by Mike Masnick
Fri, Oct 28th 2011 7:39pm
by Mike Masnick
Mon, Aug 1st 2011 10:02am
from the killing-the-cash-cows dept
In other words, the price hike isn't necessarily about the higher fees from Hollywood (though that's still there), but about speeding up the company and its customers' shift from relying on DVDs to digital. In some ways, that's really quite a forward-looking view. Most businesses that deal in having to shift their businesses from analog to digital tend to go in the other direction: seeking to delay the shift as long as possible, continuing to squeeze out the cash cow part of the business for as long as possible. You hear that all the time with people in the music, movie, TV and news business, whenever they say things like "we'll shift when there's a proven revenue stream." That's cop-out talk for "we're going to hang onto our old business until it's too late and others have taken our market."
When Netflix shocked everyone by pricing way up DVD-by-mail subscriptions — up to a 60-percent increase — that’s what he was doing: forcing the digital shift. The digital shift is what Hastings wants to happen faster. Right now, 60 percent of his 25 million subscribers are DVD takers, and the majority of the revenue is on that side of the business. He knew when he started the business that he would start with DVDs, but that the long-term business was streaming (“Six Lessons for the News Industry from Reed Hastings“). He just had to wait for the rest of the world to catch up to that vision.
The economics of his business is clear. Charge consumers less (for now) for streaming ($7.99 a month) — and profit more. As he shifts the business, the cost of revenues has already decreased almost two percentage points in a year, from 64.6 percent to 62.8 percent. Lower cost of revenues means higher cross margin, and that’s what investors have loved about the company.
Netflix, on the other hand, may be going in the other direction, actually seeking to be ahead of the curve for many of its customers, and then using the pricing wedge to nudge them forward to going digital only. I'm not sure I fully buy it, but it certainly puts a different spin on things.
by Mike Masnick
Wed, May 4th 2011 6:49am
from the ouch dept
by Mike Masnick
Tue, Apr 26th 2011 5:25am
from the things-to-remember dept
- Tradition is not a business model. The past is no longer a reliable guide to future success.
- "Should" is not a business model. You can say that people "should" pay for your product but they will only if they find value in it.
- Virtue is not a business model. Just because you do good does not mean you deserve to be paid for it.
- Business models are not made of entitlements and emotions. They are made of hard economics. Money has no heart.
- Begging is not a business model. It's lazy to think that foundations and contributions can solve news' problems. There isn't enough money there.
- No one cares what you spent. Arguing that news costs a lot is irrelevant to the market.
by Mike Masnick
Fri, Apr 1st 2011 6:27pm
from the we're-all-infringers-otherwise dept
Suppose I tweet that I'm trying to remember which Borges story has that line about how "mirrors and copulation are abominable, because they increase the number of men." Some of my diligent friends hurry to their libraries, flip through their Borges collections, and tweet back the answer--along with a few sentences of the surrounding context. Clearly there's nothing intrinsically objectionable about the search function, and a quotation of a sufficiently limited portion of the whole work in reply would normally be protected by fair use. The problem is just that Google's search--and indeed, any computer search--technically requires that a copy be made. But to my mind, this just underscores how increasingly maladaptive it is to make "copying" the primary locus of regulation in our system of intellectual property.Those three paragraphs do such an amazingly beautiful job showing why copyright is often the wrong tool for the job it's trying to do. It's focused on the wrong thing. And while the examples above are taking things to an extreme (though, one not out of the near-future realm of possibility), it's really the same problem that we face today all the time. For example, we've discussed the whole question of what "copy" is made when someone links to a site. If you're actually reading what copyright law says, there's nothing infringing in linking. But, at the same time, every time you visit a website, you're technically making a copy -- which could be considered infringement. More or less we sort of make up the rules as we go along with technology, because applying the letter of the law just doesn't make sense. Julian's description above is just taking that basic concept and taking it out slightly further.
