September 2011

Saying it would save existing jobs and create new ones, Gov. Jerry Brown (D-CA) signed into law legislation to require Amazon and many other out-of-state Internet retailers to collect sales taxes on purchases by California customers.

The new law will "create tens of thousands of jobs and inject hundreds of millions of dollars back into critical services like education and public safety in future years," Gov Brown said at a ceremony held at the San Francisco headquarters of clothier Gap. The event was attended by the lawmakers, who sponsored the bill, and retail industry executives. Experts predicted that the new law would help bricks-and-mortar stores that have sales staffs compete with e-commerce companies that need fewer people to fill orders. They also predicted that new jobs would flow into the state if Amazon, as expected, opens some large distribution centers to better serve California, which is estimated to represent as much as 20% of the company's market. Although the bill, AB 155 by Assemblyman Charles Calderon (D-Whittier), takes effect immediately, it doesn't require that sales taxes be collected from Californians until Sept. 15 of next year. The delay was part of a compromise put together by Amazon with representatives of national retailing chains, including Wal-Mart Stores Inc. and Target Corp., as well as local, independent store owners.

Amazon plans to spend $500 million to open large distribution centers and other facilities in California that would create 10,000 full-time jobs — ones that carry such benefits as health insurance.

Dish Network, the second-largest U.S. satellite-TV provider, may consider partnering with or buying a wireless carrier such as Sprint Nextel or Clearwire, Chief Executive Officer Joseph Clayton said.

“We'll look at partnerships, acquisitions, all of the above,” Clayton said. Asked whether that could include buying or partnering with Clearwire or Sprint, he said: “Could be.” Dish needs a wireless network to utilize the spectrum it has acquired in its deals for DBSD North America and Terrestar Networks announced this year. Dish filed for U.S. government permission to offer mobile high-speed Internet service to its customers last month. Government approval would allow the company to build a network. “There are several missing pieces,” Clayton said. “Wireless infrastructure, additional technology capabilities and even distribution are pieces that we’re still working on. Stay tuned.”

The Corporation for Public Broadcasting awarded a $1.25 million grant to the Association of Independents in Radio (AIR) to launch Localore, an initiative that will increase public media’s capacity for local news and public affairs journalism.

CPB’s investment will help AIR identify multi-media producers and public radio and television stations to form 10 teams that will develop innovative ways to produce and distribute local news and features. The teams will focus on sharing new and untold stories from their communities. Each project will include elements for on-air radio or television broadcast, as well as online and social media components – such as online streaming, mobile applications or games – all designed to help stations establish new ways to reach and better serve their communities. AIR will serve as executive producer of Localore and will help the station/producer teams conceptualize their topics and approaches, provide on-going editorial guidance, and coordinate collaboration and content sharing. The project will begin with a diverse group of approximately 20 stations from coast-to-coast, with others expected during the six weeks of open call for stations. AIR will share the models created as part of this initiative with other public media producers, stations, and those invested in strengthening public media. In addition, AIR will provide training, create a "bluebook" that documents best practices of the project, and showcase the material generated by the local teams on-line and on-air. AIR is working with Independent Television Service (ITVS), the National Black Programming Consortium and the public media minority consortia to implement Localore.

Additional funders of Localore include the Wyncote Foundation, the John D. and Catherine T. MacArthur Foundation, and the National Endowment for the Arts (NEA).

It is now widely accepted by the major industry stakeholders, content owners, cable operators, consumer electronics manufacturers and new startups that the following trends are unavoidable:

• Consumers will demand linear and on demand, short-form and user generated videos, to be viewed anytime, anywhere and on multiple devices. I believe that companies that build models to meet that demand will win. Those that deny it will go on life support.
• TV rooms in homes will have multiple screens running simultaneously, presenting a much better form factor to interface with the TV set than the traditional remote control. Most new TV-viewing devices will be Internet connected in 10 years.
• A substantial percentage of programming will have on demand, time shifted and interactive capabilities. New formats of programming with embedded interactive applications will emerge, and social TV will take off.
• Advertising will be targeted and personalized, at the individual and household levels, using legacy data from the settop box as well as ongoing rich data being generated every day, unless regulators step in to over restrict that. Smart marketers are already challenging the convention of TV time buying by demanding the same accountability that they are getting in their online buys.

This is going to be a much tougher fight than the last round of disruption, and here’s why:

• The stakes are enormous.
• Content owners are positioned to benefit.
• Cable operators are frienemies.
• TV Manufacturers See Opportunity with Embedded Software.
• New Entrants Ignition for the Entire Disruption.

[Kairouz is a managing partner of Rho Capital Partners and Rho Ventures]