There are two subjects that seem to keep TV execs in complete denial: cord cutting and the demand for a la carte TV packages. Both are very real (and, frankly, the increase in the former is somewhat driven by the latter), but to listen to cable execs it's just not happening. Not happening. La la la la, they can't hear you, not happening. The latest such example is from Chase Carey, CEO of 21st Century Fox, who insists that any such demand "is a farce" which some might see as a slight improvement from that time he called it a "fantasy," but not by much. So why is it "a farce?" Well, because Chase Carey knows better than you what you really want. And you want bundles because they're just that awesome.
"The bundle is still a great proposition for the consumer when you compare it to the a world of $5 lattes and cell phone bills,"
First of all, we've been hearing variations on the "what a good deal compared to the $5 latte" argument in a variety of industries, and it's almost always bogus. It's clearly an apples and oranges comparison here. No one forces you to buy the blueberry muffin, the "adult contemporary" CD, plus three smaller cups of coffee you'll never drink just to get that latte. Also, frankly, the $5 latte is the result of actually giving consumers what they want in a competitive market. The same cannot be said for the TV market. At all.
Here's a general rule of thumb modern businesses: if you're working on giving people what they actually want, that's probably a good thing and bodes well for your business. If, instead, you force them to deal with a bunch of crap they don't want -- and then mock them for suggesting a better product, you're not long for this world.
While we all know that the internet is a lawless place where you will never find a more wretched hive of scum and villainy, there is still an etiquette. You should always back-link to stories you're commenting upon, rule #34 is always assumed, pics or it didn't happen, and thou shalt not engage in astroturfing or your cause will be subjected to discredit and laughter. Astroturfing is the practice of faking a popular response by falsifying that response through anonymous internet comments, stories, etc. It is typically used by dastardly, horrible organizations with no thought for accuracy, civility, or common decency.
On the blogs, the fight was particularly fierce. Fox PR staffers were expected to counter not just negative and even neutral blog postings but the anti-Fox comments beneath them. One former staffer recalled using twenty different aliases to post pro-Fox rants. Another had one hundred. Several employees had to acquire a cell phone thumb drive to provide a wireless broadband connection that could not be traced back to a Fox News or News Corp account. Another used an AOL dial-up connection, even in the age of widespread broadband access, on the rationale it would be harder to pinpoint its origins. Old laptops were distributed for these cyber operations. Even blogs with minor followings were reviewed to ensure no claim went unchecked.
The book goes on to state that it is unclear if these practices are still currently in place, but perhaps our own comments section will give us a clue. But, see, that's the really stupid part of these kinds of astroturfing campaigns. Think about it logically. First, anyone engaging in this kind of uncouth behavior had better learn quickly that they're more likely to get caught than get away with it. And, thanks to the Streisand Effect, such as the fact that now blogs like Gawker are propelling this story into the headlines, it's going to make the astroturfing organization look bad. But the negative reaction doesn't end there.
As I mentioned, it's overwhelmingly likely that in the comments of this very piece, someone is going to come out and defend Fox News to some degree. The really damning effect of being caught astroturfing is that comments like what might appear below are no longer taken seriously by anyone. There may be very real and very earnest commentors that want to stick up for Fox, but they will find zero purchase because the wider public is going to assume that there's a real chance the comment could part of the astroturfing campaign. Bingo, Fox has now nullified their own real support. Way to go, guys!
Last year, DISH won a nearly complete victory against Fox and NBC in California over the legality of DISH's AutoHopper feature, which skips over commercials with shows that the DVR offering records. However, there were two separate lawsuits on this issue: that one in California, and another one involving CBS and ABC in New York... and that court has basically ruled the same way, refusing to grant the networks an injunction to block the DISH product. The full ruling is under seal (most likely to redact certain parts) and will be released with redactions sometime soon (next week, I think).
As the link above notes, the court did say that CBS could try to unwind its retransmission agreement with DISH, arguing that DISH misled the company when they were working on that agreement. It also notes that ABC's carriage agreement with DISH expires at the end of this month, and that "negotiations [are] not going well, with a possible blackout happening soon." In other words, the networks are likely about to shoot themselves (and the public) in the foot by pulling their channels from DISH in a petulant act of self-harm, because they're upset that DISH is innovating and offering the public what they want in a manner that the networks won't do.