Technology even complicates the question of just what constitutes a "copy"--an intriguing issue I explored in a few articles back in my days at Ars Technica. Imagine, for instance, that Google took a different approach to indexing in hopes of avoiding thorny copyright questions. Instead of storing "copies" of each book, suppose they created a huge database called Google Concordance, consisting of an enormous catalog of every word or short phrase someone might want to look up, followed by a long list, like a kind of super-index, specifying the location on every page of every book in which that word or phrase appears. ("Aardvark: Blackwell Guide to the Philosophy of Computing and Information, Page 221, Line 17, word 3...") Obviously, the Google Concordance would be a very valuable and useful reference text, and nowhere in the database would you find anything resembling a "copy" of any of the cataloged works. But just as obviously, it would contain all the information a clever programmer would need to reconstruct an arbitrary portion of the original text on the fly, assuming the database could be queried fast enough. You can imagine someone creating certain kinds of “derivative works” in a similar way: If you don't want the RIAA taking down your mashup, you might try to offer it as an algortithm specifying time segments of component tracks to be combined in a particular manner... an algorithm that might produce gibberish or Girl Talk depending on what files you feed it.
In a sense, it's always the processing algorithm that determines whether a particular binary string is a "copy" of a work or not. Open an MP3 of a Lady Gaga track in a text editor and you'll get a wholly original work of experimental literature--though not one anybody (except possibly Lady Gaga) is likely to be interested in reading. For that matter, Google's database is just an enormous collection of ones and zeroes until some program processes it to generate human-readable output. I distinguished my hypothetical Google Concordance database from a collection of copied books, but if you point to a particular file and ask whether it contains the Concordance or copies of the books, there's a very literal sense in which there just is no fact of the matter until you know what algorithm will be used to render it as alphanumeric text. This may sound like airy metaphysical hairsplitting, but the power of computers to rapidly aggregate and process dispersed information on a global network is likely to create genuine practical complications for a legal framework that takes discrete, physically contiguous chunks called "copies" as its fundamental unit of analysis. Legally speaking, it would seem to make an enormous difference whether books are scanned and stored as books, or as a comprehensive concordance database maintained by Google, or as a series of hundreds or thousands of complementary partial concordances dispersed across many servers (or even individual hard-drives linked by a p2p network). Given sufficient bandwidth and processing speed, it might make no difference at all in practice. Maybe we should take that as a hint to reexamine our categories.
He goes on to point this out, while also discussing how copyright law was really designed back in an age when making copies was expensive, and likely limited to those with commercial intent of some sort, as opposed to what we have today, where you make copies just to do almost anything on a computer. The focus on the "copy" aspect really just doesn't make sense, and Sanchez argues that perhaps it should be removed from the debate entirely, since it's really just not applicable any more:
Instead of ginning up exceptions to a general prohibition on copying just to permit publicly valuable use of content, maybe we should just admit that "copying" no longer makes sense as a primary locus of intellectual property regulation. Fair use analysis typically employs a four factor test, but the upshot is usually to see how a particular type of copying would affect the market for the original work--which makes sense, given that the purpose of copyright is to give creators a financial incentive to produce and distribute new works. If that's fundamentally what we care about, though, a default property-like right of control over copying, which now has to be riddled with exceptions to allow almost any ordinary use of content, looks like an increasingly circuitous Rube Goldberg mechanism for achieving that goal. I'm not sure what the alternative would be--or even whether rejiggering the basic categories would alter the the underlying analysis much. But--just off the top of my head--you could imagine a system where the core offense was not "copyright infringement" but some kind of tort of unfair competition with an original work. In many cases it would yield the same practical result, but at least we'd reorient the public discourse around "copyright" to focus on measurable harms to creators' earnings--and ideally get away from the confused notion that copying without permission is somehow equivalent to "stealing" by default unless it fits some pre-established exception.
by Mike Masnick
Wed, Dec 8th 2010 11:20am
from the that's-not-how-digital-works dept
Once again, this just makes the State Department look clueless, out of date and confused about the internet. First of all, you don't "return" digital documents. But, more importantly, Wikileaks has already shown that it has no intention of doing any such thing -- and making such a request just looks silly by the State Department. It's foot stamping rather than doing anything productive. Given the State Department's ridiculous PR over this whole Wikileaks thing, is it really any wonder why those old attempts by the US government to hire PR people to convince the people we were invading that it was for their own good turned out so disastrously bad?
