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06/30/2009

Supreme Court Deals Broadcasters a Hard Blow

Lost in the coverage of the Supreme Court’s decision in the New Haven firefighters’ discrimination case yesterday was another High Court decision that will touch many millions of people where they live, literally.

Briefly, in a long-running suit by broadcasters against Cablevision Systems (CVC), the fifth largest cable company in the U.S., the Supreme Court refused to hear an appeal of an August 2008 ruling by the U.S. Court of Appeals that found that the cable provider’s “remote storage” digital video recorder, or RS-DVR, does not violate copyright law. A group of programmers and film studios including ABC, NBC Universal, and Paramount Pictures, had filed suit in May 2006, claiming that the RS-DVRs, which store programming in the cloud, on company servers, rather than on individual set-top receivers at the customer’s home, are illegal because they create a separate copy of each movie or program before streaming it to the customer’s TV.

“For example, if 10,000 customers place a recording request for tonight's episode of The Bachelorette on ABC,” wrote Cable Digital News editor Jeff Baumgartner, who has provided the sharpest coverage on this issue, “the RS-DVR system will create 10,000 discrete copies for individual playback.”

Cablevision argues that the same “fair use” copyright law that protects VCRs and premises-based DVRs applies to remotely stored content. In declining to take up the case the Supreme Court implicitly agreed.

To people in the tech industry, accustomed to accessing software, Web sites and other content in the same manner whether it’s stored locally or in the cloud, that might seem like an academic distinction. To cable companies, satellite TV providers, and the entertainment industry, it’s huge. That’s because storing content in the cloud is much cheaper, for both the provider and the user, than installing expensive hard-drive receivers in every customer home. So far DVRs have been a popular but still high-end option; remote storage will make it a mass service. Broadcasters, and the advertisers who support them, don’t like that idea.

"This is a tremendous victory, and it opens up the possibility of offering a DVR experience to all of our digital customers," Cablevision COO Tom Rutledge said in a statement. "At the same time, we are mindful of the potential implications for ad skipping and the concerns this has raised in the programming community."

That last remark is a sop: cable providers, who make the bulk of their revenue from subscription and license fees, are in the business of selling more advanced services to customers, not serving advertisers. If every movie were downloaded ad-free it’d be fine with them.

Indeed, the failure of the programmers’ lawsuit represents another step in the destruction of the entire ad-based broadcasting model – a demise predicted by Michael Lewis in a 2000 story in The New York Times Magazine.

Halfway measures, like disabling the fast-forward function on DVRs as Time Warner Cable (TWC) does on its “Start Over” service, are doomed to failure. There’s no legal or economic reason that viewers should be forced to watch ads (maybe the broadcasters should consider the methods used on Alex, in A Clockwork Orange). Investors recognize that fact, sending Big Media shares sharply lower today. The networks, and the film studios, need to recognize it too.


06/24/2009

The Netbook Non-Event

My favorite headline of the month, spotted yesterday on ComputerWorld online: “Are the glory days of the netbook over?”

Glory days?! Did I sleep through those?

The tech news cycle is so compressed these days that a whole new category of device, touted as the Next Big Thing, can wax and wane in a matter of months, almost unbeknownst to the general public (i.e., people who don’t read blogs like this one).

After all, it was only a few months ago that ABI Research was predicting that netbook sales would soar to nearly 35 million devices shipped in 2009, even as the overall PC market plunges 7 percent this year. And chipmakers were lining up to supply processors for $99 Android netbooks that would surely fly off the shelves in the recession.

Hold on, there, partner. A new survey from the NPD Group (entitled “Netbooks II: A Closer Look” – what, I missed Netbooks I also??) says that consumers are not getting what they think they paid for in buying the compact, sub-$300, Web-surfing machines. Nearly two-thirds “of consumers who purchased a netbook instead of a notebook thought their netbooks would have the same functionality as notebooks,” NPD reported, and under 60 percent of those who chose a netbook over a notebook considered themselves “very satisfied” with their purchase.

Retailers and manufacturers, said study author Stephen Baker, could be putting “too much emphasis on PC-like capabilities and general features that could convince consumers that a netbook is a replacement for a notebook.”

In other words, you should make sure that customers know what they’re getting when they buy a glorified smartphone meant more for basic Web-surfing rather than the full range of capability offered by a traditional laptop computer.

The other lesson here is that the industry is too dependent on marketing-based attempts to produce iPhone-like product leaps, even when the product itself doesn’t necessarily live up to its billing. Vendors are already responding to user disappointment, offering new, more powerful computers that are smaller than most existing notebooks, like the new 11.6-inch Gateway LT3100 and the Acer Inspire One 751h.

Starting at $399, the LT3100 is more expensive than the cheapest netbooks powered by Intel's Atom processor, but offers a 1.2GHz single-core AMD Atholon 64 processor with added screen resolution and multi-touch gesture-reading capability on its touchpad. In other words, it's more like a small notebook computer.

Indeed, product categories like “netbook” and “notebook” will swiftly become useless as manufacturers offer a range of portable and handheld computers, from iPhones up to full Toshiba laptops, that defy easy categorization. At the VON Conference & Expo, Sept. 21-23 in Miami Beach, we’ll be presenting a panel session entitled “Smartphones on Steroids” that will examine the whole emerging category of super-portable computers and what it means for service providers and consumers.

Hybridization is a good thing for the industry – as long as the marketing’s clear and the customer knows what she’s getting into.


06/17/2009

Deconstructing the Twitter Revolution

As the cataclysmic events unfold in the streets of Tehran, a whole meta-conversation is taking place about the role of Twitter in helping to spark, and sustain, the revolutionary fervor unfurling in Iran. The use of Twitter to get news about the protests to the outside world, and to help organize the protests (not to mention help keep protesters from getting shot) has led many of us to reconsider our pre-formed opinions about the micro-blogging service.

To put it in more personal terms, when people are dying in the streets of Tehran, it’s way too dismissive to say, as I did in an earlier blog, “Twitter is a way for over-connected, over-caffeinated Web junkies to convince themselves that their moment-by-moment doings are significant.”

The doings of the Tehran protesters are obviously quite significant, and so I need to adjust my views. Andrew Sullivan, a blogger at The Atlantic, wrote, “I have to say my skepticism about this new medium has now disappeared.”

My skepticism hasn’t disappeared; it’s just been leavened by genuine admiration. Twitter obviously has some very powerful use cases – but as a standalone business model, and as a tool that’s “Changing the Way We Live” (as a presciently timed but overly exuberant Time cover story put it), it’s still overhyped.

For one thing, as Mother Jones blogger Kevin Drum observes in a questioning post about “the Twitter revolution,” there remain serious questions about who’s doing the tweeting from Tehran and how reliable those accounts really are. “There was just too much of [the tweet barrage from Iran]; it was nearly impossible to know who to trust; and the overwhelming surge of intensely local and intensely personal views made it far too easy to get caught up in events and see things happening that just weren't there.”

That said, Twitter is more than ever being headlined as a game-changer for the rest of us. I don’t buy it. To better examine my own prejudice, I read closely the Time story, partly because it was written by Steven Johnson, a writer whose work I admire.

For an example of Twitter’s power as a society-altering technology, Johnson described “a daylong conference in Manhattan devoted to education reform.” Called Hacking Education, the event was attended by “entrepreneurs, scholars, philanthropists and venture capitalists.” And, naturally, during the conference they tweeted incessantly, creating what Johnson called “a shadow conversation” that both echoed and amplified what was going on in the room.

That’s well and good, as far as it goes. But please note that, first, these conference attendees were a self-selected bunch: of course the entrepreneurs and VCs were Twitter-users. That’s a pretty limited sample set from which to argue that something is “changing the way we live.”

Second, the difference between a conference in Manhattan and a riot in Tehran, in social media terms, is slight: Both are real-time events that, by their nature, are off-limits to most people. You can’t get into Tehran right now; you couldn’t get into the conference unless you were an invitee. Providing a “shadow conversation,” or a real-time live feed, from such events is, clearly, Twitter’s most powerful use scenario. “Injecting Twitter into that conversation fundamentally changed the rules of engagement,” Johnson wrote, and that goes even more so for the Iranian uprising, as the mullahs are finding out to their regret.

Johnson goes on to make some other, less plausible, claims: Twitter’s “ambient awareness” function, i.e., letting you know what your friends and followers are up to at any moment, is more useful and productive than you might think; Twitter could replace Google Inc. (GOOG) as a search tool for certain topics and events; and one of Twitter’s primary functions is as a distributor of pointers and links to more substantive content, like magazine articles, research reports, and the like.

The last is undoubtedly true, but so what? There’s nothing inherent about Twitter that makes it more useful or seminal as a source of fruitful links and associations. I’d just as soon get that information via e-mail, which is far more persistent, searchable, and organizable.

As for Twitter as a search tool, here’s what Johnson writes: “If you're looking for interesting articles or sites devoted to Kobe Bryant, you search Google. If you're looking for interesting comments from your extended social network about the three-pointer Kobe just made 30 seconds ago, you go to Twitter.”

Okay, fair enough: and that’s why I’ll keep using Google. In my work, and my life, I’m constantly seeking out authoritative sources of information, whether it’s on the Lakers, the history of dissent in Iran, or the future of social media. If I want to know what’s really going on in Tehran, I’ll read The Economist. If I want to know what my “extended social network” has to blurt out about Kobe, I’ll go watch the Finals in a sports bar, thank you very much.

Similar criteria apply to knowing what my brother-in-law had for breakfast. a) I don’t care, and b) I don’t suffer from the illusion he cares what I had for breakfast either. Twitter’s “ambient awareness” is the reason we have houses with brick walls rather than glass. Whenever I see someone tweeting (or IMing) constantly, I think of Sartre’s immortal observation: “Hell is other people.”

Again, don’t get me wrong: The events of this week have proven that micro-blogging has a future, and likely a powerful one, in providing outsiders with real-time information on unfolding events they cannot witness themselves. Whether it’s a shareholder meeting, a tech conference, or a revolution, that’s a very powerful function. But note that most people reading tweets out of Iran have accessed them via blogs – in aggregated and filtered form, in other words. Twitter, as a technology, is obviously here to stay – but it’s much more likely to persist as an application embedded into other communication tools (like, say, Google’s Wave) than it is as a standalone service – far less a standalone business.

So, call me convinced. But please don’t tell me that Twitter is going to change the world – or that I’m somehow obligated to start using it.


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