We keep hearing the MPAA and others talk about how much Hollywood is suffering from piracy and how they can't fund new movies and how they're having to lay people off. And then there's this, suggesting something else may be going on:
Consider: the top 20 companies in the United States ranked by market capitalization include no media companies. But according to figures assembled for The New York Times by Equilar, which compiles data on executive compensation, media companies employ seven of the top 20 highest paid chief executives.
The names are familiar and the numbers are large: Leslie Moonves of CBS ($60,253,647), David M. Zaslav of Discovery Communications ($49,932,867), Robert A. Iger of Walt Disney ($37,103,208), Philippe P. Dauman of Viacom ($33,396,104), Jeffrey L. Bewkes of Time Warner ($25,670,263), Brian L. Roberts of Comcast ($25,087,379), and Rupert Murdoch of News Corporation ($22,418,292).
Basically, the study showed that media companies might not be as big as companies in other industries, but they pay their execs way more. Basically, the top execs in the media business make much more than comparable execs in other industries, even if the companies those execs work for are doing much better:
The data indicates that average pay of the 10 highest paid chief executives for media companies was about $30 million, more than the captains of technology or finance and other industries, who average $6 million to $14 million less.
A few years ago, a friend who worked in the movie industry told me that the industry changed completely when the top executives started thinking that they were the stars. Suddenly, the focus shifted from making good entertainment to making sure they were the highest paid people around, and making sure that everyone knew it. I thought it was just a random comment at the time, but the data suggests that there's at least something to the idea that media execs have way outsized salaries.
Either way, though, it does seem somewhat ridiculous to see any of the folks on the list above complaining that their business is in trouble when they're pulling down salaries like that.
The Jonathan Coulton / Glee dispute has been getting a fair bit of attention lately, but it appears that Glee runs into this sort of issue quite frequently. Just a few weeks before all of this happened with Coulton, there was an article in Theater Mania about a choreographer pissed off that Fox refused to credit him for using his dance moves in a Glee rendition of "Let's Have a Kiki," by The Scissor Sisters. The song and the choreography (which was done by Brad Landers for free, without a contract, but with a promise to pay later if any money was ever made) became something of a minor viral hit last year, with a bunch of YouTube videos of people doing the same moves.
You can see the original below:
And... the Glee version, starring Sarah Jessica Parker:
It's pretty clearly a copy. Is there a legal claim there? Well... maybe. Choreography is copyrightable, and we've seen some lawsuits happen, but Landers was somewhat limited in what he could do because of the lack of a full contract and since he didn't register the copyright. In fact, despite Landers' complaints, one could argue pretty persuasively that he was made much better off by this situation. Thanks to the song appearing in Glee, that handshake deal finally paid off in terms of cash:
The Scissor Sisters, after receiving a sizable sum from Fox and Spirit Music for the rights to their song, paid Landers just as they had promised during that handshake.
What's interesting is that what upset Landers (and Coulton) was something that actually had little to do with copyright at all. Both were most perturbed by the lack of credit from Fox:
From the moment Landers saw the Tweet about "Kiki" on Glee, he has pursued one thing: credit.... Since, Landers has only pursued two things from Glee: confirmation that his choreography was being used in the November 29th episode, and some kind of documentation that stated his work was his work.
All of this raises a big question: why are Fox and Glee so averse to giving credit? It's been discussed many times before that credit or attribution is often much more important to artists than copyright itself. In fact, a recent study showed very strong evidence that credit has significant value to artists, often outweighing the value of any copyright claim.
So why doesn't Fox provide such credit?
It's free to do so. It basically costs them nothing, other than to add the names to the flashing credits at the end that nobody reads, or (better yet) in online notes to the show, which perhaps people will read. I've never understood why people are stingy with credit in such situations. Some suspect that (ironically) it may be copyright law itself that makes companies stingy with credit, since it opens up at least the potential of further legal ramifications. For example, if it's later found that a use is infringing, they can make a stronger argument that its "willful," potentially tripling any damages award. In other cases, it may just be general stinginess, and a feeling that the original creators don't deserve the credit, or that the people on the show would greedily prefer that they get the credit for such "creative" interpretations.