by Mike Masnick
Thu, Dec 2nd 2010 8:46pm
from the this-is-a-mistake dept
For a little while, it had seemed like media companies had moved away from such positions -- and I had hoped it was a sign that they had realized what a mistake it was. Instead, it seems like the concept was merely lying dormant. AdAge reports that the role of the Chief Digital Officer is making a comeback within media companies. Thankfully, the AdAge article at least suggests that the new rush to hire such positions often indicates that a company "is behind." Of course, what it doesn't really acknowledge is that hiring a "Chief Digital Officer" probably isn't going to solve the problem. It's more of a sign that the business isn't really thinking digitally at all.
by Mike Masnick
Fri, Oct 29th 2010 1:02pm
Irony: Book About Recording Industry's Mishandling Of Digital Priced Higher As Ebook Than Physical Book
from the that's-saying-something dept
If you go to the ebook page itself, Amazon clearly states, "This price was set by the publisher" (a clear response to complaints about the rapidly rising price of ebooks lately). It kinda makes you wonder if the decision makers at Simon and Schuster even read the book they're pricing? They might want to crack open a used copy of the paperback (it's cheaper) to learn why not understanding digital, and therefore thinking you can price digital things super high, is not the smartest move...
by Mike Masnick
Tue, Jun 15th 2010 2:13pm
from the economics-failure dept
I wish this made sense to me. The only reason to price the digital copy at 6 dollars is to keep retailers happy. It's not in service of Marvel readers and it's certainly not in service of expanding Marvel's audience. I have a lot of friends discovering Marvel comics for the first time through the iPad app. Paying for 1/3 of a comic for the same price they normally pay for a whole comic is not something they'll appreciate or understand. I get Marvel's desire to make a move like this without spooking retailers or Diamond. It's like a scuba-diver pacing his rise to the surface to avoid getting the bends. But what does Marvel risk by scaring off potential new digital customers by pricing a virtual copy of a comic higher than the physical copy you get to keep? And for what? To keep retailers happy?Of course, we've seen this before. Incumbent businesses have legacy relationships. And one of the reasons why they're often so slow to shift to smart new business models is because it will upset those legacy relationships. But if your upstart competitors don't have those relationships and can route around them entirely to offer a better product for less, you're going to get hung up by your legacy relationships. Kurtz suggests that Marvel stop worrying about retailers and focus on consumers for once:
The only problem with that thinking is that Marvel Comics isn't in the business of keeping retailers solvent. Marvel Comics is in the business of producing and distributing comic books to as many readers as possible. At least it SHOULD be. And if digital distribution has a chance of being more profitable than brick-and-mortar store distribution then Marvel owes it to its readers, creators and stock holders to pursue that business without having to worry about someone else's business for nostalgia's sake.It's easier said than done, but not doing it can be a lot more costly in the long run.
Marvel should take a page out of Steve Job's notebook on this one. Be visionary and push ahead no matter who it pisses off. Especially if it's good for the company, readers and the industry itself.
by Mike Masnick
Tue, Jun 8th 2010 7:58am
from the cool-to-watch-in-action dept
The initial results were pretty impressive, and all put together very quickly.
But Paton seems to already be pushing the bar further. Picking up on Google's "20% time" concept, Paton is setting up something he calls "idealab", where any Journal Register employee (full- or part-time) can apply to be one of 15 members of this "lab," where they'll be given 10 hours a week, as well as some modern tech tools, and then told to "experiment with these tools and report back on how we can change our business for the better." Even more interesting, as the Nieman Lab report above notes, Paton asked people to apply via comments on his blog. You could also apply by email, but many did apply on the blog, and there are lots of interesting ideas.
The program is interesting, though, I'm not sure the initial setup goes far enough. Initially, it's giving each participant an iPhone, an iPad and a netbook as "the tools" to experiment with. I wonder if the company might find more interesting (and useful) results if it didn't even set those particular parameters (or set a budget). While I can definitely understand the value of experimenting with the currently hot and popular technologies out there, I also wonder if something more interesting might come from even greater freedom. Perhaps that's the next step.
Either way, these sorts of ideas and models are certainly among what we'll be exploring at the Techdirt Saves* Journalism event, so if you haven't yet, you should sign up for here: