February 2010

Some News Outlets Ready to Try Charging Online Readers

Extracting payment from online readers has been called everything from the next great folly of print journalism to its salvation, but to get a glimpse of how it really looks, head to Lancaster (PA). Specifically, head to the offices of The Intelligencer Journal-Lancaster New Era, one of the first handful of news outlets to acknowledge in interviews that it intends, in the next few months, to start using a software system developed by the entrepreneurs Steven Brill, L. Gordon Crovitz and their partners, which they are calling Press+. Others interested include The Fayetteville Observer in North Carolina and GlobalPost, a news site based in Boston. A very small number of news organizations, including The Wall Street Journal, The Financial Times and Newsday, already charge online readers, each with a system developed largely in-house, and The New York Times announced recently that it planned to do the same. But with advertising plummeting, many other publishers eager for a new source of revenue are considering making the switch, despite the risk of losing audience and advertising.

Pushing to Bring TV to the Internet

A small start-up is trying to do what many in Hollywood and Silicon Valley have so far been unable to do: take Internet video from its YouTube origins to a full-fledged television service with dozens of channels.

"We have video on the Web," says Roxanne Austin, chief executive of Move Networks and a former president of DirecTV. "We don't have television on the Web." Austin's 100-person company, which is based in American Fork, Utah, has raised more than $67 million from some prominent backers that include Microsoft, Comcast and Walt Disney's venture-capital arm. But like past efforts by larger companies, including Microsoft and Motorola Inc., to offer Internet-delivered television, it faces obstacles, not least of which is getting content owners to sign on. "The technology is good enough this can happen," says Boyd Peterson, an analyst at Grail Research. "Now it comes down to the business case."

Italy Set to Extend TV Rules to Web Videos

Italy's government is forging ahead with plans to extend TV-broadcasting regulations to Web sites that host videos, marking one of the most sweeping attempts by a Western government to tighten control over the use of video on the Internet.

The draft decree, expected to take effect early this month, would force sites such as Google Inc.'s YouTube to operate more like traditional TV broadcasters within Italian borders. It seeks to "establish a principle," Paolo Romani, Italy's deputy minister of communications, said in an interview. "If you use copyrighted material, your site becomes an editorial product, a broadcaster that is placed at the same level as other broadcasters." Under the proposed rules, sites would have to gain permission to host copyrighted videos, such as TV programs, that users often post on sites like YouTube. They would also be required to obtain broadcasting licenses from Mr. Romani's office, and would become liable for any libelous material in posted videos. Infringements could lead to fines and lawsuits for libel and copyright infringement.

The Amazon-Macmillan book saga heralds publishing's progress

[Commentary] With a higher price for both the tablet and the books, you wouldn't expect Apple's new model to pose much of a challenge to Amazon's dominance in digital books. But then over the weekend, Macmillan told Amazon that if it didn't agree to the same terms it had hammered out with Apple, Amazon would no longer have access to new books from the publishing house until several months after they were released through bookstores and Apple.

Amazon will go along with the new arrangement. Other publishers are now expected to follow Macmillan's lead. The new arrangement will actually increase the amount of money that Amazon earns on each book, while publishers are likely to earn less.

The higher retail prices will not only slow the transition from hard copy to digital but also open the digital market to more robust competition -- from Apple, and also from Google. Although Amazon is not pleased by the developments, they were hardly surprised. Amazon had already anticipated Apple's entry into the market by inviting software companies to begin developing applications for the Kindle that would allow it to compete directly with the more multifunctional iPad, particularly in the area of video games. And Amazon fired its own shot across the bow of the book publishers last month when it announced that it would make it easier and more lucrative for authors to use Amazon's digital bookstore to sell their work directly to consumers, bypassing the publishers entirely.

Reports of the death of book publishing, like those of music publishing and newspaper publishing, are greatly exaggerated. Business models will change, companies will come and go, and people will lose their jobs. But at the end of the process, there will be fewer people who will be paid higher incomes to produce a wider array of products at lower prices. There's a word for that -- progress -- and it's exciting to see it unfold right in front of us.

Google's China Syndrome

[Commentary] What seems like a revolutionary departure from your father's capitalism is, in fact, just another spin cycle in the machine of creative destruction.

Google's business model takes the rich, voluminous private information in search or email and creates the most profitable audiences on the planet. Advertisers flock. But what they bid to buy depends critically on banker's trust.

The extraordinary success of the search giant, now valued at about $190 billion and accounting for over two-thirds of global net searches, operates in the shadow of its virtual plaque: Don't Be Evil. Only when customers believe that slogan will the company's audiences - and revenues - be secure. This vault is more important than the bank's. Dollars stolen can be insured and replaced. Confidentiality breeched cannot be restored.