In the end, though, it seems like it would be a nice and neighborly thing to do to provide credit where possible, even if not legally required, and even if Fox wants to claim fair use. It would seem likely that such a simple free move would actually lead to much greater appreciation and support, rather than anger towards the show and its producers.
Want to know just how messed up our copyright system is, and just how out of sync it is with the way people feel about copyright and what makes sense? Just know this: between Jonathan Coulton and Fox, concerning the dispute over Fox's Gleeusing Coulton's rendition of Baby Got Back on their show -- you could make an argument that Coulton may have actually exposed himself to more copyright infringement problems than Fox did.
Allow me to explain. When the whole thing first broke, we thought that Coulton took the right approach in basically just telling his fans about it. Then, when we heard that he was exploring legal issues with his lawyers, that actually seemed like the wrong approach to take, even if he was upset about things. According to various reports, right before the show aired, Fox finally reached out to him and explained that what they did was perfectly legal (probably true) and that Coulton should be happy for the exposure. Coulton's response was quite reasonable -- asking if that meant Fox would be crediting him. Since the answer was no, the promise of exposure rings a bit hollow.
That said, it's not entirely hollow -- because of Coulton's ability to whip up (completely reasonable) righteous indignation about this from his fans via social media. As he told Mashable in the link above:
"They were right. I did get exposure, but it didn't come from anything they did. It was sympathetic outrage on Twitter, and bloggers and journalists talking about how crazy it was."
[....] "Sometimes I forget that Twitter is something beyond just being snarky at the Oscars. All of a sudden something happens and you remember that this is an amazing, powerful tool." Coulton says. "My fans have a keen sense of justice, and this idea that we should be attributed for our work. People who are of the Internet realize that attribution is what we trade on."
And, of course, he's taken it a step further as well, re-releasing his original song on iTunes, but calling itBaby Got Back (In the Style of Glee) and promising to donate the proceeds to two charities associated with Glee: The VH1 Save the Music Foundation and the It Gets Better Project. Song sales are doing well, with Coulton's version climbing the charts, while the official Glee version of the song is riddled with one star reviews from his supportive fans (even though he's not encouraging people to do this) and is nowhere to be found on the charts.
Still, what strikes me as perhaps most interesting about all of this is that as you explore the legal issues, it is entirely possible to come out with an argument that says that if anyone is infringing on copyright here... it's Jonathan Coulton. Let me be clear on this: I am not saying that anyone has directly accused him of this, nor am I suggesting (in any way) that he should be accused of this. I'm just showing how misaligned the law is with what most people think of as a sensible regime today. So why might Coulton be in trouble? As he's noted repeatedly, he paid the compulsory license to cover the song via the Harry Fox Agency. Doing so means that he agreed (pdf) to abide by Section 115 of the Copyright Act.
A compulsory license includes the privilege of making a musical arrangement of the work to the extent necessary to conform it to the style or manner of interpretation of the performance involved, but the arrangement shall not change the basic melody or fundamental character of the work, and shall not be subject to protection as a derivative work under this title, except with the express consent of the copyright owner.
Previously, we and many others had suggested that the changes that what Coulton had made could possibly be protected as unique creative works. However, he more or less gave up that claim when he used the statutory license, rather than doing a direct deal with Sir Mix A Lot, or whoever else holds the rights on the song. That also means, however, that Coulton did not live up to Section 115 and his cover, in all likelihood, violates the original copyrights, because the license he got does not cover the very different arrangement and melody he created.
That is, by any normal measure, insane. But that's the law. This whole situation has (ridiculously) exposed Jonathan Coulton as a "pirate" and Fox as being perfectly within the law. And that just seems silly.
