirely similar to brand/virtual communities, using technology to further engage and activate its members.

The results of the study take this biased community-think a bit further. There’s a lack of overlap in the patterns of linking by liberal and conservative blogs – both sides link to those blogs that support their views. It would appear that these groups are only choosing to be exposed to information that agrees with already established viewpoints. While the study shows that conservative sites cross-cite more than liberal blogs, it still tends to be to sites that reinforce their point.

The study continues to support the themes of self-interest within the blog communities. For news, conservatives linked to republican stalwarts like the NY Post, Washington Times and the Wall Street Journal editorial page. Liberals linked regularly to the LA Times, New Republic, and Wall Street Journal’s news pages.

So how did the blog communities affect the 2004 election? It appears the conservative blogs probably had the bigger impact. Howard Dean’s nascent bid was energized by the lefty blogs and their admiration of a campaign that transcended hierarchy and gave power to the people; word of mouth and fundraising via the internet made him the frontrunner before the eventual implosion. On the other side, were the two issues the righties hit upon which likely gave Bush the slight edge… the attacks on Kerry’s military service and the controversy surrounding Dan Rather’s report on GW Bush’s lack of thereof. Those two non-stories overshadowed the larger issues of the campaign.

UPDATE

Reflections on presentation…

It went really well. My main challenge was smoothly articulating similarities between the article about brand/virtual communities to my article about the political blogosphere. However, when I explained it, it seemed to make sense to those visiting my station. The conversations and questions were good. Overall, this was a worthwhile project.