Which takes us to China and its frontal threat to Don't Be Evil. Markets are not always conquered as easily as with the construction of a better database or an ad-free Search Page. The Chinese Government does not endorse free speech, and asserts sovereignty over Internet content. By establishing a physical presence in the country, with Google.cn in 2006, the company conceded a compromise. Google.cn searches were censored, and Google cooperated in the effort. Better to communicate some information to China's citizens than none at all.

Confusion reigns over tactics and motives. Google is an extraordinary entrepreneurial foray, nested in profit and loss. Many, even Ken Auletta, in his insight-filled biography of Google, misconstrue the nature of their incentives. Google's founders, who viscerally disdained web advertising as an assault on the user, came to embrace it when the market showed them the money. This sex change operation was driven by practicality, the search for a funding mechanism. This is benign to Auletta, contrasting it with the "crass commercialism" of Bill Gates' dream for a computer on every desk. Mr. Gates of World's Greatest Philanthropist fame? Google's withdrawal from China is a tack to keep their search engine open and their database closed. Their corporate soul merits protection. It is a metaphysical construct that has cash value. Supporting it is not selling-out - it's just selling. And that's a good thing. Trust me.

Senator seeks information on U.S. tech companies in China

Sen Dick Durbin (D-IL) is asking 30 leading technology, Internet and communications companies to provide detailed descriptions of their operations and human rights practices in China. The companies include Apple, Facebook, Twitter, AT&T, Amazon.com and eBay. In letters sent to the companies Tuesday, Sen Durbin seeks information about their business in China and their plans for protecting human rights, free speech and privacy there.

Orange, T-Mobile Deal a Competition Threat, UK Says

UK authorities asked to investigate the merger of France Telecom SA and Deutsche Telekom AG's British units, saying the deal may significantly "affect competition" in the country.

The Office of Fair Trading asked the European Commission, which has authority over the merger, to transfer the case to the UK. Consumer groups and competitors Telefonica SA and Hutchison Whampoa Ltd. pushed for a U.K. review of the deal, which would create the country's largest mobile operator with about 43 percent of subscriptions. Since 2004 the OFT has made four requests to take over an EU merger case, later withdrawing one, according to the regulator.

Stimulus: Secret sequel in the budget

President Barack Obama's budget proposal wants to extend the life of several Recovery Act provisions by building them into the federal budget.

By including the provisions in the federal spending plan, the administration is able to keep the Recovery Act alive without having to pass a separate measure, which will likely spark a lot of controversy. As long as they make it into the fiscal 2011 budget, they will be allowed to continue in the future despite a promised cap in federal spending. The administration wants to build on the stimulus-fueled spending for infrastructure, which it believes is a great way to create jobs. The budget would add $418 million to the $7.2 billion in the Recovery Act to expand broadband services to rural communities.

CPB Will Work To Restore Infrastructure, Program Cuts

The Corporation for Public Broadcasting has added its voice to the noncommercial broadcasters concerned with some cuts in the president's proposed 2011 budget released Monday (Feb. 1).

In a letter to "colleagues," CPB President Pat Harrison said she was grateful for the appropriation noncommercial stations did get, including the two-year forward funding that helps insure editorial independence, but she was concerned about the effort to zero out about $25 million in "critical infrastructure" grants currently funded through the Departments of Commerce and Education, as well as to cut the funding to the Ready To Learn and Ready To Teach programs. Harrison said the former two programs provide "the primary source for telecommunications infrastructure assistance for public radio and television stations, particularly in under-served rural areas" and help rural stations expand their digital services, the latter in a world where expanding digital offerings is considered one of the prices of admission to full participation in the media's future. The latter two were programs funded through the Department of Education to provide basic reading skills to low-income children. Together, the programs were funded at $38 million in 2010.

FY11 budget plan folds ed tech into new program

President Barack Obama's proposed budget for fiscal year 2011 calls for sweeping changes to programs within the Department of Education, including a restructuring of federal education technology grants.

Under Obama's budget plan, the Enhancing Education Through Technology (EETT) program -- the largest single source of federal funding for school technology hardware, software, and professional development -- would be consolidated along with several other grant programs into a new initiative called Effective Teaching and Learning for a Complete Education. This new initiative would focus on improving teaching and learning within three areas: Literacy, STEM (science, technology, engineering, and math), and Well-Rounded Education (arts, foreign languages, civics and government, history, geography, economics, financial literacy, and other subjects). According to Dept of Education officials, the new initiative would "include a focus on integrating technology into instruction and using technology to drive improvements in teaching and learning" throughout all three areas. Most of the money would be awarded through competitive grants to state and local education agencies, but Dept of Education also would set aside money for national activities, such as grants to support research and technical assistance, grants to "strengthen the use of technology in the core academic subjects"; and a competitive grant program to encourage the development of "high-quality digital educational content for children." The three components of the Effective Teaching and Learning initiative would receive a combined $1.015 billion in FY11 funding under the president's proposal, an increase of $95 million over what the programs that make up this new initiative received in FY10. But it's unclear from the plan how much of this $1.015 billion would be spent on education technology in particular.

Benton

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