Back in 2008, News Corp (owners of satellite providers DirecTV) was sued by DISH Networks for allegedly hacking their competitors satellite smartcards and flooding the market with them. News Corp (sort of) lost that lawsuit. Following News Corp's more recent high-profile hacking scandal related to News Of The World, more accusations of satellite hacking emerged, this time in the UK.
But amidst all the lawsuits and accusations, it turns out there are some other fascinating stories to be found in News Corp's world of competitive corporate hacking and private security. A new book by Neil Chenoweth, Murdoch's Pirates, digs into that world and turns up some pretty fascinating results. From an excerpt published in the Sydney Morning Herald, we get the story of some befuddled inter-agency espionage between News Corp and its own subsidiary, complete with aliases, informants, moles and a cross-border escape gambit by a spy on the run.
The story is complex, but I'll attempt to summarize. In the late 90s, NDS (the branch of News Corp that deals with private security and anti-piracy activities) sent top hacker Oliver Kömmerling undercover to Toronto, under the pseudonym Alex, with a mission: pose as a satellite pirate and infiltrate the rings selling hacked DirecTV smartcards. Oliver was also one of the hackers directly involved in the hacking of competitors' smart cards, but in this case he was being put to work defending News Corp's own satellite operation. But NDS made one big mistake: they never told DirecTV, which had its own security/anti-hacking division led by a former FBI agent, and they believed Oliver was still a bonafide satellite pirate at large. They had no idea he was now working for NDS—and one of the Canadian hackers Oliver met with turned out to be working for DirecTV, and ratted him out to them. Moreover, no matter NDS or Oliver's intentions, he was breaking the law by hacking and selling smart cards to track down the "real" hackers—so he ended up facing potential arrest or detainment at the border.
As a result, the two security divisions (both ultimately owned by News Corp) played spy-games with each other, and for the details you really should just read the whole story. It's fascinating, and quite funny—and it also raises some interesting questions about how big corporations should approach this kind of security. In one way, I actually think some of the principles here are the right way to approach things—investigate the biggest commercial pirates until you have enough evidence to either bring a lawsuit against them or pass the case along to a criminal prosecutor. That's better than having the government act as corporate police. However, big problems arise when companies start breaking the law in the course of their investigation—as much as they might want to play spy, they don't get the exemptions that law enforcement and intelligence agencies do. It's also highly troubling when their investigations are intertwined with law enforcement, such as when FACT in the UK joined the police raid on the SurfTheChannel offices—that's crossing a line between private interests and government. But then, on top of all that, you have the potential for a comedy of errors like this one: News Corp spending lots of resources to put a man in significant danger in a foreign country, for the sake of hacking its own products, and spurring its own property to put more resources into tracking down a hacker that was supposed on be on their side. At some point you have to ask: what is security worth? And how likely is it to be effective against hackers if it is disorganized to the point of farce?
Remember back in 2009, when Techdirt reported that Rupert Murdoch hated Google so much he had decided to block the search engine from indexing his titles, even though this would inevitably cut down their visibility and online traffic? He obviously thought that he would put this upstart technology in its place, showing that mighty media moguls don't need this Internet thing in order to flourish just like they did 50 years ago. According to this story in paidContent, it seems that strategy hasn't worked out too well:
In the next few weeks, paidContent understands The Times' website will begin showing articles' first two sentences to search engines, in a marketing exercise designed to attract new subscribers.
The limited free preview does not alter News International's belief that it should continue charging for The Times (visitors will be invited to subscribe to read full articles). But it does suggest that, having signed up 130,751 digital subscribers since mid-2010, the publisher is having to look in new places to maintain customer acquisition momentum.
This shows that Murdoch has finally realized that being left out of Google is the online equivalent of not being listed in telephone directories in earlier times. It also suggests that attempts to gain subscribers for the online edition in other ways are not going so swimmingly, which must raise questions over the long-term viability of the paywalled approach for this title.
Murdoch's move comes at an interesting time for the newspaper industry in Germany. As we discussed recently, a law currently being considered there would require snippets to be licensed and paid for on the basis that search engines are gaining a benefit from even these short extracts. By allowing his title to be indexed and short excerpts to be displayed for free, Murdoch is essentially admitting that the marketing value of snippets to him outweighs any nominal loss due to Google's supposed free-riding -- as Techdirt suggested -- thus undermining the supposed justification for the German proposal.
Back in 2010, we suggested that the mad dash by various publications to build fee-based iPad apps was completely misguided, reminiscent of the belief in the 90s that publications could sell CD-ROM versions of their magazines. As we noted, there's nothing that special about the iPad format that takes away the natural abundance of the internet, and pretending that it was really any different than a portal to the wider internet with all its options was a fool's errand. In particular, we called out Rupert Murdoch's obsession with creating an iPad-only publication. In fact, we were confused why all the publishers investing so much in apps didn't put that same sort of effort into improving the features on their websites. A few months ago, the editor-in-chief and publisher of MIT's Tech Review more or less made the same point, saying that the future was on the web, betting on HTML 5 to make the site "look great on a laptop or desktop, tablet or smartphone" and then killing off the apps it had developed.
While others aren't going that far, there's more and more evidence that betting on apps was, in fact, the exact mistake that we predicted. Mathew Ingram summarizes how both The Huffington Post and Murdoch's The Daily have failed with their fee-based iPad app strategy. He makes the same basic point that a winner of our "most insightful comment" (by Robert Weller) made recently: that people get their news from lots of sources, so paying for a bunch of apps just doesn't make sense. In fact, it takes away from the value. As Ingram notes:
What he's basically saying is that the publishers focusing on apps are trying to create artificial scarcity by building digital silos. But that actually takes value away from those publications. People interact with the news in all sorts of ways that go way beyond "reading." But individual apps often make that more difficult. It involves extra effort (and cost) while providing less benefit. All because publishers are looking for something (anything!) that resembles some fencing so they can build a gate and go back to pretending they're in the gatekeeper business.
Hopefully publishers will finally stop looking to recreate the past by building artificial walls, and start looking at ways to make money that embrace the internet and what it enables.
Four years ago, we wrote about claims that News Corp. had hired hackers to break the encryption on DISH Networks' satellite TV smart cards, and to "flood the market" with those cards, thereby increasing "piracy" of DISH's service. News Corp., of course, owned DISH's main competitor, DirecTV. The whole thing seemed really bizarre, and we were skeptical. This kind of thing only makes sense if you actually believe that "piracy" like that directly takes away money from the company whose service is hacked. But, it seems just as likely that flooding the market with hacked smartcards would take away business from both DISH and DirecTV in the cases where it was a true substitute (rather than going to people who would never pay for either anyway). Either way, that case ended with a jury finding News Corp guilty... but of just hacking one smartcard, for which the company was fined a grand total of $49.69... and another $1,000 for "damages." Honestly, I'm not even sure that makes sense, because if it just hacked a single smartcard, it sounds like it may have just been for reverse engineering purposes.
Of course, in the intervening years, News Corp.'s name has become a lot more closely tied to the word "hacking" thanks to the News of the World scandal where reporters regularly "hacked" into voicemails (and, by "hacked" I really mean used a widely known loophole that makes it easy to listen to many people's voicemails). So with news breaking that News Corp. is again being accused of hacking, a lot of people are thinking about the recent scandals -- but the details suggest that this may have been identical to the DISH/DirecTV story above, but with a UK focus. Basically, News Corp's subsidiary NDS is accused of hacking ITV Digital, a UK competitor to News Corp's Sky TV.
In this case, there are some more details, where it certainly suggests that at least someone at News Corp. was working closely with some hackers to publish the codes necessary to make unauthorized smartcards for ITV. ITV eventually did go out of business, and of course the article linked above quotes an exec there insisting that such "piracy" was "the killer blow for the business, there is no question."
Again, this doesn't make much sense to me. Even if all of these actions were done via News Corp., how does that actually help News Corp? People who got the hacked ITV smartcards weren't going to buy Sky TV services either. The whole thing seems pretty strange, suggesting it was either exaggerated, or whoever at News Corp. decided this was a reasonable strategy didn't even think about how getting more hacked smartcards would likely be a challenge for Sky just as much as it was for ITV.